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Investments Boost Tech Fund
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FEBRUARY 27, 2004 -- If you invest in the stock market, then these last few months have probably warmed the cockles of your portfolio.
The university's endowment is enjoying that same rosy glow. During the first six months of this fiscal year, the Michigan Tech Fund endowment portfolio has grown in value from $41.1 million to $48.8 million, an increase of 15.5 percent. The endowment also benefited from $1.2 million in new gifts.
The upturn in stocks during the second half of 2003 drove the trend, with the Fund's investments outperforming two standard indices.
In the year ending Dec. 31, the Tech Fund's endowment portfolio posted an overall return of 26.9 percent. The public equity portion of the portfolio alone saw a 38.6 percent gain, compared to the S&P 500 Index of large U.S. stocks, which returned 28.7 percent.
The endowment's combined fixed income portfolio returned 6.1 percent during 2003, while the Lehman Aggregate Bond Index, a measure of broad bond market activity, rose 4.17 percent.
No one is happier than Fred Hensley, senior vice president for advancement and marketing, who remembers years when the endowment's value actually declined. A bull market is better.
"The good news is, it appears we've turned the corner," he said. "This means more dollars for scholarships and departments."
The upswing in the economy also means that donors are becoming more willing to consider giving to the university, since their assets have increased as well, he added.
Hensley credits the Michigan Tech Fund Board's Investment and Finance Committee for the endowment's stellar performance. Their strategy has helped the Tech Fund in good times and bad. "We were fortunate that on the downside of the economy, our policy protected us against major fluctuations, while allowing us to take advantage of opportunities," he said. "We didn't experience losses to the degree that many other universities and foundations had to absorb."
Administrative Fees Drop
The growth of the endowment, coupled with an aggressive reduction in MTF operating expenses, has allowed the Tech Fund to reduce its administrative fees from 3.9 percent to 2.9 percent, retroactive to July 1. "This reduction will further allow our endowment portfolio to continue to grow at a more rapid pace," said Gail Mroz, the Tech Fund's CFO and executive director of operations.
"Our operating expenses aren't out of line with other institutions our size, but our fees were," Hensley said. "If the current economic climate continues to encourage donors, increased fundraising will offset the reduced income from fees."
The percentage used to calculate payouts to departments from their Tech Fund accounts will decline also, from 5 percent to 3.5 percent, effective July 1, 2004, to help assure that the endowment's principal remains strong. Fund managers hope that increases in the value of the fund will help offset the percentage change. The MTF Board of Trustees approved this policy change at its fall 2003 meeting.
Even though the last few years have been rocky for investments, the Michigan Tech Fund has still been able to generate millions of dollars for university programs, thanks to the generosity of donors.
For more information on the fund, visit http://www.mtf.mtu.edu/ |
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