Contact: Bill Wagnon
Endowed funds managed by the Mississippi State University Foundation earned an 18.5 percent return for the fiscal year ending June 30, 1996, some 2 percentage points higher than an index of comparable investments, reports the foundation's chief financial officer.
Total return for fiscal 1996 was up from 13.2 percent the previous year, according to David Easley. The Foundation managed $80.6 million in endowment funds during fiscal 1996. The nonprofit foundation does not manage funds held by the Bulldog Club or the Alumni Foundation.
"We were thrilled to have another good year," said Easley, who also is budget and finance director for the university's Office of Development. "For the first time ever, our returns for the year were in the top 25 percent of similarly managed portfolios around the country."
Fiscal 1996 was the foundation's second full year under an investment philosophy that pursues a diversified and aggressive style and has the potential to improve long-term results.
In an attempt to maximize cash flow, investment strategy in the prior years focused heavily on fixed income instruments such as bonds and Treasury bills. The target asset mix adopted in 1994 is composed of 65 percent stocks and 35 percent fixed income investments. It is virtually the reverse of the previous approach, Easley said.
"The diversification of our investment portfolio allows us to maintain a higher equity exposure with minimal risk. This increase in equity exposure will result in a higher return over time," Easley said.
The campus beneficiaries of earnings on endowed funds currently may spend up to 5 percent of the total endowment each year. The earnings support academic scholarships, program and facility enhancements, faculty development, equipment purchases, and other activities designated by the donors. The remainder of the earnings is reinvested to help protect against the long-term effects of inflation.