Richmond's endowment rebounds after sharp drop

The University of Richmond's endowment rebounded during the last six months, increasing in value by approximately 11 to 12 percent, according to university officials.

That rebound followed a roughly 14 percent drop during the fiscal year that ended June 30, 2009, said Srinivas Pulavarti, president of Spider Management Company, the university's investment office.

The endowment's preliminary market value as of August 30, 2009, was approximately $1.5 billion, Pulavarti said.

The endowment comprises approximately 40 percent hedged equities, 6 percent real assets, 30 percent absolute return, 5 percent real estate and 20 percent cash or opportunistic investments, he wrote in an e-mail.

The endowment's good standing is due to investments' high hedged exposure and very little exposure to market risk, Pulavarti said. Along with hedged equities, credit investments were some of the most beneficial for the school, he said.

"Last year was [a bad] year for financial markets," he said. "Thankfully, years like that only come around once in 25 or 30 years."

Unlike Richmond, other schools have not been as fortunate in the struggling economy, President Edward Ayers wrote in an e-mail.

"This excellent endowment management, combined with wise stewardship of the university's resources and the generosity of our alumni, has enabled the university to continue investing in the core mission while other schools have been forced to retrench," he said.

According to a Sept. 11, 2009, Boston Globe article, Williams College's endowment posted an investment loss of nearly 18.4 percent for the fiscal year that ended June 30, 2009.

Similarly, Yale University has been forced to make budget cuts after its endowment fell 30.4 percent from last year.

Pulavarti stressed that the Spider Management Company did not compete with its peers.

"My job is to produce the best returns," he said.

Pulavarti took on his position as president of the Spider Management Company in July 2005. He had previously worked as director of investments at Johns Hopkins University, managing its endowment, and as chief strategist for Citigroup Pension Investments.

The Spider Management Company also manages the funds of 10 to 15 other endowments and foundations, Pulavarti said. He was unable to give the names of the institutions because of secrecy policies, he said.

Of those institutions, Richmond is still demonstrating the best performance.

"We haven't seen a number better than ours in the last 12 months," he said. "But our job is about not losing money, not beating somebody else."

He was careful to point out that markets are volatile and that it will take time to determine if these positive returns will continue.

"It will take us at least a few more quarters to see if this rally in the market is sustainable," he said.

Ayers said he was also aware of the remaining economic challenges, for both Richmond and other institutions of higher education.

"Our determination is to remain focused on the student experience and do everything we can to sustain our momentum," he said.

Contact staff writer Guv Callahan at guv.callahan@richmond.edu