In July 1954, the University adopted the policy of investing Endowment and Quasi-Endowment funds over which it had full investment discretion in a Consolidated Investment Pool. This pooling of investments allowed for closer supervision of the investment portfolio and made available to all eligible Endowment and Quasi-Endowment Funds the advantages of participation in a diversified portfolio of investments. In 1981, the University restructured the Consolidated Investment Pool (CIP) portfolio to gain broader exposure to the capital markets, including non-traditional assets. Effective in late 1993, the University formally adopted the “total return” approach to investment management.
The University’s investment philosophy begins with the conviction that investing in securities with attractive long-term return potential outweighs short-term volatility risk. To that end, a disciplined asset allocation strategy is necessary, which includes diversification among investments not similarly affected by economic, political, or social developments. Taking these factors into account, investment decisions are made with a long-term perspective and value orientation. The University also believes that opportunities exist for managers with unique strategies and skills to add value to a portfolio, beyond that of a purely passive exposure to the market. Consequently, active management is primarily put to use in those markets that are inefficient and/or in unconstrained mandates. Working in conjunction with an outside consultant, the University looks for managers that possess a repeatable strategy, solid investment culture, emphasis on risk management, and a measurable active return stream. This approach, implemented under an active governance structure, enables the University to maintain its long-term, strategic focus and avoid the distractions of short-term market movements.
Asset Allocation is based on the long-term objectives of the Endowment. Performance is monitored on an ongoing basis, and a full, formal re-assessment of the target ratios is performed at least annually, or more often as circumstances require. Because of the Endowment’s size and institutional status, it is able to fully exploit both the public and private markets across a range of assets. The allocation as of 12/31/17 is shown below.
|Investment Grade Debt||4%|
|Natural Resources & Infrastructure||15%|