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Investment returns place St. Olaf among top 5 percent of colleges nationally

By Amy Gage
March 17, 2005

St. Olaf had a near-record rate of return for its endowment investments during the 13-month period of June 2003 to June 2004, according to the annual endowment study by the National Association of College and University Business Officers (NACUBO).

The NACUBO study examines the average annual compound returns for 747 colleges and universities across the country. St. Olaf's investment return placed it among the top 5 percent of all institutions in the country.

St. Olaf recorded a 20.9 percent return, during a period when the average school return was 12.4 percent to 17.9 percent, according to Mark Gelle '76, assistant treasurer at St. Olaf.

As of March 17, 2005, the endowment was valued at $227 million. "Relative to our peers, we don't believe we have ever done this well," he says.

Gelle attributes the strong rate of return to the strength of the Board of Regents' investment subcommittee, whose 12 members include Regent Addison "Tad" Piper, chairman of Piper Jaffray in Minneapolis; Regent Mark Yost '86, president of Intrinsic Capital Partners in Chicago; and John Clymer, regional chief investment officer for U.S. Trust Co. in Minneapolis.

Clymer is one of several non-Regents on the subcommittee who provides a valuable external voice, Gelle says.

The college's relatively new relationship with Hammond Associates, an institutional-fund consulting group based in St. Louis, Mo., has likewise contributed strongly to the endowment's success, Gelle says.

Hammond has helped "opened doors" to fund managers who "have been nothing short of spectacular," he adds. The endowment was valued at only $131 million when the college hired Hammond Associates in September 2002.

"We're managing our money well," says Gelle, whose duties include executing the decisions of the Board of Regents' investment subcommittee.

Still, he adds, Hammond consultants have told St. Olaf officials that further substantial growth in the endowment "will have to happen more on the fund-raising side than the investments side."

"Ensuring Our Future," an article in the January 2005 issue of St. Olaf Magazine, outlined the challenges for St. Olaf as it attempts to boost its endowment to a size comparable with that of peer colleges.

St. Olaf currently divides its endowment assets among six categories: U.S. equities, 40 percent; international equities, 26 percent; fixed-income tools or bonds, 15 percent; real assets, such as real estate, 7 percent; hedge funds, 7 percent; and private equity, 5 percent.

Contact David Gonnerman at 507-786-3315 or gonnermd@stolaf.edu.