Endowment regains value in recovering economy

As of March 2010, the university endowment is worth $1.1 billion, a value that is close to the peak endowment worth of $1.25 billion, a university official said.

Jim R. Hille, chief investment office for the university, said the endowment’s value slipped below $1 billion from June 2008 to June 2009, but has been recovering since the end of that fiscal year.

According to The Chronicle of Higher Education, the university lost about 20 percent of the total value of its endowment in 2008-2009, but continued to rank highly, in fifth place for endowment worth in Texas. Comparatively, Southern Methodist University lost about 26 percent of the total value of its endowment the same year.

“By staying invested rather than panicking at the downturn, and actually prior to that, (we were) very well-positioned for the downturn,” Hille said. “We didn’t know it was going to occur, but we forecasted it was going to occur, therefore it limited the damage to the fund.”

Hille said the endowment is monitored and managed both by himself and his colleagues, as well as over 50 external managers, known as the Board of Trustees. This financial team focuses on preserving the long-term value of the endowment and providing stability.

The financial allocations of TCU’s endowment are not made public by the university.

The endowment assets go toward helping subsidize the operations of the university, Hille said. The subsidy is generally about 5 percent a year and is considered to be the maximum sustainable payout rate to secure long-term value.

“Ever since the university was founded, the founders recognized that you needed an endowment,” Hille said. “Not only does it subsidize for current students, but it also provides stability like during this downturn. It helps the university stay around.”

Chancellor Victor Boschini wrote in an e-mail that the strategy the university used in regards to managing the endowment during uncertain times is “one of prudent investment with an eye on measured growth” that the university has used for many years.

“We have certainly been helped by the presence of our CIO James Hille who has exerted great leadership in this area,” Boschini wrote.

Paige Allen, a sophomore communication studies major, said she was glad to hear the endowment has been recovering.

“It’s good to hear the endowment is up,” Allen said. “It shows how supported our university is by having generous donors that will help maintain the prestige of our university.”

Hille said he thought it was fairly clear the endowment was on the path to recovery.

“To be where we are today, at $1.1 billion, after pay out, we’re nearly back to where we were at the peak,” Hille said. “When you take a look at that, it’s pretty extraordinary.”