Rice endowment close to reaching pre-recession levels

By Hallie Jordan     11/9/11 6:00pm

The endowment for fiscal year 2011 has increased to $4.451 billion from $3.787 billion in 2010 and is almost back to pre-recession levels.

Before the recession in 2008, the endowment was $4.610 billion. This year, returns on the endowment were 22.4 percent, up from 9.9 percent in 2010 and -18.2 percent in 2009. $220 million went to the operating budget of the university.

The endowment's strong performance this year can be attributed to high oil and gas prices, the strong performance of its public stock market equities and private equities, Allison Thacker said, president of the Rice Management Company, which invests the endowment.

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"The endowment performed very well this year. Rice's results are good compared with other universities," Thacker said. "There has been a lot of volatility during this period. It's been a relatively low-return decade for all global endowments."

The assets in the endowment include U.S. stocks, international stocks, fixed income and cash, hedge funds, private equity, oil, gas, real estate and timber.

To support Rice long-term, the Company manages the endowment conservatively, Thacker said.

"Our ultimate goal is to try to have stability," Thacker said. "We want to protect the ability to support students in the future."

The endowment is what allows Rice to be as affordable as it is and provide financial aid, she said.

Though the numbers are up this year, Thacker said it is still a time of recovery and that endowments are usually looked at in blocks of three-to-five-year time spans and not just year to year.

Thacker emphasized that the endowment has been doing strongly because it has been invested well in the past but is still vulnerable to the global economy. To keep the fund as stable as possible, investors try to invest only in assets they think will still be a good idea 10 years in the future.

"A good strategy is to invest with good people and monitor them aggressively," she said. "The difficult thing is that the endowment is subject to global markets, but there is reason to feel very optimistic."

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