Princeton University’s endowment lost 1.7% on its investments during the latest fiscal year, its second straight negative return and the worst annual performance in the Ivy League with most schools reporting.

The culprit for the negative return was poor performance in venture capital, compounded by an attempt to hedge against that result, said Andrew Golden, president of the Princeton University Investment Co., which manages the fund. The value of the endowment declined to $34.1 billion at the end of June, the New Jersey school said Wednesday.

The results at Princeton extended a string of low returns at the largest college endowments even as the S&P 500 jumped 18% during the same period. Many of the richest funds have been hit with falling investment values in alternative assets such as private equity and venture capital. Endowments with less than $500 million, which typically invest more heavily in US stocks, have outperformed their larger peers, according to Wilshire Trust Universe Comparison Service, which doesn’t name individual schools.

Princeton is especially reliant on its endowment, which distributed $1.6 billion to the university in the latest fiscal year. Earnings from the fund provide about two-thirds of the school’s net annual operating revenue, a share that has grown from a third in 1997 and is larger than at Harvard and Yale.

Endowment funds at Princeton covers more than 70% of the financial-aid budget for undergraduates, “which has supported the university’s efforts to increase the socioeconomic diversity of the student body,” the school said in a statement.

Princeton’s annual investment performance was the lowest in the Ivy League, with seven of eight schools reporting results, while its 10-year annualized return ranked third. Cornell University’s fund has yet to report investment returns.

No endowment in the Ivies came close to matching the S&P 500. Still, the big funds typically don’t benchmark themselves against the broad stock index but rather choose a mix of assets that reflect their long-term risk tolerance. Over the last few decades, they have moved to more sophisticated investments such as hedge funds and venture capital instead of plain vanilla US equities.

Until the latest year, Princeton’s returns have been driven by private equity holdings, in which venture capital is the largest allocation. While private equity was down 11% at the endowment during the 12 months ending in June, the asset class rose 7.5% the year before, which helped mitigate an overall investment loss. The 10-year return for private equity at Princeton’s fund was 19%.

Golden, who took the reins at Princeton’s investment company in 1995, is retiring in June.  

This article was provided by Bloomberg News.