UCLA endowment gets lowest return of all UCs

By Chris Goodmacher
Daily Bruin Contributor

The UCLA Foundation’s $474 million managed endowment fund
had the lowest returns last year of all the UC campuses.

The average net return of all the UC campus funds was 14.9
percent, compared to UCLA’s 7.6 percent, according to the
Annual Endowment Investment Report from the Office of the Treasurer
of the UC, released in mid-January.

“For this year’s return, everyone’s
disappointed,” said Neal Axelrod, assistant vice chancellor
of finance and information management.

UCSF endowment funds, by comparison, had 25.6 percent in returns
for the 2000 fiscal year, the highest of all the campus endowments
in the UC system.

Axelrod attributed this year’s poor performance to an
imbalanced portfolio in previous years.

“Before, we overweighed on value stocks and underweighed
on growth stocks,” Axelrod said. “Now, we took on more
value stocks and changed to a more balanced path.”

Growth stocks are stocks whose earnings and revenues increase
faster than average. Value stocks are stocks that appear to be
undervalued by the market, according to finance.yahoo.com.

Over the past 10 years, however, the fund has had an average
return of 13.5 percent. This is right at the Cambridge Median
Average of 13.4 percent, which is compiled by Cambridge Associates
and averages the returns on 120 college and university endowment
pools.

“Of course, we think we could do better,” Axelrod
said. “We hope to exceed that median index.”

Another set of funds the report compares the UCLA funds with is
the $5.1 billion General Endowment Pool of the Regents of the
University of California.

The GEP consists of money donated directly to the regents, along
with money handled by them on behalf of individual campuses,
according to Bob Yastishak, director of treasury operations for the
UC Treasurer’s Office.

The GEP had 14.7 percent in returns, 7.1 percent higher than the
endowment funds managed by the UCLA Foundation.

Yastishak, however, stressed looking at the long term.

“These are long-range investments; it’s not fair to
look at one year,” Yastishak said.

Performances vary over time, depending on strategies and how the
economy worked, Yastishak said.

“We look at (results) in the long-term time frame,”
Axelrod said. “We’re satisfied with the 10-year
results.”

Endowments are grants providing for the continued support and
maintenance of anything from scholarships to buildings.

Donors give gifts to UCLA for specific, restricted activity,
such as funding a scholarship.

“These gifts have to be managed in investments to ensure
that the money is always there to fund what the donor
intended,” Axelrod added.

The money is meant to last forever, so it is invested in stable,
conservative investments, according to Axelrod.

A finance committee determines how much money will be paid out
each year for the intended purpose of the endowment.

The minimum endowment is usually over $50,000 according to
Axelrod.

Axelrod is optimistic about next year’s returns.

“Now this year, it’s the value stocks that have
taken off, the gross stocks collapsed,” Axelrod said.
“We’re very comfortable with the path we’re
on.”

RETURNS ON MANAGED ENDOWMENT ASSETS FOR ALL UC
CAMPUSES This chart displays the Regents’ and each
foundation’s reported net total return for the fiscal year of 2000.
The chart also shows the overall weighted average return for all
university endowments SOURCE:University of California Office of the
Treasurer Annual Endowment Inventment Report Original by MAGGIE
WOO/Daily Bruin Web Adaptation by HERNANE TABAY/Daily Bruin Senior
Staff