Investment Policy

The primary objective of the Endowment is to maintain its purchasing power by generating a total real return, net of fees, which exceeds the spending rate over the long-term.

The spending rate target range on the Endowment is 4.0% to 5.0% of a trailing, twelve-quarter, average market value as of the quarter ending six months prior to the start of the fiscal year. The intention is for this rate to cover all expenditures from the Endowment. The specific investment goals enumerated below should be achieved through a multi-asset class portfolio, with up to 80% invested in equities. Specific goals for the Endowment and the managers are set forth below.

Total Endowment

  • Earn a total return (net of fees) equal to the spending rate plus the inflation rate (CPI) over rolling five- and ten-year periods.
  • Outperform a custom index comprised of benchmark indices for each asset class represented in the policy portfolio.
  • Outperform a peer group of other endowments.

Common Stock Managers

  • Outperform (net of fees) on an average annual basis the S&P 500 or an agreed upon relevant market index.
  • Measure performance over rolling three- to five-year periods or a market cycle, whichever is greater, but monitor on an ongoing basis to ensure consistency of investment philosophy, organizational structure, etc.

Fixed Income Managers

  • Match on an average annual basis the Lehman Brothers US Treasury Bond Index or an agreed upon relevant market index.
  • Measure performance over rolling three- to five-year periods or a market cycle, whichever is greater, but monitor on an ongoing basis to ensure consistency of investment philosophy, organizational structure, etc.

Inflation Hedging Managers

Outperform (net of fees) on an average annual basis an agreed upon relevant market index ยท Measure performance over rolling three- to five-year periods or a market cycle, whichever is greater, but monitor on an ongoing basis to ensure consistency of investment philosophy, organizational structure, etc.

Rebalancing Policy

The Endowment will have a two-pronged rebalancing strategy.

  • Cash flows (new gifts and spending) will be used to move the portfolio towards the Rebalancing Target; and
  • The transfers necessary to achieve the Rebalancing Target will be made quarterly.
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