For the first time in three years, college and university endowments had a positive average return on investments during the 2003 fiscal year, according to the Chronicle of Higher Education.
At the University, the total return on investments in the 2003 fiscal year was second only to Harvard, coming in at a 9.2 percent gain, well above the national average of 3 percent.
An endowment is a sum of money in which the principal can never be touched and only the annual payout from investments is available for university use.
More money coming in from investments can mean augmented salary supplements for faculty, more financial aid for students and increased support for academic and athletic programs.
University spokesperson Carol Wood attributed the strong return to the University's investment strategies.
"Decisions made by the University's Board of Visitors in 1974 to invest 75 percent of the fund in equities have paid off," Wood said. "One million invested in 1974 is worth $38.1 million this year."
Wood also credited former University Treasurer Alice Handy with the success of the endowment.
Handy said she and her team developed a strategy to strengthen the endowment.
"Three years ago we made a conscious decision to reduce the endowment's exposure to the traditional equity market," Handy said.
The University then took an aggressive position and invested 60 percent in hedge funds, Handy added.
The positive return this year marked the first time in University history that private funding outweighed public funding, with private funds, including the endowment money, contributing 8.3 percent and public funds comprising 8.1 percent of the University's total budget.
Among the 30 largest colleges and universities in the nation, the U.Va. endowment consistently ranks in the top five.
For the quarter ending Sept. 30, the University's total endowment was $1.9 billion.
The Chronicle article reported that the total value of endowments for colleges and universities was just above $230 billion. Harvard came in at the top of the list, with a total endowment of $18.8 billion, and a return of 12.5 percent.
The Chronicle cited a survey conducted by the National Association of College and University Business Officers, reporting the average return was 3 percent on investments for the 2003 fiscal year, which ended June 2003 for most institutions.
In 2001 the average return on investments was -3.6 percent and in 2002 it was -6.0 percent.
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