Although I havn't reported in some time on my "porfolio challenge" (aka an independent school endowment held entirely in gold bullion, just for the fun of it), I wanted to provide a year-over-year comparison, given that we recently closed the fiscal year 2010-11.
The stats from June 30, 2010 (one year ago):
June 30, 2010 marked the end of the first fiscal year of my portfolio challenge. As a reminder, my fictitious endowment for Independent Academy is based on holdings of 2,500 troy ounces of gold. My figures from the past year are as follows:
Starting Dollar Value as of 6/30/2009: $2,321,250 (New York close of $928.50/oz.)
Dollar Value as of 12/31/2009: $2,741,250 (New York close of $1,096.50) +18.1% from 6/30/09
Dollar Value as of 3/31/2010: $2,781,500 (New York close of $1,112.60) +19.8% from 6/30/09
Dollar Value as of 6/30/2010: $3,106,000 (New York close of $1,242.40) +33.8% from 6/30/09
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At that time, we did the following:
1. Annual Draw. As promised we will take 4.5% of the US Dollar value of the corpus and sell that many ounces of gold. Based on a New York Spot close on 6/30 of $1,242.40, our endowment was valued at $3,106,000.
SOLD: 112.5 oz = $139,770
Endowment Balance = $2,966,230 [2,387.5 oz. of gold bullion]
2. Annual Purchase, based on 15% of Annual Fund donations. Our Annual Fund brought in $500,000, 15% of which equals $75,000.
BOUGHT: 60.4 oz. of gold
Endowment Balance = $3,041,230 [2,447.9 oz. of gold bullion]
June 30, 2011 marked the end of the second fiscal year of my portfolio challenge. As a reminder, my fictitious endowment for Independent Academy is based on holdings of 2,447.9 troy ounces of gold. My figures from the past year are as follows:
Dollar Value as of 6/30/2010: $3,106,000 (New York close of $1,242.40) +33.8% from 6/30/09
Dollar Value as of 6/30/2011: $3,672,584 (New York close of $1,500.30) +18.2% from 6/30/10
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A return of 18% is pretty good, given the state of the economy! Independent Academy has done well. Now, two matters remain before we launch into the third fiscal year of an endowment based entirely on gold bullion.
1. Annual Draw. As promised we will take 4.5% of the US Dollar value of the corpus and sell that many ounces of gold. Based on a New York Spot close on 6/30/11 of $1500.20, our endowment was valued at $3,672,584.
SOLD: 110.2 oz = $165,266
Endowment Balance = $3,507,018 [2,337.2 oz. of gold bullion]
2. Annual Purchase, based on 15% of Annual Fund donations. Our Annual Fund brought in $500,000, 15% of which equals $75,000.
BOUGHT: 50 oz. of gold
Endowment Balance = $3,581,277 [2,387.2 oz. of gold bullion]
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Looking Ahead to FY 2011-12
1. Our ounces of bullion are diminishing, yet our dollar value of the endowment corpus is increasing. Don't you find that interesting? The dollar buys less than it did, which you can see in our purchases of bullion: we're not buying as many ounces as before.
2. It may make sense to change our policy, so that we always maintain a "balance" of 2,500 troy ounces of gold. However, word to the wise: that may become prohibitively expensive.
3. If you haven't believed me before, in terms of my own work and presentations on endowment -- including paying special attention to inflation, can you see it now? How do schools deal with that?
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