Investment Objectives & Spending Policy
The long-term performance objective of the endowment portfolio is to attain an average annual total return that exceeds the University's spending rate plus inflation within acceptable levels of risk over a full market cycle.
The University has an endowment income spending and distribution policy that aims to (1) provide a stable and predictable source of funding for the University's academic and strategic initiatives and (2) protect the real value of the endowment over time. Under this policy, the amount that can be expended for operations on an annual basis is calculated as follows:
70%: Prior year spending adjusted for an inflationary factor
30%: 5% of a 12 quarter moving average of market values
The annual payout from the endowment is reviewed each year by the Board of Trustees as part of the University's operating budget. The fiscal year 2013 payout of $85 million represents 10% of the University's $862 million operating budget.