This past fiscal year was a volatile period where the financial markets seemed unable to put together a meaningful period with any real upward momentum. For the fiscal year ending June 30, 2012, the Purdue Endowment’s investment return was -2.5 percent. Purdue is a long-term investor and although negative results are disappointing in any one year, Purdue’s three‐year annualized return of 11.35 percent reflects strong performance compared to inflation plus spending. The market value of the Endowment was $1.9 billion down slightly from the previous year reflecting both the performance results and the $90.4 million that was distributed for spending.
The Endowment makes tactical adjustments within the approved policy ranges when appropriate but the intent is not to try to time the market. In FY12 Purdue invested additional funds in emerging markets based on valuations in the third quarter of 2011. This 2 percent overweight helped returns through the end of the first quarter in 2012 but was not spared the market decline in May before the end of the fiscal year. We still have confidence in the overweight but realize due to increased volatility that it may take longer to realize the gains and exit as planned. The Endowment also remains underweight to fixed income due the historically overall level of interest rates and expected future returns over the next couple of years. The fixed income investments are positioned defensively for interest rates to rise and focused on corporate credit.
As we navigate this period of uncertainty in the financial markets we are mindful of our fiduciary duty to our donors. The Purdue Endowment continues to utilize a diversified investment strategy to generate the returns that allows the University to spend today while saving for the future.
Chief Investment Officer