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Asset Management Committee 12-1-16

The Asset Management Committee on  December 1, 2016. Chairman Stephen Lacy presided. Actions taken and topics discussed included the following:

  • Staff provided a Point of View for the Endowment Pool and presented the current strategic allocation and actual allocation of the Endowment Pool and discussed the returns of the Expendable Funds Pool.

  • Chairman Lacy provided an overview of the materials provided to the Committee. Reports were provided to the Committee on the Current Endowment Pool portfolio positioning and the February topical discussion topic preview (Expendable Funds Pool).

  • Meeting minutes for the September 21, 2016 Asset Management Committee teleconference meeting were then approved.

  • Staff then gave an overview of its Private Capital exposure within the Endowment Pool. Topics included current and future allocations, the portfolio construction role played in the Endowment Pool, performance review, fee analysis, sourcing and diligence of prospective managers, ongoing diligence of existing managers, and examples of internal reporting. Staff then commented on how it plans to use Private Capital going forward in regards to re-balancing.

  •  Staff Cox presented the current Investment Policy for the Endowment Pool with a recommended minor change to the liquidity guidelines. Staff also provided the current Investment Policy for the Expendable Funds Pool with no proposed changes. 

  • The committee reviewed a follow-up presentation from Board retreat and September AMC meeting. It was noted that as state support trends lower and university needs trend higher, there is a need for increased philanthropic support.  Discussion ensued regarding expected lower investment returns being forecasted over the next ten years, which could lead to the inability to sustain the endowment at the current distribution rates.  Options discussed to consider how to sustain the endowment included lowering the endowment management fee, lowering distribution to purpose, increasing fundraising to endowment, adding new revenue source(s), or altering investment strategy, presumably adding more risk.

  • Staff then provided information on a previously-considered option of establishing an Investment Management Company to be considered by the Committee. Staff then briefed the committee on Phase II of the KSU Office Park. The AMC will be asked in its February meeting to consider a portion of the Expendable Funds Pools to be used for Phase II bridge financing.