Ryerson plays it safe with endowment funds

Ryerson brought in a six per cent return over the last 10 years. (Stephanie Chan / Ryersonian Staff)

Ryerson brought in a six per cent return over the last 10 years. (Stephanie Chan / Ryersonian Staff)

Ryerson prides itself on a long-term and safe investment strategy when it comes to its endowment funds. But comparisons with other universities show Ryerson is lagging behind schools with similar-sized funds that are taking riskier approaches.

Endowments are funds given to the school by donors to go towards scholarships, research and other academic programs.  Every contribution that equals $25,000 is considered an endowment, grouped into a larger pool of money and invested.

According to 2012 figures, Ryerson’s $102-million endowment fund is the 24th largest in Canada. However, it has only brought in a six per cent return over the previous 10 years.

The number is slightly less in comparison to the 6.5 per cent return at the University of New Brunswick  and much lower than St. Francis Xavier University in Nova Scotia, which vastly outpaced Ryerson with 11.2 per cent. Most Canadian universities, however, saw a return between five and seven per cent over the last 10 years.

Only the returns — or the money made every year from the investments — go towards funding for awards and programs. It is done so to ensure that the original amount is always invested and generating profit.

Janice Winton, Ryerson’s chief financial officer, said the school has chosen to go with a conservative strategy to ensure that Ryerson didn’t lose any money.

“When you look at the size of our endowment, you can see it’s quite small,” she said. “We’re at $102 million compared to U of T. They’re at $1.6 billion. So they can afford to lose some money. We can’t.”

Winton also said that she was not worried about Ryerson’s performance compared to other universities with similar-sized endowment funds.

“I’m not sure that the difference is significant,” Winston said. “They’re more comfortable with the swings than we are. We’re more steady and central and over 10 years, we’re about the same as most of our peers.”

The school entrusts its endowment to investment management firm Fiera Capital. Ryerson puts roughly half of the funds in stocks and half in bonds. The latter is considered safe because the investor is guaranteed to get back the invested amount after a certain period of time.

The school entrusts its endowment to investment management firm Fiera Capital. Ryerson puts roughly half of the funds in stocks and half in bonds. (Stephanie Chan / The Ryersonian)

The school entrusts its endowment to investment management firm Fiera Capital. Ryerson puts roughly half of the funds in stocks and half in bonds. (Stephanie Chan / The Ryersonian)

The University of New Brunswick has amounts invested in riskier bets like hedge funds and property. St. Francis Xavier University has most of its fund in stocks.

David Pennycook, Ryerson’s investment manager at Fiera Capital, said that it’s important to compare universities with similar investment breakdowns. He said this allows one to properly judge the different return targets that each school aims for.

Comparisons to universities that have a roughly 50/50 split between stocks and bonds also showed Ryerson lagging slightly behind. University of Sudbury sees a 6.1 per cent return, while Laurentian University sees a 6.6 per cent return.

“What happens is that everybody can look back over their shoulder and say, ‘I want all my money in this,’ but it’s hard to be right all the time,” Pennycook said.

Overall, Ryerson’s returns can be considered average among Canadian universities. It has reliably beaten its investment benchmarks. It has also avoided the massive lows, unlike the University of Toronto which lost almost 30 per cent of its investments in 2009.

Ryerson’s fund has grown to over $100 million as of 2013, doubling from under $50 million in 2007. The current return rate for 2014 is 14.5 per cent.

“We’ve had very good growth over the last number of years. It’s not always found that universities are doubling their endowments in short spaces of time, which we have,” said vice-president of university advancement, Adam Kahan. “So am I satisfied? I’m never satisfied. I always want more for the university.”

This story was first published in The Ryersonian, a weekly newspaper produced by the Ryerson School of Journalism, on March 19, 2014.

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