Title of Project - University of North Carolina Wilmington

Report
Endowment Board
University of North Carolina
Wilmington
April 3, 2014
1
2
Endowment Board
University of North Carolina Wilmington
Thursday, April 3, 2014 at 3:00 pm
Masonboro Island Room, Fisher Student Center
Agenda
Welcome
Ms. Wendy Murphy
Approve Minutes of October 24, 2013
Ms. Wendy Murphy
Results of FY 2013 NACUBO Endowment Study
Ms. Roberta LaSure
Endowment Portfolio at February 28, 2014 (unaudited)
Ms. Roberta LaSure
Endowment Performance Returns through February 28, 2014
Ms. Roberta LaSure
Request for Proposal: Investment Consulting Services
Mr. Charles Maimone/Dr. Rick Whitfield
Update: BOG Approval of UNCW Request of a For-Profit
Associated Entity
Mr. Rob Hoon/Mr. Charles Maimone
Closed Session
Mr. Charles Maimone
Adjournment
Ms. Wendy Murphy
3
2013 NACUBO Endowment Study
For the Year Ended June 30, 2013
4
NACUBO Endowment Study Overview
• 835 U.S. endowments and affiliated foundations participated in the 2013
NACUBO-Commonfund Study of Endowments (NCSE)
• All data is through June 30, 2013
• The breakdown of participating institutions is by size below
Percent of total respondents
Percent of total endowment dollars
Over $1 billion
16%
10%
8%
15%
$501 million to $1 billion
$101-$500 million
20%
31%
Over $1 billion
$501 million to $1 billion
11.0%
71.6%
13.2%
$51-$100 million
$51-$100 million
$25-$50 million
Under $25 million
$101-$500 million
2.7%
0.4%
1.1%
$25-$50 million
Under $25 million
5
NACUBO Endowment Study: Average Returns of
Top Performers and Select Portfolio Sizes
FY2013 Average 1,3,5 & 10 Net Returns per NACUBO and by UNCW Portfolio
Top Decile
Top Quartile
All Institutions
All Public Institutions
Over $1 Billion
$51 Million - $100 Million
University Endowment Portfolio
Foundation Endowment Portfolio
UNC Investment Fund
TIFF Multi-Asset Fund
GMO Quality Strategy Fund
GMO US Equity Fund
1 Year
16.4
14.7
11.7
11.5
11.7
11.6
12.9
11.8
11.8
12.6
16.5
18.2
3 Year
12.1
11.7
10.2
10.3
10.5
10.0
10.8
9.4
9.4
10.5
18.8
19.2
5 Year
5.6
5.2
4.0
4.2
3.8
4.0
4.4
2.2
2.2
5.5
9.0
8.6
10 Year
7.5
7.5
7.1
7.1
8.3
6.7
9.1
n/a
n/a
9.4
n/a
7.3
6
NACUBO Endowment Study: Asset Allocation of
Top Performers and Select Portfolio Sizes
FY2013 Asset Allocations per NACUBO and per UNCW
Top Decile
Top Quartile
All Institutions
All Public Institutions
Over $1 Billion
$51 Million - $100 Million
University Endowment Portfolio
Foundation Endowment Portfolio
UNC Investment Fund
TIFF Multi-Asset Fund
GMO Quality Strategy Fund
GMO US Equity Fund
* dollar weighted
Domestic
Alternative
Equities Fixed Income Int'l Equities Strategies
28
10
18
40
22
9
19
46
16
10
18
53
19
12
19
47
13
8
17
59
33
20
20
23
34
6
12
41
12
2
8
61
14
2
10
71
28
17
27
16
86
13
100
S-T
Securitites/
Cash/Other
4
4
3
3
3
4
7
16
2
2
1
7
NACUBO Endowment Study: Spending Policy
and Long-Term Return Objectives
Spending Policy for FY2013
Total
numbers in percent (%)
Institutions Over $1 Billion $51 - $100 Million
Percentage of moving average
77
60
83
Average Percentage
4.7
4.7
4.8
Long-Term Return Objectives
Total
numbers in percent (%)
Institutions Over $1 Billion $51 - $100 Million
Have return objectives
72
61
75
Less than 5%
2
1
1
5.0% - 5.9%
9
6
10
6.0% - 6.9%
7
5
7
7.0% - 7.9%
17
12
18
8.0% - 8.9%
30
30
30
9% and over
7
7
9
Do not have return objectives
13
12
10
No answer/uncertain
15
27
15
8
NACUBO Endowment Study: Internal Chief
Investment Officer
9
NACUBO Endowment Study: Outsourced
Investment Consultant
10
ENDOWMENT PORTFOLIO INVESTMENT
STATEMENT
At February 28, 2014
