By Donald Gilpin

Princeton University announced last Friday that its endowment earned 6.2 percent for the 2019 fiscal year ending June 30, a drop from last year’s 14.2 percent and a drop from the top spot to fifth among Ivy League earners.

Brown University’s endowment was the Ivies’ top earner at 12.4 percent, with Dartmouth second at 7.5 percent, University of Pennsylvania third, and Harvard fourth, both at about 6.5 percent, according to Barron’s magazine. All the Ivy League schools posted lower returns in 2019 than in 2018.

The Princeton University endowment value now stands at $26.1B, an increase of about $200M from the previous year. With its annual return over the past decade at 11.6 percent, Princeton is among the top percentile of 500 institutions listed by the Wilshire Trust Universe Comparison Service.

The Princeton University Investment Company (PRINCO), which manages the endowment, will certify the results at its October 17 directors meeting.

PRINCO President Andrew Golden has in the past emphasized PRINCO’s focus on long-term results and the relative unimportance of a single year’s earnings. In his annual Report on Investments in the 2017-18 Report of the Treasurer, Golden noted, “A single year is so short that luck is almost always the single largest driver of relative results. We strive to keep all eyes on the long term. A single year’s performance … does not give much information about past efforts or the likelihood of future success.”

The University declined to comment on possible reasons for this year’s drop in performance and any anticipated adjustments or changes in strategy.

The Princeton endowment has a target asset allocation of 27 percent private equity, 25 percent independent return (hedge funds), 18 percent real assets, 10 percent international emerging markets equity, 9 percent U.S. equity, 6 percent international developed equity, and 5 percent fixed income and cash, according to PRINCO’s website.

“Princeton is unusual, even among similar universities, with an endowment that covers more than half of our operating costs each year,” said Provost Deborah Prentice. “That endowment is
the result of generations of generosity from alumni and friends as well as effective stewardship and investment by the trustees and PRINCO.”

She continued, “Its payout continues to provide essential funding for core operations, a flexible margin to invest in strategic opportunities, the capacity to recruit and retain faculty and staff talent, and the substantial resources necessary to ensure affordable access to academic offerings of the highest quality regardless of a student’s ability to pay.”

Earlier this year, Princeton trustees approved a 7.2 percent increase in undergraduate financial aid to $187.4M for the current year. Endowment funds cover more than 80 percent of the undergraduate aid budget.

Typically, according to the University, Princeton students from families with the U.S. median household income of $65,000 pay no tuition or room and board fees. Most students from families with incomes up to $160,000 pay no tuition, and financial aid covers about 81 percent of tuition for an average family with income around $190,000.