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Endowment Performance

MSU Common Investment fund (cif) Report and Comparative Endowment Performance

Over the last 10 years, the MSU Endowment has more than doubled in size and was valued at $2.3 billion as of June 30, the end of the 2015/16 fiscal year. Over that time, the endowment has given more than $750 million back to the university in the form of student scholarships, endowed professor support, program support, and funds to the general budget.

For the fiscal year ending June 30 we returned -4.3%, below the median return of our peers. The university is not a short-term investor, and while it was a very disappointing year, our long term performance remains above the median of our peers and has continued to allow us to meet our funding obligations to the university.

MSU Common Investment Fund -4.3% 5.1% 4.7% 5.5%
Median College and University Endowment (1) -1.7% 5.7% 5.7% 5.2%

Investment Objectives of the CIF

  1. Achieve a total rate of return sufficient to generate the amount annually made available for spending by the MSU programs supported by endowment funds.
  2. Provide a modest increase in the inflation-adjusted value.
  3. Achieve the desired return while assuming only moderate risk.

On January 1, 2016, the MSU Investment Office was created. Read a message from Chief Investment Officer Philip Zecher to learn about MSU’s endowment management approach.

Endowment Spending Policy

The programmatic spending rate currently stands at 4.8 percent of a 20 quarter average of the market value of those funds invested in the CIF. The spending rate is reviewed annually against the projected long-term CIF returns and the impact of inflation and was reduced from 5.0 percent in 2016. The rate is intended to protect against inflation and provide a modest increase for endowment growth.

Reasonable and appropriate investment fees will continue to be charged against the endowment. On December 10, 2010, the MSU Board of Trustees amended the endowment spending policy to authorize annual assessments of up to 1 percent of the market value of these endowments in the CIF for reasonable and appropriate endowment stewardship costs, including fundraising. Based on recommendations of the Investment Advisory Subcommittee, an endowment stewardship charge of .59 percent of the available 1 percent was implemented in the 2011/12 fiscal year, and the charge remained unchanged through the 2015/16 fiscal year. The stewardship charge was reduced to .55 percent beginning in the 2016/17 fiscal year.

Returns above the programmatic spending rate and investment and stewardship charges are retained to grow the endowment and hedge against inflation. A hypothetical $100,000 endowment established July 1, 2007 would now have a market value of approximately $103,000 as of June 30, 2016 after having provided programmatic spending distributions approximating $52,000 over the 10-year period.

Asset Allocation

MSU seeks to achieve its investment objectives by diversifying across major asset classes as well as within each asset class. The investment policy, approved by MSU’s Board of Trustees, outlines the asset allocation. Approximately 240 different investment vehicles are now used to invest the funds. Cambridge Associates serves as MSU’s investment consultant.

Chart of endowment CIF asset allocation

Endowment Size and Comparison

Chart of total endowment market value (MSU and MSU Foundation)
Chart of endowment market value across the Big Ten

Benchmark Returns


MSU Common Investment Fund and Key Economic Indicators
Annualized return MSU commom investment fund vs. key economic indicators.
  MSU CIF 70/30(2) CPI-U(3)
2007 19.0% 19.6% 2.7%
2008 1.6% -4.0% 5.0%
2009 -17.5% -18.9% -1.4%
2010 11.3% 11.8% 1.1%
2011 21.3% 22.4% 3.6%
2012 -3.2% -1.6% 1.7%
2013 12.1% 11.6% 1.8%
2014 17.1% 17.6% 2.1%
2015 3.7% 1.5% 0.1%
2016 -4.3% -0.3% 1.0%


MSU Common Investment Fund and Peer Institutions
Annualized return MSU commom investment fund vs. peers.
  MSU CIF Big Ten Mean Peer Institution Mean(1)
2007 19.0% 20.5% 20.0%
2008 1.6% -3.2% -2.5%
2009 -17.5% -21.2% -20.3%
2010 11.3% 12.8% 12.3%
2011 21.3% 22.4% 21.1%
2012 -3.2% 0.0% 0.6%
2013 12.1% 12.1% 11.6%
2014 17.1% 16.7% 16.5%
2015 3.7% 3.1% 3.6%
2016 -4.3% n/a -2.5%

The CIF 10-year annualized return was 5.5%, the 70/30 10-year annualized return was 5.2% and the CPI-U 10-year annualized return was 1.7%. For quarter by quarter investment return information and copies of MSU’s investment policies, please visit the MSU Investment Office website.

For More Information

For more information on the investment of MSU’s CIF and related endowments, please contact Dr. Philip Zecher, chief investment officer of the MSU Investment Office at (517) 355-5018.

If you would like more information on establishing a new endowment through a gift to MSU, please contact Robert Groves, vice president for University Advancement, at (517) 884-1000, or contact the development officer in the unit you wish to support.


(1) Per Big 10 + Peer Benchmark Survey compiled by The Pennsylvania State University Office of Investment Management
(2) 70% Morgan Stanley Capital Int’l All Country World Index/30% Bloomberg Barclays US Aggregate Bond Index
(3) CPI-U = Consumer Price Index for All Urban Consumers