Consolidated Endowment Investment Activity thru
February 28, 2014
BEGINNING MARKET VALUE
Total Endowment Funds
University Endowments
Foundation Endowments ***
Fiscal Year To-Date
7/1/13 -2/28/14
Fiscal Year To-Date
7/1/13 - 2/28/14
Fiscal Year To-Date
7/1/13 -2/28/14
$
76,009,323
$
3,818,828
167,000
(55,112)
3,930,716
$
503,674
4,818,384
2,166,953
7,489,011
DISBURSEMENTS
Annual endowment distributions
Annual administrative fees
Investment Fund Fees
TOTAL DISBURSEMENTS
ENDING MARKET VALUE
RECEIPTS
Donor Contributions
Match from General Administration
Repurposing of gifts by donors
TOTAL RECEIPTS
EARNINGS
Interest and Dividends
Realized Gains /Losses
Unrealized Gains /Losses
TOTAL EARNINGS
***
$
72,283,342
$
3,816,318
167,000
(20,866)
3,962,452
$
481,896
4,785,144
1,845,977
7,113,017
$
(2,275,653)
(575,983)
(149,110)
(3,000,746)
$
84,428,304
$
3,725,981
2,510
$
(34,246)
(31,736)
$
21,778
33,240
320,976
375,994
$
(2,207,146)
(558,911)
(141,908)
(2,907,965)
$
(68,507)
(17,072)
(7,202)
(92,781)
$
80,450,846
$
3,977,458
Includes $1,370,478 not managed by Board but by students as part of student managed investment portfolio
11
University’s Endowment Investment Activity thru
February 28, 2014
BEGINNING MARKET VALUE
Total
University
Endowment
Investments
$ 72,283,342
% of Endowment Investments
Total Pooled
Endowment
Investments
$ 69,724,700
100.0%
FISCAL YEAR TO-DATE THRU FEBRUARY 28, 2014
POOLED ENDOWMENT INVESTMENTS
State
Note
UNC
Treasurer's S/T Receivable
Investment TIFF Multi- GMO Quality GMO US
Investment
from
Fund
Asset Fund
Fund
Equity Fund
Fund
Foundation
$ 37,008,371 $ 14,189,239 $ 9,960,075 $ 5,202,875 $ 2,085,695 $ 1,278,445
53.0%
20.4%
14.3%
7.5%
-
-
3.0%
RECEIPTS
Donor Contributions
Match from General Administration
Repurposing of gifts by donors
Transfers
TOTAL RECEIPTS
3,816,318
167,000
(20,866)
$ 3,962,452
3,816,318
167,000
(20,866)
(1,000,000) (1,307,403)
$ 3,962,452 $ (1,000,000) $ (1,307,403) $
- $
3,816,318
167,000
(20,866)
2,307,403
6,269,855 $
EARNINGS
Interest and Dividends
Realized Gains /Losses
Unrealized Gains /Losses
TOTAL EARNINGS
481,896
4,785,144
1,845,977
$ 7,113,017
481,896
122,524
214,226
133,198
4,785,144
537,538
1,307,403
966,389 1,973,483
1,845,977
3,364,090
(49,889)
(462) (1,467,762)
$ 7,113,017 $ 3,901,628 $ 1,380,038 $ 1,180,153 $ 638,919 $
11,948
331
12,279 $
DISBURSEMENTS
Annual endowment distributions
Annual administrative fees
Investment Fund Fees
Promissory note payments
Purchase of real estate
TOTAL DISBURSEMENTS
ENDING MARKET VALUE
% of Endowment Investments
(2,207,146)
(558,911)
(141,908)
(2,907,965)
$ 80,450,846
(2,207,146)
(558,911)
(141,908)
(2,013,366)
(4,921,331)
(141,908)
(141,908)
-
- $
-
-
-
-
-
-
$ 75,878,838 $ 39,768,091 $ 14,261,874 $ 11,140,228 $ 5,841,794 $
100%
52.4%
18.8%
14.7%
7.7%
(2,207,146)
(558,911)
1,278,445
(2,013,366)
(3,500,978)
4,866,851 $
6.4%
12
ENDOWMENT REAL ESTATE & OTHER ASSETS
Total NonPooled
Non-Pooled
Life
Endowment Real Estate Endowed Insurance
Investments Properties Scholarship
Gift
$ 2,558,642 $ 2,531,832 $ 11,008 $ 15,802
1.8%
100.0%
99.0%
-
0.4%
0.6%
-
-
- $
- $
- $
-
-
- $
- $
- $
-
-
-
-
2,013,366
2,013,366
-
-
(1,278,445)
(1,278,445)
0.0%
$
2,013,366
2,013,366
-
$ 4,572,008 $ 4,545,198 $
100.0%
99.5%
11,008 $ 15,802
0.2%
0.3%
Foundation’s Endowment Investment Activity thru
February 28, 2014
FISCAL YEAR TO-DATE THRU FEBRUARY 28, 2014
Student Managed
Board Managed Endowments
Endowment
Total
Foundation
Endowment
Investments
BEGINNING MARKET VALUE
$ 3,725,981
% of Endowment Investments
RECEIPTS
Contributions
Transfers
