Tufts’ long term assets see return of 3.7%, endowment grows in 2020 fiscal year

Ballou Hall is pictured on Oct. 10. Anna Steinbock / The Tufts Daily

Tufts’ Total Return Pool, where a majority of the university’s long-term assets are invested, saw a return of 3.7% for the fiscal year 2020. The endowment grew from $1.91 billion at the end of FY 2019 to $1.94 billion at the end of FY 2020, according to Tufts’ Annual Financial Report. 

Craig Smith, co-chief investment officer ad interim, wrote in an email to the Daily that this return met the university’s expectations. 

“In any given year, the performance of the primary endowment portfolio (the ‘Total Return Pool’ or “‘TRP’) will be heavily influenced by global capital market returns,” he said. “On a one-year basis, the best assessment of the TRP performance is relative to its reference benchmark, which returned 3.0% for the fiscal year. For context, broad global equity markets returned 2.1% during this period.”

According to Smith, the TRP grew from approximately $1.98 billion to $2 billion during the 2020 fiscal year.

Each year, the value of the TRP changes due to investment returns, new gifts to the endowment, and annual distributions from the TRP to support the university’s operations and mission,” Smith said. 

The university’s Annual Financial Report disclosed that $1.7 billion of that $2 billion belongs to the endowment. 

Smith explained the different ways in which the endowment and the revenue generated from its investments impact the university and its students. 

“One hundred percent of funds from the endowment work to support the university’s good works and its mission of being a student-centered research university dedicated to the creation and application of knowledge,” Smith said. 

He said scholarship funds and professorships are prime examples of the impact university investments can have on the larger community. 

Tufts is currently carrying out a fundraising campaign called Brighter World: The Campaign for Tufts. 

“The campaign, now approaching the middle of its eighth year, has raised about $1.1 billion in new achievement (which includes both cash and pledges) towards an ambitious goal of $1.5 billion by end of fiscal year 2023,” Eric Johnson, senior vice president for university advancement, wrote in an email to the Daily.

Johnson explained that although the campaign is unrelated to the endowment’s investments like the TRP, it does contribute to the total endowment.

Smith explained how the value of most capital markets fell from February to March but recovered soon after and have even continued to rise. Consequently, Tufts’ endowment assets have increased.

“Beginning in late March, stimulus actions taken globally by central banks and governments led to a swift recovery in capital markets, though most markets still ended the fiscal year well below February market highs,” he said. “While not immune to significant capital market declines, the long-term investment strategy in the endowment allowed the TRP to weather this period well.” 

Smith added that economic and investment risks linked to the pandemic still continue, as COVID-19 cases rise and unemployment may remain at a heightened level.

Johnson said the Brighter World campaign has had to adapt to the current circumstances and challenges introduced by the pandemic. 

“The challenges posed by [COVID-19], which has prevented travel and in-person events since March, have slowed the pace of fundraising this year,” he said. “But with 74% of the campaign timeline elapsed, we have reached 72% of our overall goal, only a little behind our target pace.” 

Johnson mentioned how the pandemic has affected engagement and communication.

“The economic disruptions, social upheavals and stresses caused by [COVID-19] and political dynamics have also inhibited fundraising,” he added.  “Nevertheless, the staff has adapted quickly to virtual tools.”

Earlier this year, Tufts announced a hiring and salary freeze due to economic challenges brought on by the COVID-19 pandemic in an April 14 message to university employees signed by University President Tony Monaco, Provost and Senior Vice President Nadine Aubry and Executive Vice President Mike Howard.  

According to James Hurley, vice president for finance and treasurer, the increase in endowment and the 3.7% return from the TRP will not affect any hiring or salary freezes.

“The hiring and compensation freezes were among a number of measured and strategic actions taken to reduce costs in some areas to balance rising COVID-related costs in other areas, such as those associated with testing, PPE and other safety measures, the cost of the Mods, and increased financial aid, to name a few,” Hurley wrote in an email to the Daily. “The combination of these measures has enabled the university to keep its budget balanced to date.”