MIT Endowment Has 3.2 Percent Yield, Even As U.S. Markets Slide

Despite the faltering economy, MIT’s endowment increased by $88 million, or 3.2 percent, according to figures for fiscal year 2008 released by the Massachusetts Institute of Technology Investment Management Company. The endowment now stands at $10.1 billion as of June 30, 2008.

Woes in the financial sector caused the endowment to grow far more sluggishly this year than in fiscal year 2007, when it grew by 22.1 percent. Nonetheless, MIT’s endowment return outpaced the Standard and Poor’s 500 Index, which dropped by 13.1 percent in fiscal year 2008.

“Investment gains were broadly spread across MITIMCo’s diversified portfolio, with private equity, real estate, and fixed income securities performing particularly well,” according to the MIT News Office.

At the State of the Institute Forum on Sept. 29, President Susan J. Hockfield said that at MIT, the financial officers’ “watchwords are ‘vigilance’ and ‘prudence.’”

Due in part to the growth of the endowment, MIT will have a balanced budget for the fiscal year 2009. “This is the first balanced budget MIT has had in many years. A balanced budget means we can focus on the future,” said Hockfield during the State of the Institute Forum.

Most colleges have had difficulties wrangling profits from the troubled markets. According to the Boston Globe, a survey of 165 large institutions (of similar size to Harvard and Yale) found the average endowment return to be negative 3.0 percent for fiscal year 2008.

Both Harvard and Yale saw smaller increases than in previous years. Harvard University reported an 8.6 percent return on its currently $36.9 billion endowment, according to the New York Times. In the previous year, Harvard’s endowment earned a 23 percent return.

Yale University, historically a leader in endowment gains, reported only a 4.5 percent return on its investments this year, increasing its endowment from $22.53 billion to $22.9 billion. In the 2007 fiscal year, Yale received a 28.0 percent return, the largest among academic institutions.

MITIMCo, is a division of MIT that serves to oversee and manage the Institute’s investment of its endowment, the sixth largest university endowment in the nation, after Harvard, Yale, Stanford, and Princeton Universities and the University of Texas system. Over the past ten years, MITIMCo has averaged an annual return of 13.2 percent on the endowment.

MITIMCo also manages MIT’s retirement plans and operating funds. MITIMCo had a total of $14 billion under its management at the end of the 2008 fiscal year. The current president of MITIMCo, Seth Alexander, was formerly a director at the Yale Investment Office.