W&L’s endowment among top quartile of universities nationwide

by Kylee Sapp

Washington and Lee had a negative 1.4 per-cent return on its endowment investment in the last fiscal year, University Treasurer Steve McAllister said.

But that’s not cause for much concern be-cause W&L’s negative 1.4 percent return was still in the top quartile of schools, McAllister added.

“Being down 1.4 looks good relative to the others,” McAllister said. “In fact, on what I think we would call peer institutions we’ve seen many of those down three to four percent for the year. Only a few schools had a positive return.”

Williams Investment Society (WIS) Execu-tive Director Noah Henderson said the last fiscal year was a “terrible year” for the stock market.

McAllister added that the stock market’s poor performance caused financial investments across the board to do poorly.

“It was a difficult market environment,” he said. “Very few asset classes actually had positive returns last year.”

This fiscal year, McAllister said the endowment is doing much better. It is up around 3 percent so far. W&L’s five-year return is 6.1 percent, which is still in the top quartile.

W&L’s endowment is around $1.4 billion and McAllister said that number is pri-marily derived from two sources. The first is donations, which typically come from alumni, parents or friends of the university.

The second is called a trust held by others.

“Those are gifts that have been made at some point by the donor, but the principle of the funds are retained by an external trustee, and we benefit from either all or some portion of the payout that’s determined by the trustee on those funds,” McAllister said. The endowment is currently made up of nearly 1,300 separate accounts.

The portion of the endowment that W&L controls is just over $1 billion. But in 2007, the university switched to an outside investment group called Makena Capital Management. This group is responsible for about 70 percent of the $1 billion that W&L controls, and advises on the other 30 percent.

McAllister said the Uuniversity’s investment committee did a study to determine how best to manage the endowment and looked at having an internal investment of-fice, an in-depth consulting relationship with a vendor or an outside company.

“I think it boiled down to simply the depths of the team that was available to over-see the endowment and the ability for them to act on a daily basis to address issues that might be coming up in the management of the funds,” McAllister said. “It was recognized that as a volunteer committee, the committee could not act as quickly as having someone that was doing it on a day in, day out basis.”

The $30 million that W&L controls is allocated among liquid investments, the WIS and legacy portfolios.

The WIS has $10.125 million that it invests and Henderson said when he was a freshman they only had around $3 million, but the board increased that amount over the last three years.

“I think just over the years the board has realized that it’s a great learning opportunity and the stu-dents have been able to handle the money well,” Henderson said.

Although it’s still early in the fiscal year, McAllister said he thinks the university will have a positive return.

“We’re off to a good start this fiscal year,” he said.