3 Dear Alumni and Friends, When you believe in something, you want it to last; and to make something last, you invest in it. You endow it. The university — and all of us — may have lived through the historic challenges of 2020 and 2021, but because of our commitments to the endowment and to each other, Lehigh endures. We have weathered the uncertainties of the pandemic, and much of Lehigh’s current stability can be attributed to the strength of the endowment. Building on our strong financial foundation, much work is underway. The capital building projects of the past few years are coming to life as the Health, Science, and Technology building opens its doors to interdisciplinary researchers and faculty and students in the College of Health. Students, back on campus for a residential experience this fall, are living in the Singleton, Hitch, and Maida Houses. We’ve welcomed a new president in Joseph J. Helble ’82, himself a graduate of the P.C. Rossin College of Engineering and Applied Science. We are able to look forward because of you: Your generous support to the endowment is what allows us to reach this moment with not only financial security but momentum. Thank you for your generosity over the years and for your steadfast commitment today. The Lehigh that we know, which has served us so well, exists because of all of us. As chair of the Tower Society, I thank you, and I am honored to stand among you. In the following pages, you will see how Lehigh continues to grow and thrive. You will get an update on GO: The Campaign for Lehigh, as well as a bird’s eye view of everything your gifts make possible across campus and details on the endowment’s current financial position. We have so many things to be grateful for: our students, our community, and for the tomorrow we all make possible. Thank you for everything you do for this great university. Go Lehigh! With warmest regards, Mike Caruso ’67 Chair, Tower Society Dear Alumni and Friends, The endowment earned +35% for fiscal year 2021, net of all fees. The fiscal year was a remarkable period with the portfolio generating over $575 million in investment gains, resulting in an ending endowment value of $1.8 billion. All asset classes generated significant positive performance during the period with the exception of the treasury portfolio, which was marginally negative due to increasing rates. The portfolio’s strong performance was driven by private equity, which returned +70%, and public equity, which returned +40%, for the fiscal year. Within private equity, venture capital and growth equity were the top performers. Our exposure to both of these areas has meaningfully increased over the last several years as we continue to see a tremendous pipeline of largely technology focused startups with highly attractive growth potential. Looking forward, we expect the significant growth in endowment assets to provide us with greater flexibility in our asset allocation to take advantage of illiquidity premiums in private markets. While investors were rewarded for equity exposure during the year, we were encouraged to see returns in the midteens for our diversifying asset classes, including absolute return and real estate. These investments are meant to provide a consistent return, uncorrelated to broader equity markets. Real estate, in particular, saw a rebound from 2020 lows led by investments in industrial and multifamily assets. We continue to increase our exposure to uncorrelated opportunities where we can generate an attractive return that is less reliant on equity markets or rates. As we enter fiscal year 2022, we remain vigilant of the current market environment which is characterized by elevated valuations in equity markets as well as compressed yields in credit markets, all impacted by the extraordinarily low-rate environment. We remain nimble by maintaining a cash balance that allows us to take advantage of market volatility while also hedging our overall market exposure. Thank you for your ongoing support of the Lehigh endowment and the very important role it plays in advancing Lehigh’s strategic priorities and programs. Kristin Agatone Chief Investment Officer Cover: Back to in-person learning after the COVID-19 pandemic interrupted the 2020-21 academic year, students and faculty alike were eager to return to tackling the world’s most complex challenges. Here, tomorrow’s civil engineers get the hands-on experience that distinguishes their exceptional Lehigh education.
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