Princeton Endowment Projected to Rise Less Than 5%

Princeton University’s endowment probably earned zero to 5 percent on its investments in the past fiscal year, according to President Shirley Tilghman.

The Ivy League school is expected to release returns for the year ended June 30 by next month. The endowment returned 22 percent in fiscal 2011, and 15 percent in the prior period.

“Better than we thought we were going to be, say back in January,’’ Tilghman said of the return range in an interview at Bloomberg LP’s headquarters in New York. “Clearly, after two spectacular years, we’re back on the ground again.’’

The expected return range would mean there is no cushion this year for inflation because Princeton increases its budget by 5 percent annually, Tilghman said. Foundations and endowments produced the worst returns of any institutional investor class in the year ended June 30, gaining a median of 0.4 percent, consulting firm Wilshire Associates said Aug. 6.

Princeton’s endowment was valued at $17.1 billion in June 2011. It’s the fourth-largest in higher education in the U.S. and Canada, behind Harvard University, Yale University and the University of Texas system, according to an annual survey of endowments by the National Association of College and University Business Officers and Commonfund Institute. Princeton’s endowment value dropped 24 percent in the year ended June 30, 2009, after the bankruptcy of Lehman Brothers Holdings Inc. in September 2008 crippled global financial markets.

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