Long-term investment returns robust in '13

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John Carberry
A.J. Edwards

Cornell’s long-term investments (LTI) – which include the university’s portfolio of endowments – realized a robust return for fiscal year 2013, says A.J. Edwards, the university’s chief investment officer.

The LTI had an increase of 11.4 percent for fiscal year 2013, which ended June 30. The rise is due to gains in public equity markets, both domestic and international, as well as strong returns from private partnerships, says Edwards.

The value of Cornell’s LTI at the close of fiscal 2013 was $5.7 billion, up from $5.2 billion in 2012, reflecting investment gains and gifts that exceeded endowment payout by about $500 million. The payout to the university, which is used to support about 10 percent of the university operating budget, supports operations and student financial aid.

The rate of return on Cornell’s long-term investments has been steady: The LTI has returned 10.2 percent annualized over three years and 8.2 percent over 10 years, as seen against the backdrop of the Consumer Price Index, which has grown at a 2.4 percent annual rate over the past 10 years.

Edwards and his staff work closely with the Cornell Board of Trustees Investment Committee to establish allocation targets for each asset class. Edwards looks to hire best-in-class managers for each of the underlying asset classes. The current asset allocation includes domestic, international and emerging markets equities; private equity; enhanced fixed income (distressed investments); hedge funds; resource-related investments; real estate; traditional fixed income; and cash.

“Our goal is to maintain the inflation-adjusted purchasing power of the LTI over time. This year we took advantage of some select opportunities in Europe and the United States, as well as across emerging markets and our natural resources portfolio,” says Edwards. “The LTI is positioned both to weather the continued uncertain economic outlook and to benefit from opportunities that may arise from time to time. We remain focused on maintaining a generally healthy liquidity position within the LTI, allowing it to comfortably meet the projected needs of the university, while at the same time taking advantage of our long-term investment horizon.”

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Blaine Friedlander