Have you ever wondered how the University of Michigan continually grows its endowment; how, in the course of the last fiscal year, the endowment increased by $1.2 billion? The effort behind the endowment, which now stands at $10.9 billion, falls to our Investment Office, an experienced team of 23 investment professionals.
If you do not work intimately with the Investment Office team, it may be challenging to get an idea of what they do other than “make the university money.” Every year, the Investment Office assembles its Report of Investments for the Board of Regents. It is a thorough examination of how the endowment is structured, as well as how it is faring in context both historically and to the market at large. It is available to the public just after the December Regents’ meeting.
The 30+ pages are filled with reference material so that the numbers are presented with meaningful context. The current year’s performance is depicted in a bar graph, containing the preceding 25 years of results. It really illustrates the impressive growth of the university’s endowment from $1 billion in 1994 to almost $11 billion today! The university’s cash and investments are also bucketed so that you can quickly see where the money is – in endowment funds, working capital funds, Veritas, which is the university’s wholly-owned insurance company, as well as other assets like long term disability benefit reserves, life income trusts, unexpended debt proceeds, and other reserves.
For those who want even more details, the performance is also broken down by asset class in a bar graph overlaid with the total return. This year, it’s amazing to see a return of over 24 percent for equities, and the resulting 13.8 percent return overall. If you’re a bit foggy on your investment terminology, the Report also does a great job of breaking down the concepts and ideas behind the terms. Also, it provides a great overview of the variety of investments, giving insight into how they have performed in the short-term, and what is generally expected of the class in the future.
When you see the Report of Investments, it may not be obvious, but the photographs highlight a unique and important university theme. This year, to celebrate the Bicentennial, they chose to highlight ten iconic university buildings, arranging them in order of construction. Looking at the cover picture of the President’s residence, it’s amazing how it has changed over the years! Previous themes have included student life, inventions at Michigan, many of which we invest in through the MINTS program (Michigan Investment in New Technology Startups) companies, as well as close up architectural campus building details.
The 2017 Report of Investments is available online and it’s worth your time to take a look!