The Johns Hopkins University Financial Report 1996

The Johns Hopkins University
Financial Report 1996

Investments

The University's investment assets at June 30, 1996, had a fair market value of over $1.2 billion. Endowment funds represented $983 million of these assets. These funds are held in over 1,600 individual endowment accounts managed by the University in accordance with donor-designated intentions. The majority of these endowment assets are invested jointly in the Endowment Investment Pool, which had a fair market value of $874 million at June 30, 1996.

The Endowment Investment Pool is managed with the objectives of attaining:

  • an average annual return, over a full market cycle, that is 4.0% above the rate of inflation

  • a ranking in the top quartile of a broad database of plan sponsors

    • For the year ended June 30, 1996, the Pool produced a return of 17%, which easily met the fund's real return objective and ranked it in the second quartile of a peer group of institutional portfolios. The improvement in the Pool's return in fiscal year 1996 as compared to fiscal year 1995 is directly attributable, in large part, to a decision made by the Trustee Committee on Investments to increase the fund's allocation to domestic equity assets and to the general outperformance of domestic equity assets in fiscal year 1996 compared to fixed income and international equity assets. Endowment Investment Pool Asset Allocation

    June 30, 1996 June 30, 1995
    Equities
       Domestic 39.4% 31.9%
       International 12.9 12.7
    Fixed Income 35.2 40.4
    Special Investments 9.0 10.6
    Cash and Equivalents 2.1 2.7
    Miscellaneous 1.4 1.7
    Total 100.0% 100.0%

    On a longer term basis, the Pool's compound average annualized return for the five-year period ending June 30, 1996, of 13% also far exceeded the fund's real return objective and ranked in the top third of its peer group of institutional portfolios. Notably, when the level of risk involved in achieving these returns is considered, the Pool's June 30, 1996, five-year risk-adjusted return ranked in the top decile of these portfolios.

    With regard to the performance of the Pool's individual investment managers, the domestic equity managers as a group, including the Special Investments portfolio, outperformed the S&P 500 Index in fiscal year 1996 with a combined return of 29% versus 26% for the Index. The Pool also received above-index performances from its international equity and fixed income managers. The two international equity managers had a combined annual return of 19% compared to a Morgan Stanley Capital International Europe, Australia, and Far East (EAFE) Index return of 13%. The Pool's single fixed income manager had an annual return of 6.5% versus a Lehman Brothers Government/Corporate Index return of 4.7%.

    During 1996, the University made a decision to increase its exposure to the large- capitalization growth style of domestic equity management by replacing a value-style domestic equity portfolio with two new large capitalization growth-style domestic equity managers and directing an existing growth-style manager to divide its portfolio into separate large-cap and mid-cap growth portfolios. These changes increased the number of separate domestic equity portfolios in the Pool to 7, bringing the total number of separately managed investment portfolios in the Pool to 11. The Pool's domestic equity exposure now includes both the growth and value styles of domestic equity management and all ranges of market capitalization.

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