Investments stable despite economy

February 25, 2008 —

In spite of recent economic downturns, University investment strategy will not change.

Beginning in 2006, the nation entered into a financial situation known as the Subprime Mortgage Crisis. While the crisis began with subprime loans, or those given to individuals with less than ideal qualifications, it quickly started to infiltrate other areas of the economy. Now all types of corporations, investors, and lenders, including the University, are beginning to feel the effects.

"The overall financial market is volatile," Vice President of Administration and Business Affairs Jim Muladore said. "It obviously has had a negative impact on the University and the University foundation, as it has caused declining market values for securities we've invested in."

Additionally, Muladore said that the current financial crisis has had a large impact on the issuing of bonds for building project on campus.

Although he admits that the market conditions are rather unsettling, he maintains that the University will not adjust their investment strategy, but rather will stay in the market and continue investing as usual.

"We'd clearly prefer otherwise, but we take a long-term view and our investment strategy will stay the same," Muladore said. "We're staying the course."

The University currently invests in a wide range of equities, bond funds, international equities, hedge funds, and short-term cash investments.

The funding for these investments comes from a variety of sources, including donations, cash flow from tuition, and fees that are invested on a short-term basis.

"Other sources provide some funding, but the largest source for investment funds is gifts and donations from private individuals," Muladore said.

The process of deciding on how to invest University money is complex and depends on the sort of investment under consideration.

"University and University foundation investments are governed by investment policy," Muladore said. "Some investments are made by the Foundation Investment Committee, and other investments are made by the Office of Administration and Business Affairs."

The money that results from the investments made by the University contributes to both the general fund budget and several other projects on campus, including future investments.

"Investment earnings benefit the University community directly. They provide support for scholarships, endowed faculty chairs, and several academic programs and awards," Muladore said.

Though many people may not realize the effect that investment earnings have on them as members of this campus community, Muladore asserts the importance of the money raised in regards to financial operations around campus.

"If we didn't have the investment earning funds, it would certainly be pretty noticeable."