NEW YORK (Reuters) – Yale University’s endowment fund shrank a more-than-expected 30 percent in the year ended June in the largest contraction in at least a decade, bogged down by illiquid assets that have yet to rebound in value.
The university expects to report later in September that the fund, the second largest among U.S. universities, fell to $16 billion as of June 30, 2009, according to a letter from Yale President Richard Levin and Yale Provost Peter Salovey to faculty and staff on Thursday.
“Only a small fraction of our endowment is invested in publicly traded securities, so the recent stock market rebound has not had a substantial effect on that number,” said the letter, which was obtained by Reuters.
“The bulk of our endowment remains invested in illiquid assets, which have not begun to recover their value,” it said.
Yale, located in New Haven Connecticut, will release final results later this month.
The fund totaled $22.9 billion on June 30, 2008, according to its most recent endowment report. In December, Yale had forecast that the the fund would fall to $17 billion by June.
Before last year, the fund posted double-digit gains over the preceding four years.
Yale will reduce payouts from the endowment by 6.7 percent this year and by an additional 13 percent in 2010-2011, according to the letter.
It will also slow the pace of faculty recruitment.
Yale’s endowment appears to be moving in line with other university endowment funds.
In January, the National Association of College and University Business Officers reported that while university endowments dipped by an average 3 percent in the 2008 fiscal year, they shrank 23 percent from July to November 2008.
In fiscal year 2008, the Yale fund reported a gain of 4.5 percent, or $1 billion.
(Reporting by Joe Rauch and Phil Wahba; Editing by Tim Dobbyn and Ted Kerr)