ANN ARBOR—In the same year the Victors for Michigan fundraising campaign came to a close, the value of the University of Michigan’s endowment rose to $12.4 billion, half a billion dollars more than a year ago.

Chief Investment Officer Erik Lundberg told the Board of Regents today the investment return for the university’s long-term investment portfolio, which is mostly made up by the endowment, was 6.4% in the 2019 fiscal year that ended June 30.

With a 20-year annualized return of 9.2%, U-M ranks in the top decile for long-term investment performance among university endowments, where the median annualized return is 6.3%.

This long-term performance, Lundberg said, was sufficient to sustain and grow the endowment in real terms, net of spending.

Endowment distributions—the money university units and affiliated organizations get to spend—totaled $368 million in fiscal year 2019, up from $346 million a year earlier. Endowment distributions totaled $4.7 billion over the past two decades.

The university’s endowment is actually a collection of more than 11,700 separate endowment funds that provide support for specific purposes such as scholarships, educational programs, research and professorships.

For example, roughly $2.4 billion, or 20% of the endowment, is dedicated for use by Michigan Medicine and other clinical activities. Another $2.6 billion, or 22%, is earmarked for student scholarships and fellowships.

“The positive relative performance of the long-term portfolio compared to the median endowment suggests that the investment office has added more than $3 billion since it was established in fiscal year 2000,” said Lundberg, who has led that office since its inception.

Many endowment gifts are from the university’s Victors for Michigan fundraising campaign, which wrapped up Dec. 31, 2018. The campaign raised $5.28 billion from more than 398,000 donors, and U-M became the first public university campaign to raise $5 billion in a single campaign.

The Board of Regents also approved an updated “model portfolio” for the university’s long-term portfolio, which provides investment allocation ranges for each individual asset class.

The approved model portfolio for the year ahead would be composed of 25% equities, 18% absolute return, 12% fixed income, 25% private equity and venture capital, 10% real estate, 8% natural resources and 2% cash. Within each category there is an acceptable range to allow for modest shifts throughout the year. The board also has the flexibility to adjust the ranges as new investment opportunities arise.

To ensure continuing support for future generations, the university’s endowment distribution policy, together with its long-term investment strategy, provides a steady flow of dollars each year for operations. This long-term approach also is designed to protect and grow the endowment corpus in real terms.

The U-M endowment is ranked the ninth largest among all U.S. universities and third among public universities after two university systems. On a per-student basis, U-M’s endowment has been ranked 94th, making it much smaller than many private school peers while supporting a much larger number of students.