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An Analysis of University Endowment Spending

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The goal of this project is to identify the best spending rule to maximize the purchasing power of a university’s endowment, while also maintaining steady yearly spending each year. An endowment is an asset owned that should support an organization in perpetuity; in the case of most universities, it is a large sum of money that is invested in various assets, and managers decide how much to spend each year. Researchers analyze rules’ performance in various financial metrics for 1,000 economic scenarios designed to replicate annual returns earned by endowments over a 50-year period. The results of this analysis suggest that universities should calculate yearly spending from their endowment using the recursive moving average spending rule, a blend of the hybrid and moving average rules.

  • This report represents the work of one or more WPI undergraduate students submitted to the faculty as evidence of completion of a degree requirement. WPI routinely publishes these reports on its website without editorial or peer review.
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  • E-project-042720-160606
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  • 2020
Date created
  • 2020-04-27
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