Rochester’s net return for the fiscal year ending June 30, 2004 was approximately 17.4%, substantially above the 8.0% goal contained in the University’s financial plan. It is, however, below the benchmark return of 18.9% (comprised of 60% Wilshire 5000, 20% Lehman Aggregate and 20% EAFE). Underperformance relative to the benchmark is to be expected when domestic equity returns are unusually robust, as Rochester’s domestic equity exposure is just one-half the benchmark weight.
The endowment value at the end of the fiscal year was approximately $1.26 billion, roughly $156 million above the reported value at the beginning of the year. The change in endowment value was attributable to investment returns of $185 million, gifts and additions of $43 million and spending of $72 million. Rochester’s five-year average annual return through June 30, 2004 is 7.0% vs. 0.8% for the benchmark. The ten-year average annual return through June 30, 2004 is 11.3% vs. 9.4% for the benchmark.
The investment office continues to monitor peer endowments and expects that this effort will continue to produce similar asset allocation and investment approaches for Rochester’s endowment. The release of fiscal 2004 peer asset allocation data, expected in November, will assist in the discussions and strategic planning at the Investment Committee’s March, 2005 annual review. Early reports from Rochester’s peers suggest that returns achieved by large endowments in fiscal year 2004 will range from 15% to approximately 20%. It is important to note, too, that the return was generated through the efforts of many talented advisors, investment committee members, consultants and investment office staff. It is the consensus of these groups that, over time, the University of Rochester’s target return of 8.0% is achievable.
Investment Reports for Previous Years »