Wednesday, October 7, 1998
University endowments take big losses
STOCKS: Summer market downturn shrinks funds of colleges across
nation
By Edward Sherwin
Daily Pennsylvanian
University Wire
PHILADELPHIA, Penn. – Penn is far from the only school singing
the stock-market blues.
When the University found about $300 million wiped out from its
endowment in the recent downturn, officials could at least take
solace in the fact that other universities experienced
still-greater investment losses in recent months.
And Penn is also fortunate that its losses will likely not
affect planned spending in the coming year, unlike the situation at
some other major universities.
Schools from Stanford University in the west to Emory University
in the south found hundreds of millions of dollars missing from
their coffers in the wake of this summer’s market losses.
Due to instability in the emerging markets of East Asia, Latin
America and Russia, U.S. stocks lost more than $2 trillion between
July 17 — when most market indices hit their all-time highs – and
the end of August.
Over that period, the major barometers, including the Dow Jones
Industrial Average, Standard & Poor’s 500 and technology-laden
NASDAQ index, each lost between 19 percent and 26 percent of their
values.
Universities’ endowments are important as a source of funding
for annual budgets and long-term projects, and schools commonly
invest hefty portions of their endowments in the stock market.
Officials at many schools, however, downplayed the losses as a
temporary setback and reaffirmed the financial health of their
institutions, according to published reports.
Penn officials confirmed last month that the school’s endowment,
which peaked at slightly more than $3 billion at the end of June,
fell $300 million to about $2.7 billion by August 31 – the day the
Dow fell more than 512 points.
Harvard University led all U.S. schools in total investment
losses after its $13 billion endowment – the nation’s largest – was
reduced by $1.3 billion, officials at the company that runs the
fund announced September 24.
Several other schools joined Penn and Harvard in reporting
matching losses of about 10 percent. Stanford lost $500 million of
its $5 billion endowment, while the University of Virginia and
Swarthmore College each lost $100 million of their $1 billion and
$900 million endowments, respectively, student newspapers at the
three schools reported.
"All (schools’) portfolios, including (Virginia’s), are very
sensitive to market fluctuations," Virginia Treasurer Alice Handy
told The Daily Cavalier. "This is not an unanticipated event."
Princeton University was one of the few schools to sneak into
the range of single-digit losses. At $357 million, the New Jersey
school’s losses totaled just 6.1 percent of its nearly $5.9 billion
investment fund, The Daily Princetonian reported.
"This is small potatoes compared
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