Bowdoin has announced that its endowment earned a return on investment of 22.3 percent, rising in value to $904.2 million in the fiscal year ending June 30, 2011, up from $753.5 million in fiscal year 2010. The increase in value is the College's sixth-highest single-year gain since 1970.
The median return among the educational funds tracked by investment advisory firm Cambridge Associates was 19.7 percent in fiscal year (FY) 2011, with the College performing "significantly better," according to Noel O'Neill, a managing director at the firm.
In FY 2010, the endowment's 10.3 percent gain fell below Cambridge Associates' reported median return of 12.2 percent.
This year's unexpectedly high returns along with the 10.3 percent return in FY 2010, have allowed the College to recover from the 17 percent drop which followed the economic crisis, when the endowment's market value plunged from $831.5 million to $688.5 million.
The three-, five- and 10-year annualized returns for the College's endowment were 3.8 percent, 7.1 percent and 9.4 percent, respectively, according to a post on the Bowdoin Daily Sun. Senior Vice President for Investments Paula Volent said she is extremely pleased with the long-term returns because they preserve capital for future generations and also support current students.
"Bowdoin's 10-year annualized return of 9.4 percent is a great return for the College and reflects the underlying structure of the endowment portfolio which is intended to preserve capital during down years while participating in up markets during good years," Volent wrote in an email to the Orient.
Volent credited the equities, absolute return strategies and venture capital portions of the endowment, noting that the College's investments in venture capital and private equity performed extremely well and have recovered from the damage of the financial crisis.
According to Bowdoin's 2010 Form 990—a form all nonprofits are required to file with the IRS—roughly half of the endowment was invested in absolute return investments (a category which includes hedge funds), while approximately a quarter was invested in venture capital and private equity.
The Bowdoin Daily Sun noted that 44 percent of the endowment is allocated for financial aid which funded 63 percent of the financial aid budget in the previous academic year.
The plan for this year's budget, which was approved by the Board of Trustees in May, will remain unchanged despite the gains, according to Senior Vice President for Finance and Administration Katy Longley.
"This year's operating budget was built using the 12-quarter lagging average of the Bowdoin endowment as of June 30, 2010. The positive investment return, however, helps to alleviate budget shortfalls in future years arising out of the recession," Longley wrote in an email to the Orient.
As of press time, no other NESCAC schools have released their endowment returns for FY 2011. However, the University of Pennsylvania recently reported that its endowment grew 18.6 percent and Harvard University announced yesterday a gain of 21.4 percent.
Editors' Note: A previous version of this article indicated that the endowment "grew" by 22.3 percent. However, the percentage cited refers to return on investment and does not account for the total growth the endowment experienced, as gifts and other additions can increase the size of the endowment. The headline and opening paragraph have been amended accordingly. The Orient regrets the error.