TOTAL RECEIPTS
UNC
Investment
Fund
$
100.0%
State Treasurer's S/T
Investment Fund
2,127,090
$
57.1%
$
2,510
(34,246)
(31,736) $
(47,296)
(47,296) $
$
21,778
33,240
320,976
375,994
14,164
203,675
217,839
DISBURSEMENTS
Annual endowment distributions
Annual administrative fees
Investment Funds Fees
TOTAL DISBURSEMENTS
$
(68,507)
(17,072)
(7,202)
(92,781) $
ENDING MARKET VALUE
$ 3,977,458
EARNINGS
Interest & Dividends
Realized Gains (Losses)
Unrealized Gains (Losses)
TOTAL EARNINGS
% of Endowment Investments
100.0%
$
$
$
(7,202)
(7,202) $
57.5%
$
$
1,247,057
9.4%
33.5%
2,510
47,296
49,806
$
(34,246)
(34,246)
$
21,290
19,076
117,301
157,667
488
-
2,290,431
351,834
TD Ameritrade
488
(68,507)
(17,072)
(85,579) $
316,549
8.0%
$
1,370,478
34.5%
13
14
ENDOWMENT INVESTMENT PERFORMANCE
RETURNS
Through February 28, 2014
15
Endowment Portfolio Returns @ February 28, 2014
Portfolio vs. Benchmarks
UNCW Endowment Portfolio
CPI + 4.5% (spend rate)
CPI +5.75% (spend rate + admin fee)
16.0%
14.3%
Annualized Net Returns @ February 28, 2014
Return since
1 YR
3 YR
5 YR
10 YR
inception
14.3%
9.4%
10.8%
8.2%
7.7%
5.6%
6.5%
6.5%
6.9%
7.2%
6.9%
n/a
n/a
n/a
8.4%
UNCW Endowment Return vs. Benchmarks
14.0%
12.0%
10.8%
9.4%
10.0%
8.2%
8.0%
6.0%
Date
of inception
07/01/87
6.9%
5.6%
6.9%
6.5%
6.5%
4.0%
2.0%
n/a
n/a
n/a
0.0%
1 YR
UNCW Endowment Portfolio
3 YR
CPI + 4.5% (spend rate)
5 YR
10 YR
CPI +5.75% (spend rate + admin fee)
16
Endowment Fund Manager Returns @ February 28, 2014
Investment Name
UNC Investment Fund, net return
Strategic Investment Policy Portfolio (SIPP)
TIFF Multi Asset Fund (MAF), net return
Constructed Index
GMO Quality Fund , net return
S&P 500
GMO US Equity, net return
S&P 500
Annualized Net Returns @ February 28, 2014
Date
UNCW
Fund
of UNCW
1 YR
3 YR
5 YR
10 YR Inception Inception Inception
14.5%
8.8%
9.1%
n/a
9.3%
9.3% 08/01/03
n/a
n/a
n/a
n/a
n/a
n/a
12.2%
7.9%
16.6%
8.6%
7.3%
8.5%
16.8%
6.3%
8.3%
5.8%
14.6%
6.7%
18.4%
15.1%
18.4%
6.4%
25.4%
14.4%
23.0%
7.2%
19.5%
7.2%
15.1%
19.9%
5.9%
16.8%
11.3%
25.4%
14.4%
23.0%
7.2%
19.5%
11.1%
Investment Manager Allocations
GMO
22.4%
$17.0M
UNC Invest. Fd
52.4%
$39.8M
03/20/06
03/31/95
04/30/09
02/06/04
04/01/09
09/18/85
7.7%
18.3%
TIFF
18.8%
$14.3M
Date
of Fund's
Inception
01/01/03
STIF
6.4%
$4.9M
17
INVESTMENT COMMITTEE INTIATIVES
18
Background: Investment Committee Initiatives
• Results of combined efforts of Endowment & Foundation Investment
Committees over past few years:
1. Updated and revised Investment Policy Statement (IPS)
2. Systematic review of asset allocation at portfolio level
3. Refined Investment Performance Report against benchmarks
• Committees recommended UNCW staff’s next project be an assessment of
our current investment management structure relative to spectrum of
services offered in marketplace
19
UNCW Endowment at a Glance
Endowment
•
•
Total investable assets of $76M for University and $3M for Foundation
Currently utilizing “hybrid” approach
 Two outsourced CIO managed funds – UNCMC and TIFF, representing 73% of assets
• UNCW is “little fish in big pond” – receive little attention from managers
• Structure of each managed pool is a “fixed menu” – no customization
 Two direct mutual fund investments with GMO, representing 23% of assets
Endowment Board
•
•
7 Trustees
Quarterly meetings
UNCW Staff
•
VC of Business Affairs, Associate VC Finance & Director of Endowment Accounting
Catalysts For Change in Oversight & Management
Issues Facing Institutional Investors
•
•
Progressively more complex and volatile markets
Increased complexity in strategies and financial instruments
