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Portfolio > Investment VIPs

Cornell Endowment Posts 3.3% Loss, Worst Among Ivies So Far

By Janet Lorin

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Cornell University’s endowment posted an investment loss of 3.3 percent, the worst among Ivy League schools that have reported their annual results.  To try to boost performance, the school plans to move its investment office to Manhattan to attract professionals unwilling to relocate to the campus in Ithaca, New York’s Finger Lakes region, Cornell said in a statement Thursday. The fund’s value declined 3 percent to $6.1 billion for the year ended June 30.  

More than a dozen university endowments with assets of more than $1 billion have reported investment declines as they struggled with volatile markets. Endowments with more than $500 million lost a median 0.73 percent, according to the Wilshire Trust Universe Comparison Service. The data, from fund custodians, is gross of fees, while most schools report returns including fees. Cornell in the statement didn’t disclose strategies the endowment used or performance by asset class.

“We recognize the importance of the endowment for the university’s financial interests and its research, faculty and students,” Donald Opatrny, chairman of the investment committee, said in the statement. “Moving forward we are proactively examining, given this low-return environment, how to optimize the endowment.”

(Related: Why Yale Keeps Beating Harvard in the Endowment Game)

Cornell has struggled with its returns and leadership. Cornell had the lowest annual performance and 10-year annualized return in the eight-member Ivy League in fiscal 2015. Many endowments, including Ivy members Harvard University, University of Pennsylvania and Dartmouth College, posted investment losses for fiscal 2016. 

Potential Candidates

Cornell’s new chief investment officer, Kenneth Miranda, began in July and is the fourth person to head the fund since 2010. The shift of the investment office from Ithaca to New York by late 2017 is in the “long-term interest” of Cornell, he said in a statement.

“The investment committee believes over the long term the relocation to New York City gives us even better access to potential staff who might not be willing to move to Ithaca,”  Joanne DeStefano, Cornell’s executive vice president and chief financial officer, said in the statement. “We’ve had great staff hires, but this move will expand the population of potential candidates. And it puts us closer to the world capital markets.”

Any increased costs associated with the relocation, including rent and salaries, will be offset by the greater returns from the endowment, DeStefano said.

“The cost of the office versus a 10 basis-point increase in our endowment return more than covers it,” she said.

Cornell’s fund size ranks sixth in the Ivy League, larger than Dartmouth and Brown University. The school’s 10-year annualized return through June 2015 was 7.2 percent.

So far for fiscal 2016, only Yale has posted an investment gain at 3.4 percent among the eight schools. Princeton, Brown and Columbia haven’t yet reported returns.

— Related: Why Yale Keeps Beating Harvard in the Endowment Game

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