Penn Endowment > Your Endowment (Sort Of)
September 28, 2009 at 12:04 pm
For the past month or so we've been hearing just how clever Penn is when it comes to investments. Amy filled us in on the numbers before we even got to school, and every news source in the country has been yammering on about how awesome it is that Penn's endowment only went down 15.7%.
This week Fortune investigated this "Ivy League upset" in which we all of the sudden have the top-performing Ivy endowment. While our endowment was down just under 16%, Harvard was down 27% and every other Ivy (except Columbia, who saw a loss of around 16%) was down 25%. Let us not forget that we started out with $5.2 billion... and Harvard started off with $26 billion.
Regardless, we guess it's cool that we did the least bad (or something like that). Fortune was impressed too, so they sat down and talked shop with Penn chief investment officer Kristin Gilbertson.
Here's an excerpt:
Q: What's behind your relatively strong performance?We would share more, but that made our head hurt.
I'd say three factors led to our relative outperformance. The first is that in April 2008 we sold about 10% of our public equities and moved that money into funds that specialize in distressed debt. We were seeing some early signs of a credit crunch, and we wanted to be waiting on the sidelines ready to gear up. In retrospect it was fabulous decision.
The second thing is we had a historically high allocation to fixed-income, around 15%, and we stayed there even though our long-term goal was closer to 10%. Most of our cash was in T-bills. Fixed income was the only asset class last year to have positive returns.
The third and biggest contributor was moving our equity allocation to large-cap quality stocks. Our public equity managers outperformed the S&P on average by 12%. They were overweight tech, light on financials and energy and materials, and focused on companies with high return-on-equity.
(Photo Illustration by Ben Rosen)