March 9, 2011 by Julie M. Hughes, NMSU News Center
Like many university endowments across the country, the New Mexico State University Foundation endowment saw increased returns in 2010 and averaged higher returns than many endowments of a similar size, according to a joint study by the National Association of College and University Business Officers and the Commonfund Institute released in February.
The average annual total net returns for institutions having endowments of $101 million-$500 million for fiscal year 2010 was 11.9 percent. For that same time period, the NMSU Foundation return was 13.5 percent. The endowment in total is valued at $154 million.
“We are pleased to report these extremely positive investment results, since growing our endowment is perhaps the single most important role the Foundation plays on behalf of New Mexico State University,” said Dennis Prescott, Foundation president.
The 2010 NACUBO-Commonfund Study of Endowments (NCSE) gathered data from 850 U.S. colleges, universities and affiliated foundations. The average return for endowments of all sizes also was 11.9 percent, which is in sharp contrast to the -18.7 percent reported during fiscal year 2009.
“These results are particularly gratifying, especially on the heels of the extremely challenging period we’ve all experienced in the financial markets,” Prescott said.
The study also looks at participants’ asset allocation and spending. The NMSU Foundation’s asset allocation model is heavily weighted to domestic stocks, international equities and fixed income. Only 21 percent is invested in the alternative market. This is a common practice among endowments of NMSU’s size. Larger endowments tend to invest more in alternative markets. NMSU’s spending rate, as a percentage of beginning market value, was 4.9 percent, which compares closely to the 4.5 percent overall average for all institutions participating in the study.
“The Foundation’s Investment Committee has established a sound investment policy and asset allocation model appropriate for endowments of our size,” Prescott said. “We will continue to look for ways to add value to the portfolio while appropriately managing downside risk.”
The second annual NCSE for fiscal year 2010 is the result of a research partnership between NACUBO and Commonfund. Previously, the two organizations conducted separate studies of educational endowments’ investment performance. NACUBO is a membership organization representing more than 2,500 colleges, universities and higher education service providers across the country and around the world. Commonfund Institute is dedicated to the advancement of investment knowledge and the promotion of best practices in financial management.
For additional information about the NMSU Foundation, visit http://foundation.nmsu.edu.