The ISU Foundation’s long-term (endowment) portfolio reported a negative return of 0.7% for the quarter ending September 30, 2023 (lagging its portfolio benchmark of a positive 0.8%). Longer-term returns are 8.9% over five years and 7.8% over ten years. The pool balance as of September 30 was $1.34 billion.
Financial markets declined during the quarter as both equities and bonds were impacted by rising bond yields. The Federal Reserve signaled the likelihood of another interest rate hike yet this calendar year along with expectations for a longer period of higher rates. Persistent inflation and positive economic data continue to drive the Fed’s monetary policies. Inflation ticked up to 3.7% from the June 30th level of 3.0%. Various headwinds continued to impact the markets, including the ongoing Ukraine war, the Israel-Hamas conflict, the possibility of another government shutdown, and slowing economic growth outside of the United States. Accordingly, virtually all asset classes were negative for the quarter, except for energy as oil prices surged nearly 30%. On a positive note, the market consensus around a recession seems to have diminished to no recession or, at the worst, a soft landing in 2024.
The foundation’s diversified and global asset allocation and investment strategy is focused on the long-term nature of the endowment. Built to minimize risk (particularly in the short-term) while maximizing return, the strategy continues to provide for long-term growth and future purchasing power while delivering current spending to the university today.
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