Near-record Investment Returns Boost UNC's Endowment to Almost $1.5 Billion

Posted on Nov. 28, 2006

The University’s Foundation Investment Fund reached $1.48 billion in fiscal year 2006, after recording a 19.2 percent net investment return, the third highest in the past 20 years. This brings the University’s overall endowment to $1.68 billion.

Jon King, president and chief executive officer of UNC Management Co. Inc., which manages the fund, presented the investment results Nov. 16 at a meeting of UNC’s Board of Trustees.

“What this return means to UNC, and to the state, is that the University has a very solid foundation from which to support new and existing programs and to build for the future,” King said. The investment fund makes up a majority of UNC’s overall endowment.

According to an independent survey of 149 colleges and universities, UNC’s investment return rate was first among public universities and in the top 6 percent overall. Only returns in fiscal 2000 (27.3 percent) and 1999 (19.7 percent) outperformed this year’s, King said.

UNC’s investment fund, a diversified portfolio, is positioned for growth and includes a significant allocation to nontraditional assets including international equity, private equity and private energy related investments. The allocation to these asset classes, combined with excellent performance generated by the fund’s investment managers, were key to the fund’s growth, King said. The fund outperformed its primary benchmark, the Strategic Investment Policy Portfolio (SIPP), which returned 14.1 percent for the year.

“We had the wind at our back,” said King, who began his role at UNC Management Co. Inc. in January 2005 after growing Dartmouth College’s endowment to almost $2.5 billion. “We were over-allocated to the asset classes that did well, under-allocated to the classes that didn’t do well, and our investment managers turned in very strong performances.

“UNC’s fund tends to do better in years when nontraditional asset classes outperform traditional U.S. stocks and bonds, as was the case in the most recent fiscal year,” he said.

The 2006 results set the three-year return – 16.9 percent – at its highest mark in 20 years. The five-year return hit 10.6 percent, placing the one-, three- and five-year returns above the SIPP benchmark for each of these periods. The growth also places UNC’s endowment in the top 15 percent of all colleges and universities for the past one-, three- and five-year periods.

Increasing the University’s overall endowment is a major objective of the Carolina First campaign, the fundraising effort with a goal of $2 billion by December 2007. The campaign has received gifts and pledges of more than $1.9 billion.

The campaign has nearly reached its $800 million target to support the endowment. To date, Carolina First has received commitments of $739.3 million for the endowment. Of that, $387.6 million is in hand.

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