As Baylor makes strides toward increasing its endowment by more than $1 billion over the next five years, significant annual increases in total value are being achieved through the returns made through thoughtful investment of those funds.
Just how well have Baylor's endowment investments been performing lately? A recent study of 765 colleges and universities made by the National Association of College and University Business Officers provides an impressive example. Over a three-year investment period, on average, the schools in the study saw their endowment investment returns increase by a factor of 9.4 percent annually. During the same period, Baylor's endowment produced an annualized return of 18.8 percent - twice the median rate. That strong showing gave Baylor the seventh-highest ranking in endowment return in the country.
A 2006 comparison with selected peer institutions shows that while Baylor's investment rate of 16.9 percent for the year was lower than those of MIT, Yale and Princeton, Baylor's rate topped that not only of Harvard, but of all Texas schools in the Big 12 Conference as well as Texas Christian University, Southern Methodist University and Rice.
Baylor's endowment also is doing better than the average market return. During the fiscal year that ended May 31, 2006, Baylor's return of 19.8 percent was more than twice the return of the Standard & Poors 500 and more than four times higher than the NASDAQ return.
Baylor President John M. Lilley said the rate of return is a critical part of achieving the university's endowment goals as envisioned in Baylor 2012.
"It is extremely important that we both increase the amount of our endowment and wisely invest the funds that have been entrusted to us," Lilley said. "High returns on our investments not only allow our endowment to grow at a much faster rate, but they provide real dollars that we can make available each year to support student scholarships and academic research. By all accounts, Jonathan Hook has done a remarkable job as our chief investment officer. Our Regents chose wisely when they brought our investment management in-house and then appointed Jonathan and his team to lead our investment efforts."