Arizona schools get $225M from land trust fund

The Arizona endowment fund managed on behalf of public schools grew to record heights in April, helped by a rising stock market, even as it paid out more money than in any prior year.

The Permanent Land Endowment Trust Fund grew to $5.57 billion in assets as of the end of April, said State Treasurer Jeff DeWit, in a statement. The fund returned nearly 10.1 percent over the first 10 months of its fiscal year, which began July 1.

DeWit said the fund’s investment results outpaced those of several major university endowments, including those for Dartmouth, MIT, Stanford and Harvard, as well as returns at CALPERS, a giant pension fund for public-sector workers in California.

The Arizona fund, which is seeded from proceeds from land sales but invests in the stock and bond markets, distributed a record $225 million to schools over the first 10 months of the current fiscal year, DeWit said, exceeding payouts for all prior years.

DeWit credited internal management of the fund’s investment portfolio for helping to lower expenses. He also cited the fund’s conservative strategy over the bond portion of the portfolio. That has paid off with interest rates starting to rise.

“Rather than reach for yield in our bonds by investing long, we have kept our bond investments shorter ... to protect them from a rise in interest rates,” he said.

When interest rates rise, long-term bonds are more vulnerable to price declines than shorter-term securities.