KU Endowment Association posts big losses

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LAWRENCE, Kan. (AP) -- Leaders of the University of Kansas Endowment Association are predicting that investment returns for the fiscal year that just ended are likely to be among the worst in recent memory.

For the fiscal year ending Tuesday, association officials said its investments likely will post a 20 percent loss when final accounting is completed.

In the past three years, the association's long-term investment program averaged a 9.7 percent growth rate. Since 1988, it has averaged a 10.3 percent growth rate.

"Certainly the financial crisis we've experienced in recent months was broad enough that it affected every asset class," said Dale Seuferling, president of the Endowment Association. "There really was nowhere to hide to avoid that downturn."

The association is waiting to see if it will remain one of 77 university endowment associations that have endowments greater than $1 billion. Last year, the value of all the association's assets was $1.52 billion.

Jeff Davis, senior vice president for investments for the association, said he believed the total value of the assets will stay above $1 billion this fiscal year. But he said it was too early to predict whether the value of endowed funds -- $1.21 billion last year -- will remain above $1 billion.

Endowment leaders say they believe the group has done its best to maintain value while Wall Street suffered through a major downturn.

"I think our performance is pretty much in line with our peers," Davis said.

He said during the first 11 months of the fiscal year, the association's rate of return was a 22 percent loss. During the same time, endowments of more than $1 billion suffered a median decline of 19.9 percent, according to a study by Northern Trust Universe.

Unlike some other large endowments, the Kansas association has avoided borrowing against its holdings to make additional investments.

"I think what we've done here is taken a very long view of those sorts of investments," Davis said. "We decided to proceed very cautiously."

Still, Seuferling said this year's results were the worst he remembers since he joined the association in 1981. In 2002, after the technology bubble burst, the association posted a loss of 7.9 percent.

"You hoped you wouldn't see those type of returns in the same generation, but this definitely topped that," Seuferling said.

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Information from: Lawrence Journal-World, http://www.ljworld.com