Spring Break
Endowment survival in a changing market
Issue date: 10/4/07
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The recent troubles in American financial markets have some worried about the possible damage done to Hopkins' precious endowment fund, the financial lifeblood of the University. The recent hiccup was a nasty accumulation of summertime economic difficulties - the long-foreshadowed credit crunch finally rearing its ugly head, the last vestiges of froth in the housing market bubbling away and oil prices topping the $80 per barrel benchmark.
Yet while the summer's market correction was violent and sudden, its significance to Hopkins' investments was not as harmful as one might first think. Kathryn Crecelius, the University's chief investment officer, pushed aside such concerns.
"[The University's] asset allocation strategy is designed to produce risk-adjusted return over the long term. While we review returns monthly, we are not focused on short-term volatility."
The exact investments in Hopkins' portfolio are a well-guarded secret for reasons of financial security, but Crecelius was able to give the briefest of outlines, stating it is a "global portfolio, with approximately 57 percent in public equities," referring to stocks of public companies.
Moral considerations influence investment choices as well; for instance, Hopkins does not invest in tobacco companies of any kind. All this leads to what Crecelius termed, "a high quality, well diversified investment portfolio which allowed the endowment to weather the summer well, outperforming public equity markets."
All that is well and good, but while the University's assets might have fared better than the common investor and his Etrade account, what Crecelius failed to mention was the probable successfulness also enjoyed by institutions of comparable size to Hopkins, namely other top-notch colleges and universities.
Despite a solid performance over the years, Hopkins' endowment still lags behind other premier schools, both in size and in most recent percentage return on investment.
Yet while the summer's market correction was violent and sudden, its significance to Hopkins' investments was not as harmful as one might first think. Kathryn Crecelius, the University's chief investment officer, pushed aside such concerns.
"[The University's] asset allocation strategy is designed to produce risk-adjusted return over the long term. While we review returns monthly, we are not focused on short-term volatility."
The exact investments in Hopkins' portfolio are a well-guarded secret for reasons of financial security, but Crecelius was able to give the briefest of outlines, stating it is a "global portfolio, with approximately 57 percent in public equities," referring to stocks of public companies.
Moral considerations influence investment choices as well; for instance, Hopkins does not invest in tobacco companies of any kind. All this leads to what Crecelius termed, "a high quality, well diversified investment portfolio which allowed the endowment to weather the summer well, outperforming public equity markets."
All that is well and good, but while the University's assets might have fared better than the common investor and his Etrade account, what Crecelius failed to mention was the probable successfulness also enjoyed by institutions of comparable size to Hopkins, namely other top-notch colleges and universities.
Despite a solid performance over the years, Hopkins' endowment still lags behind other premier schools, both in size and in most recent percentage return on investment.
Viewing Comments 1 - 2 of 2
Jon L. Albee
posted 10/05/07 @ 10:09 AM EST
This is a good article. There's something we should all remember about university endowments: There's a large element of gamesmanship in all this. Most prestigious research universities (such as Johns Hopkins) have endowments so large that they're managed more for bragging rights than for anything pragmatic. (Continued…)
Tom N
posted 10/13/07 @ 6:43 PM EST
If wour endowment was allowed to invest in sudan without upsetting hippies imagine how much bigger it could be.
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