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Asset Management Committee: February 11, 2015

Chairman Kevin Lockett presided at the regularly scheduled meeting on February 11, 2015.  The following are reports received and actions taken:

Meeting minutes for the December 11th, 2014 Asset Management Committee were approved.

Chairman Lockett noted that the ending market value of the Endowment Pool at the end of the 2014 fiscal year stood at $474 million. This was a 30 percent increase over the previous year, placing the Foundation in the top 5 percent of all US College and Universities endowment growth in that time period.  The return of just over 19% combined with the generosity of K-State donors led to the record year.

Staff reported the return for the quarter ended 12/31/2014 was negative -1.63%, underperforming the benchmark by 1.13%. In particular, Staff noted that the Risk Overlay and exposure to Emerging and Frontier Markets equity were the main reasons for relative underperformance during the quarter. Manager selection rather than over or under weights in the strategic asset allocation led to underperformance as well. Relative to peers in the Cambridge Associates quarterly survey, with roughly half of participants responding at 12/31/2014, the Endowment Pool return is in the bottom quartile for the quarter.  All other longer term periods are at or near the median.

Staff noted that actual allocations within the Endowment Pool are near the stated target asset allocation, with no allocation greater than 2 percent from target. The portfolio is within liquidity targets as well.

Staff provided the Asset Management Committee with additional detail regarding the Risk Overlay strategy and also discussed currency exposure within the Endowment Pool. Additionally, Staff discussed the current state of Energy markets and its opinion regarding the current interest rate environment.

Staff presented the Watch-List and Risk Analytic Reports to the Asset Management Committee.

Staff discussed the Expendable Funds Pool and noted the operating balance was increased from $84 million to $90million. Staff talked with the Asset Management Committee about the current level of cash in the Expendable Funds Pool, which is mostly due to current capital projects.