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Bucking The Trend

Bucking The TrendWhile the value of most college endowments dropped by 3-4 percent last year, Tufts was one of just a few whose endowments recorded growth.

Medford/Somerville, Mass. [02.19.02] With the slowing economy, many colleges and universities found themselves on unfamiliar ground at the end of the 2001 fiscal year. For the first time in almost two decades, the average college endowment lost ground. But while hundreds of schools posted losses last year, Tufts bucked the trend -- becoming the only Boston-area school among the top 100 endowments to record growth.

According to the Boston Business Journal, Tufts' endowment recorded a 4.9 percent increase -- which University Treasurer and Vice President for Finance Tom McGurty attributed to a combination of solid investment strategies and increased giving. Few other colleges and universities fared as well in 2001.

"Two out of every three endowments declined in value, according to data reported by 610 institutions that responded to an annual survey sponsored by the National Association of College and University Business Officers," reported the Chronicle of Higher Education. "The average endowment lost 3.6 percent of its value."

For the most part, higher education weathered the slowing economy better than other sectors.

"The Standard and Poor's 500 Composite Index, a broad measure of the performance of stock issued by large companies, declined 14.8 percent," reported the Chronicle.

Though most didn't record declines as large as many companies, few colleges and universities posted gains.

Among the schools with the 100 largest endowments, only 22 percent recorded gains. Of them, only 12 exceeded Tufts' growth.

"[McGurty said] Tufts ended higher by investing about 20 percent of the endowment in alternative investments, mostly hedge funds, 30 percent in bonds and the remainder in stocks," reported the Boston Business Journal.

As the economy slowed last year, Tufts' strategy paid off. But the endowments of other leading national universities took sizeable hits.

Boston University posted a 27.2 percent loss -- the second largest drop in the country. Harvard, Princeton, Stanford, MIT, Cornell, Johns Hopkins and Brown were among the universities that also posted losses in 2001.

McGurty told the Boston Business Journal that Tufts will likely continue its current investment approach.

"The board is studying the issue of asset allocation, but I suspect we'll continue to see our allocations remain relatively constant," he told the Journal.

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