UVa's endowment pool loses $100 million more

The University of Virginia’s endowment pool continued its retreat in February, giving up nearly $100 million.

The loss extends the string of declines to nine consecutive months for the university’s endowment, whose performance has reflected the ongoing economic troubles overall and stock market declines.

In the past eight months, marking UVa’s fiscal year to date, the endowment pool value has declined from $5.1 billion to $3.76 billion, a 26 percent drop.

The university’s Board of Visitors is scheduled to hear the latest figures at its meeting today.

Endowments at major universities across the country have suffered in the past year, causing hiring freezes and cutbacks and delaying construction projects.

UVa has frozen salaries and is controlling costs, but has not halted construction projects that already have money earmarked, said spokeswoman Carol Wood. Belt-tightening at UVa is more directly tied to declining state funding than endowment losses.

“We are better positioned than many universities to keep moving forward,” Wood said.

The endowment provides about 5 percent of UVa’s operating budget, while some universities depend on endowment money for as much as 25 percent of operations.

The average loss of major university endowments during the first months of the current fiscal year has been about 25 percent, said Ken Redd, director of research and policy analysis for the National Association of College and University Business Officers.

University of Virginia officials continue to maintain a long-term outlook and cite the value of sticking with investments in U.S. and global markets as a key part of the strategy.

In February, the company that manages the investments said the endowment had taken more conservative positions by placing $600 million in cash and government bonds, making up 16 percent of the pool.

“We implemented this defensive position to provide more stable liquidity to meet future obligations during this time of heightened market uncertainty,” said a report presented to the BOV at its February meeting by the University of Virginia Investment Management Co.

In the two months since, the endowment has shed $113 million.

The investment company’s CEO, Christopher Brightman, said Wednesday that the endowment continues to hold about $600 million in cash and government bonds.

Brightman said there have been no changes since the start of this year in the nature of the endowment holdings in response to ongoing economic troubles.

“We have great confidence in the staff of UVIMCO to manage the university’s endowment,” said UVa Rector Heywood Fralin, a member of the Board of Visitors. “We are confident that in the long run we are positioned well and that the endowment will bounce back.”

Before the housing bubble burst in 2008, endowments, including UVa’s, enjoyed superb returns over the years.

UVa’s pool, for example, had an annualized return of 10.5 percent for the 10-year period that ended in December.

Farther back, the endowment level climbed from $117.8 million in 1979 to $1.2 billion in 1999, when it was described in one publication as “one source of the University of Virginia’s extraordinary stability.”

By last June it reached $5.25 billion.

Like UVa officials, Redd said, members of the National Association of College and University Business Officers stick with the long-term view and the track record of endowments that shows growth despite periodic dips.

After previous steep declines, university endowments have always bounced back and then continued up.

“If history is a guide, I don’t think they will stay down for a long period of time,” he said. “But at the same time, history may not be the best guide.”

Some universities are even eyeing the down stock market with some enthusiasm, he said.

“There are still some of our members who view this as a buying opportunity.”