Asset Management Committee: June 8, 2016Chairman Stephen Lacy presided at the regularly scheduled meeting on June 8, 2016. The following actions were taken:
Meeting minutes for the February 19, 2016 Asset Management Committee were approved.
Staff began by providing an Executive Summary to the Committee, summarizing the status of investments for the Endowment Pool and Expendable Funds Pool.
Staff gave a brief market overview and noted that it’s concerned about global equity valuations and is being very cautious in regards to allocating capital outside of normal re-balancing. Staff is of the opinion that active management will be crucial in the coming quarters and years and believes volatility will continue and capital preservation will be crucial going forward.
Staff provided an overview of the asset allocation of the Endowment Pool and highlighted the current underweight positioning in Deflation Hedge and Inflation Hedge assets and an overweight in the Diversifiers assets. Staff discussed target allocations versus actual allocations for the Endowment Pool and Staff’s views on rebalancing the portfolio in the current market environment.
Staff introduced the September topical discussion, which will be Long/Short Equity.
Hamilton Lee, consultant with Cambridge Associates, presented an overview of what Cambridge Associates expects in regards to its market outlook going forward. Lee also discussed how the Endowment Pool compares to peers and noted that the current asset allocation is very similar to larger institutions. Lee noted that the current distribution to purpose from the Endowment Pool is in line with most mid-size institutions and that most mid-size institutions assess some additional administrative fee on the endowment on top of spending. Lee noted that earning a real return higher than the distribution rate may be difficult going forward. Lee did note that the Endowment Pool is better positioned than most peers to weather a low-return environment going forward.
Staff provided background on the Trust Management Advisory Group’s recent decision to postpone the initiation of new trusts pending further review and meetings with the new proposed trustee.Staff also provided the Trust Management Advisory Group Charter as it relates to the Asset Management Committee’s responsibilities.
Staff then gave an overview of its fund of fund due diligence process. Topics included sourcing and diligence of prospective managers, ongoing diligence of existing managers, and examples of internal reporting. Staff then commented on how it reports to the Asset Management Committee and its ongoing effort to improve its investment process.
Staff discussed organizational priorities and presented the Kansas State University Foundation’s vision, mission, strategic objectives, values and operating principles as well as a matrix relating to the topics the Board wishes to address during the next fiscal year. Priorities include sustainability of the Endowment Pool. The Endowment Pool Distribution Formula was reviewed.
Staff reviewed the salary and non-salary budget recommendations. The recommendations were approved by the Asset Management Committee.
Staff gave the Asset Management Committee peer comparison data for the 2015 fiscal year. Staff commented on short and long term results of the Endowment Pool relative to multiple peer groups and data sets. Staff also discussed distribution policy and asset allocation relative to multiple data sets.