In the 15 years since the Board of Regents established an Investment Office to manage the university endowment, the total endowment has nearly quadrupled to $9.7 billion and distributions in support of campus operations have topped $3 billion.

The investment return for the endowment in fiscal year 2014 was 18.8 percent, up from 10.7 percent a year ago. Overall the endowment grew from $8.4 billion to $9.7 billion in fiscal year 2014 on the strength of investment gains and new gifts from donors.

The university publicly launched the Victors for Michigan fundraising campaign in November 2013 with a goal of raising $4 billion.

With a 15-year annualized return of 10.2 percent, U-M sits at the upper end of the top quartile for long-term-investment performance among university endowments. Although the U-M endowment is ranked the eighth largest among all U.S. universities it ranked 94th on a per-student basis in 2013.

The figures are among those included in the university’s annual investment report, presented Thursday to the Board of Regents during a meeting on the Flint campus. That report also notes that the university’s total cash and investments as of June 30 stood at $11.6 billion.

“Long-term results are well ahead of what has been generally achievable by investing in market-traded stocks and bonds during the last 15 years,” said L. Erik Lundberg, chief investment officer.

Lundberg, who has led the Investment Office since it was established in 1999, pointed out that FY ’14 was the fourth year of double-digit investment returns in the past five years.

“This is an indication that markets in general, have fully recovered from the impact of the financial crisis and the economy is finally emerging from the subsequent Great Recession,” he said.

Lundberg also cautioned that lower rates of return could lie ahead.

“While strong investment returns are welcome, such positive performance appropriately needs to be tempered by the recognition that high current returns usually beget lower future returns as markets often get ahead of underlying fundamentals,” he said.

Distributions from the endowment that help fund university operations totaled $283 million in FY ’14, up from $276 million the previous year, said Douglas Strong, interim executive vice president and chief financial officer.

“It’s quite remarkable that, through good times and bad, the endowment continues to provide increased funding for university operations,” Strong said. “Our donors have confidence that the university will invest their donations wisely.”

The university’s endowment actually is a collection of about 8,500 separate endowment funds that provide support for specific purposes such as scholarships, educational programs or professorships. For example, roughly $2 billion, or 21 percent of the endowment, is restricted for use by the U-M Health System. Another $2 billion is earmarked for student scholarships and fellowships.

To ensure continuing support for future generations, the funds themselves are invested so part of the annual distribution can provide a steady flow of dollars each year. This long-term approach also is designed to protect and grow the endowment corpus in real terms, Strong said.

U-M annually distributes a portion of the endowment’s average market value calculated over the last seven years for operating purposes. In 2010, regents voted to gradually reduce the portion distributed from 5 percent to 4.5 percent in order to better preserve and grow the endowment over time. This reduction was fully implemented during FY ’14.

Basing the spending on a trailing average market value instead of the current market value allows the university to stabilize endowment distributions year-over-year so operating budgets are insulated from the volatility in financial markets and receive dependable support over time.