* Endowments seen reporting more tepid returns
* Returns hurt by weaker international equities
* Harvard and Yale to announce results soon
By Svea Herbst-Bayliss
BOSTON, Sept 21 The University of Pennsylvania
said on Friday that its endowment gained 1.6 percent during the
2012 fiscal year, giving a first glimpse at what analysts say
will be weaker returns at many of the nation's top colleges and
Penn said its endowment stood at $6.8 billion at the end of
June, up from the $6.58 billion reported a year ago when the
school earned an 18.6 percent gain on its assets.
Fellow Ivy League schools Harvard and Yale, which both
reported double-digit investment returns last year, are expected
to release their numbers soon.
Fiscal 2012's results will be much weaker than the past
year's gains, analysts forecast, citing Europe's lingering debt
crisis, which has weighed on international stocks.
Modest returns at some of the country's biggest public
pension funds already have foreshadowed what likely happened at
endowments as well, analysts say. The California Public
Employees Retirement System and North Carolina's state pension
fund each reported low single-digit gains.
Kristin Gilbertson, Penn's chief investment officer, said
the university benefited most from illiquid alternatives like
real estate, natural resources and private equity, which were
the year's top performers.
All asset classes except for international equities and
emerging markets posted positive returns, she said.
The bulk of the school's assets are invested in the
Associated Investments Fund.
This year's more modest returns come only a few years after
many pension funds and endowments lost billions of dollars
during the financial crisis. Penn said its endowment has been
above its pre-crisis high-water mark since 2010.
Even more attention will be focused on how Harvard
University, the world's richest school with a $32 billion
endowment, when it reports its results. In July, Jane Mendillo,
who oversees the school's endowment as chief executive of
Harvard Management Co, said it may increase its natural resource
investments as a way to grow the endowment.
Returns at Harvard and Yale, whose endowment reached $19.4
billion last year, have long been studied in the investment
industry for clues about new trends, particularly after both
schools were among the first to make big investments in hedge
funds and private equity funds.