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Market instability still hurting EIU Foundation endowment
Loss could have been worse, but scholarships and grants may suffer
Krystal Moya / Administration Editor
Issue date: 3/2/09 Section: News
The Eastern Illinois University Foundation endowment, which plummeted throughout 2008 because of the economic crisis, is now suffering from the harsh investment climate that has continued into 2009, the foundation board of directors learned at its meeting on Friday.
After the investment committee's presentation, foundation members admitted that scholarships and grants for students could be significantly affected, but since the market is so unstable, there are no formal numbers as to what will be lost on the side of students.
As administrators, committee leaders and investors sat in the Neal Welcome Center, Elizabeth Monticelli, associate director of consulting for Hammond Associates, an external institutional fund-consulting group hired by the foundation, warned the board to be weary of the woeful market.
Monticelli pointed out that the endowment fared better than other investment portfolios.
"As I said before, the only place safe is if you took the cash out of your investments and stuck it under your bed," she said. "However, in 2008 we did come out with stronger returns than the less diversified portfolio."
Over 2008, the endowment dropped 27.5 percent, but still remained ahead of the less diversified portfolio, which lost 31.7 percent.
A three-year snapshot showed the endowment at a loss of 7.1 percent and 0.6 percent for a five-year snapshot. The ten-year period was the only period that showed gain at 3.5 percent.
However, if those figures are compared to the less diversified portfolio, the ten-year period would have lost 0.2 percent, the five-year 2.1 percent and the three-year 8.6 percent. Monticelli explained that because of investment diversification, the endowment suffered much less than it could have.
She also described investment strategy suggestions to make the most out of the dismal global equity market in 2009.
"We want to focus on liquidity so that you will have the funds for spending needs over the next year and selectively increase risk exposure in the equity markets," she said.
These and more strategies specific to markets and types of investments were outlined in a board report put together by Monticelli and associate consultant Alex Hammond.
How 2009 will fare is subject to the very unstable markets and how moves to risky equities pay off, Monticelli said.
Without appreciation and return on the endowment, Foundation Vice President Jeffery Scott said scholarships and grants would suffer.
"We need to think about next year," he said. "The losses we have endured will affect scholarships, unless we have appreciation.
"What scholarships will be lost? We need to begin to make those students who will lose thousands of dollars aware. Those that lose $25 won't obviously have to adjust so much, but those that lose more need to prepare to find other funds for next year."
The Scholarships and Grants Committee made no mention of what scholarships and grants would be affected by the endowment's loss. Formal numbers and specifics on those items have not been released.
The Foundation distributed more than $790,000 in scholarships and more than $1.1 million in grants to the university in 2008 prior to the decline of the endowment.
Krystal Moya can be reached at 581-7942 or at ksmoya@eiu.edu.
After the investment committee's presentation, foundation members admitted that scholarships and grants for students could be significantly affected, but since the market is so unstable, there are no formal numbers as to what will be lost on the side of students.
As administrators, committee leaders and investors sat in the Neal Welcome Center, Elizabeth Monticelli, associate director of consulting for Hammond Associates, an external institutional fund-consulting group hired by the foundation, warned the board to be weary of the woeful market.
Monticelli pointed out that the endowment fared better than other investment portfolios.
"As I said before, the only place safe is if you took the cash out of your investments and stuck it under your bed," she said. "However, in 2008 we did come out with stronger returns than the less diversified portfolio."
Over 2008, the endowment dropped 27.5 percent, but still remained ahead of the less diversified portfolio, which lost 31.7 percent.
A three-year snapshot showed the endowment at a loss of 7.1 percent and 0.6 percent for a five-year snapshot. The ten-year period was the only period that showed gain at 3.5 percent.
However, if those figures are compared to the less diversified portfolio, the ten-year period would have lost 0.2 percent, the five-year 2.1 percent and the three-year 8.6 percent. Monticelli explained that because of investment diversification, the endowment suffered much less than it could have.
She also described investment strategy suggestions to make the most out of the dismal global equity market in 2009.
"We want to focus on liquidity so that you will have the funds for spending needs over the next year and selectively increase risk exposure in the equity markets," she said.
These and more strategies specific to markets and types of investments were outlined in a board report put together by Monticelli and associate consultant Alex Hammond.
How 2009 will fare is subject to the very unstable markets and how moves to risky equities pay off, Monticelli said.
Without appreciation and return on the endowment, Foundation Vice President Jeffery Scott said scholarships and grants would suffer.
"We need to think about next year," he said. "The losses we have endured will affect scholarships, unless we have appreciation.
"What scholarships will be lost? We need to begin to make those students who will lose thousands of dollars aware. Those that lose $25 won't obviously have to adjust so much, but those that lose more need to prepare to find other funds for next year."
The Scholarships and Grants Committee made no mention of what scholarships and grants would be affected by the endowment's loss. Formal numbers and specifics on those items have not been released.
The Foundation distributed more than $790,000 in scholarships and more than $1.1 million in grants to the university in 2008 prior to the decline of the endowment.
Krystal Moya can be reached at 581-7942 or at ksmoya@eiu.edu.
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