Tennessee Tech’s endowment appreciated 16.6 percent over the past decade, surpassing the average of 12.8 percent at the nation’s top schools. Over that same time period, Tennessee Tech’s investment returns also frequently bested S&P 500 averages.
“While we’ve been conservative and consistent over the past decade with our investments, that philosophy has led us to a return rate that rivals the top universities in the nation,” said Paul Isbell, TTU’s vice president for University Advancement.
For the 2004 calendar year, TTU’s return came in at 16.4 percent, well above the S&P 500’s 10.8 percent. The previous year, the university achieved a more than 40 percent return compared to the S&P 500’s 26.38 percent.
Bruce Silver of New York City’s Silver Capital Management manages the portfolio that includes stocks and bonds. Silver is the university’s first and only money manager outside the institution. Many universities hire administrators to manage endowments, rewarding them with a portion of the profits, but no administrator gains financially at TTU, a public institution.
“We are consistent, disciplined and focused with the university’s investments,” said Silver. “Our investing is done with significantly less risk than the overall market experiences.”
“We buy stocks at attractive valuations,” he explained. “Many come with low expectations and few friends, but the reward speaks for itself.”
Isbell credits Silver with listening to the needs and concerns of a public institution and staying true to its conservative investment philosophy.
“Every penny our donors contribute to endowments is professionally managed,” said Isbell. “Because we’ve picked a management company whose strength is in low-risk investments, we tend to suffer less when times are bad and stay well situated to take advantage when times are good.”
Of the almost $40 million in total endowments held by the university, Silver manages $33.8 million. The remainder is divided among TTU’s Chairs of Excellence investments with the state and in the local government investment pool.
University endowments are created to ensure money is perpetually available for the scholarships they support. When a principal sum of money — for example, $10,000 — is donated for an endowment that money is invested and only a portion of the return is actually spent on the scholarship. The $10,000, plus a portion of the earnings, remains untouched to make sure there is money available to weather the market’s ups and downs.