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After a severe 21-percent drop in its value last year, University officials announced this afternoon that the University’s endowment rebounded somewhat in the past year, growing 12.3 percent.

The growth, from $6 billion to $6.6 billion as of June 30, 2010, begins the recovery from last year’s $1.6 billion loss. However, the figure leaves much more to gain back before the University’s long term portfolio is back to its 2008 level, when the endowment reached an all time high of more than $7.6 billion.

The return is higher than expected by University officials like Tim Slottow, the University’s executive vice president and chief financial officer, who told the regents in June that he was predicting an 11.5 percent return on the endowment investments.

The return is on par with what several other universities across the country have experienced, putting the University in the top quartile of investment returns for the year.

The University of Virginia saw a 12.5 percent return on its endowment this year, helping to offset its 21-percent loss last year. Similarly, Harvard University gained 11 percent on its endowment this year, which helped make back losses it suffered in 2009 when it lost 27.3 percent of it’s value. And Yale University saw an 8.9-percent bump this year on its endowment, which fell by 24.6 percent last year.

To protect itself from volatility in the market, University officials implemented a seven-year rolling average in 2006 that averages the endowment’s most recent 28 quarterly statements to determine the value on which the endowment’s payout is calculated. The long-term approach of the calculation helps smooth out peaks and valleys in the endowments value — protecting the University from volatility in the endowment’s value, as it did when the endowment values across the country fell last year.

The University’s Board of Regents also approved a proposal over the summer that will lower the rate of endowment spending — taking it down a half percent from a 5 percent annual distribution to a 4.5 percent annual distribution. The measure is being implemented gradually to ensure that the total dollar amount distributed does not fall during implementation.

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