 Increased time and expertise required for proper oversight
•
•
Expectations of a potentially lower return environment
Growing emphasis on risk adjusted performance returns
Issues Facing Smaller & Mid-Size Universities
•
•
•
Limited resources to develop in-house investment capabilities
Lack economies of scale
Building donor confidence
Issues Facing University Investment Committees
•
•
•
Trustee Succession – loss of continuity as trustees roll off committees
Active asset management no longer a desirable role
Focus on governance and policy; reviewing asset allocation and performance
returns against benchmarks
20
21
Participants in Process
• Endowment & Foundation Board member participants in this process:









Britt Preyer
Edward Alexander
Steve Warwick
Hank Miller
Jason Wheeler
Chad Paul
David Hartness
Charles Mattox
Robert Keith
• UNCW Staff participants in this process:
 Vice Chancellor for Business Affairs
 Associate Vice Chancellor for Finance
 Director of Endowment Accounting
22
Request for Information (RFI)
• UNCW issued Request for Information (RFI) in July, 2013 to conduct
assessment and gather relevant information on the spectrum of
investment consulting services offered in marketplace
• UNCW staff reviewed all 40 responses and recommended on-campus visits
from 3 firms whose core client base consist of higher education
institutions, who offer full range of discretionary services, and who are not
a subsidiary of a larger holding company
• Visits from following (3) firms completed on January 15, 2014:
 Fund Evaluation Group
 Hirtle Callaghan
 Cambridge Associates
23
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24
Three Common OCIO Models
Single commingled
fund
Multiple commingled
funds
Multiple direct investments
Ex: UNCMC, TIFF
No ownership of
managers
Complex
administration
Cash in / cash out
Not Customized
Fully Customized
25
Next Steps: Request for Proposal
• Investment committee members and other Board
participants recommended issuing a Request for
Proposal for outsourced Chief Investment Officer
(CIO) services with full discretion
26
Endowment Board
University of North Carolina Wilmington
Thursday, April 3, 2014 at 3:00 pm
Masonboro Island Room, Fisher Student Center
Agenda
Welcome
Ms. Wendy Murphy
Approve Minutes of October 24, 2013
Ms. Wendy Murphy
Results of FY 2013 NACUBO Endowment Study
Ms. Roberta LaSure
Endowment Portfolio at February 28, 2014 (unaudited)
Ms. Roberta LaSure
Endowment Performance Returns through February 28, 2014
Ms. Roberta LaSure
Request for Proposal: Investment Consulting Services
Mr. Charles Maimone/Dr. Rick Whitfield
Update: BOG Approval of UNCW Request of a For-Profit
Associated Entity
Mr. Rob Hoon/Mr. Charles Maimone
Closed Session
Mr. Charles Maimone
Adjournment
Ms. Wendy Murphy
27
Endowment Board
University of North Carolina Wilmington
Thursday, April 3, 2014 at 3:00 pm
Masonboro Island Room, Fisher Student Center
Agenda
Welcome
Ms. Wendy Murphy
Approve Minutes of October 24, 2013
Ms. Wendy Murphy
Results of FY 2013 NACUBO Endowment Study
Ms. Roberta LaSure
Endowment Portfolio at February 28, 2014 (unaudited)
Ms. Roberta LaSure
Endowment Performance Returns through February 28, 2014
Ms. Roberta LaSure
Request for Proposal: Investment Consulting Services
Mr. Charles Maimone/Dr. Rick Whitfield
Update: BOG Approval of UNCW Request of a For-Profit
Associated Entity
Mr. Rob Hoon/Mr. Charles Maimone
Closed Session
Mr. Charles Maimone
Adjournment
Ms. Wendy Murphy

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