Asset Management Committee
Chairman Richard Myers presided at the regularly scheduled teleconference meeting on May 13, 2013. In addition to the regular performance monitoring reports, the following are a few of the reports received and actions taken at the teleconference meeting:
- Staff presented recommendations for the Inflation Sensitive allocation custom benchmark to improve the benchmark, as recommended by the consultant in the recent asset allocation study. The committee approved replacing the artificial benchmark of the CPI + 5% with a custom benchmark composed of 70% Dow Jones UBS Commodity Index and 30% EPRA NAREIT Developed Index. The custom benchmark is more reflective of the underlying investments in the Inflation Sensitive allocation.
- Staff reviewed proposed changes to the distribution policy, as recommended by the Finance and Audit committee. The changes to be presented to the Board will finalize the distribution policy rates for the 2014 fiscal year.
- Staff also reviewed the status of the underwater endowment reserve pool study, which is ongoing.
- Foundation CEO Fred Cholick announced the retirement of CIO David Weaver; Weaver will enter phased retirement July 1 and fully retire December 31, 2013. Lois Cox will assume CIO responsibilities on July 1. Rounding out the investment team, Roy “Rush” Harvey will be joining the foundation staff July 1 as the investment officer. Rush previously served as Vice President-Senior Investment Analyst at Envestnet|Prima located in Denver, Colorado.
- Endowment pool annualized returns for the periods ending 3/31/2013 were 10.86%, 7.98%, 2.99% and 8.89% for the one-, three-, five- and 10-year periods respectively. The endowment pool outperformed the custom benchmark in the one- and three-year periods and underperformed in the five- and 10-year periods. Importantly, the pool also outperformed the absolute objective of returning more than the total of distributions, expenses and inflation over a ten-year period, returning 8.89% versus the absolute benchmark of 8.44%. While a few individual endowed accounts remain underwater, the pool as a whole is no longer underwater as it exceeds the historic contributed book value by 1.7%.
If you are interested in learning more about the status of the endowment and the policies and procedures utilized in managing all KSU Foundation assets, please visit the foundation Web site at www.found.ksu.edu/ and click on “Our financials” then “Investments