The bankruptcy of some of the nation’s most renowned creditors and the plummet of major U.S. stocks has marked a severe economic decline in the United States, but officials say UH is doing OK.
University officials said although the condition of the economy will without a doubt affect the University of Houston System financially, measures have been taken to make sure its financial repertoire remains resilient enough to combat these economic hard times.
"The economic issues facing the U.S. are impacting the performance of the capital markets in the U.S. and abroad – markets in which our funds are invested," University of Houston Treasurer Raymond Bartlett said.
As of Aug. 31, the University of Houston System reported having $203 million invested in bonds, $84 million in the endowment and $119 million in operating funds.
For the 12 months ending Aug. 31 the UH System endowment had an estimated return of -5.39 percent.
Barlett said the return compared favorably to the Dow Jones Industrial Average Index, which marked a return of -11.35 percent, the S’P 500 Index return of -11.14 percent and the MSCI EAFE Index return of -14.41 percent.
For the eight months ending Aug. 31 the fixed income for the non-endowed funds returned 3.17 percent, which performed better than its benchmark of 2.35 percent.
Although data for the month of September is still being retrieved, Bartlett said UH officials have taken the necessary precautions to ensure the UH System does not suffer the full extent of an anticipated economic decline.
"The University of Houston System Board of Regents has taken important steps to diversify the portfolio over the course of the last 18 to 36 months in expectation of a climate change such as we are facing today," Bartlett said.
For the same eight-month period bonds were reported to outperform University equities as the Lehman Brother Aggregate Bond index rose 2 percent.
"The bond portfolio remains high quality and has minimal exposure to those financial sector companies making recent headlines," Bartlett said.
Bartlett said even though UH officials cannot estimate how long the economic downturn will last, the financial condition of UH’s endowment has proved stable over time.
"We believe that the endowment’s financial condition has historically reflected strength and is capable of withstanding and adjusting to future economic uncertainties," Bartlett said.
BAILOUT PLAN -Proposed by Treasury Secretary Henry M. Paulson Jr., the bailout will grant the U.S. government $700 billion to buy out troubled mortgages.
-After the U.S. Treasury purchases the distressed mortgages it will attempt to resell them to investors.
-In addition to the $700 billion, an estimated $85 billion bailout will be needed for insurance company American International Group. Source: The New York Times
