September 28, 2010
Stanford Management Company announces 2010 results
The Stanford University Merged Pool (MP) achieved a 14.4 percent investment return for the 12 months that ended June 30, 2010, according to the Stanford Management Company (SMC). The MP is Stanford's primary investment pool and includes most of the university's endowment and expendable funds, as well as capital reserves from Stanford Hospital and Clinics and Lucile Packard Children's Hospital.
Over the past 10 years, the Stanford MP has achieved an annualized return of 6.9 percent, growing from $5.8 billion to $15.9 billion as of June 30, 2010. During the same period, the U.S. equity market, as measured by the S&P 500 Total Return Index, declined by an average of 1.6 percent per year, and the U.S. bond market, as measured by the Barclays Aggregate Bond Index, increased 6.5 percent per year.
"Our investment managers took advantage of strong equity and credit markets through the first three quarters of the fiscal year, allowing us to make up some of the ground lost in fiscal 2009. In addition, we were pleased that our efforts to diversify and mitigate risk helped during the challenging June quarter," said John Powers, CEO of SMC.
Stanford University's endowment rose in value by 9.6 percent over the past year to a value of approximately $13.8 billion as of Aug. 31, 2010, the last day of Stanford's fiscal year. The growth in endowment value results from investment gains and losses, endowment gifts and other funds transferred into endowment, offset by the annual payout for university operations.
The MP previously experienced a 25.9 percent investment loss for the 12 months ended June 30, 2009; as a result, the university reduced the payout on individual endowment funds by 10 percent in fiscal year 2010 and a further 15 percent in fiscal year 2011. The university's budgeted endowment payout for fiscal year 2011 is $758 million, equal to 5.5 percent of the beginning-of-year endowment value.
"While we're pleased with investment returns and endowment growth over the past year, Stanford's endowment remains 20 percent smaller than it was two years ago." said Randy Livingston, vice president for business affairs and chief financial officer. "We made the difficult budget adjustments that are enabling the university to continue operating smoothly with less annual payout from the endowment. We appreciate how well the university community has responded in these difficult times."
For detailed information about the Stanford University budget, including the 2011 Stanford University Budget Plan, see http://budget.stanford.edu/ and http://bondholder-information.stanford.edu.