“The Foundation continues to have excellent returns on its investments due to several factors like excellent domestic money managers, non-U.S. equity managers, and managers of alternate investments who have done an outstanding job in market assessment of its prospects over a long-term period for making profitable investments.”
— Joyce Hagen, Treasurer of the UofL Foundation
Investment Performance Highlights
Due to the prudent investment strategy of the Foundation, the University of Louisville’s total endowment performance has been ranked in the top performance quartile relative to other endowments for each of the last 5 years. According to Cambridge Associates, LLC, an investment consulting firm, the University of Louisville’s annualized net return since January 1, 1990 is 11.9%. That ranks the endowment in the 12th percentile of the 184 non-profit endowments (including colleges and universities) that are tracked by Cambridge Associates, LLC.
The investment strategy involves mitigating the market risk by maintaining a diverse investment pool through the use of target asset allocation guidelines. These guidelines maintain that the Foundation’s investment pool be made up of a variety of publicly traded fixed income and equity securities, private equities and other non-marketable securities and real estate investments.
The Foundation’s investment objective is to preserve the principal of the endowment funds both in absolute and real terms while reasonably maximizing the total rate of return. Realizing this objective, the Foundation’s Board of Directors determines the portion of the total return, which then may be expended. The approved spending policy establishes that 5.5% of the three year moving average of the Combined Endowment Fund market values as of December 31 can be made available for spending in the subsequent fiscal year. In September 2008, the Foundation Board approved a resolution increasing the assessment for development, alumni relations and support services to 1.98%. The majority of the long-term investments are kept in the Combined Endowment Fund, which serves as the general endowment pool for the Foundation. The Foundation’s investment strategy allows for the average annual return over the long term to equal the rate of inflation plus the average level of spending from the Combined Endowment Fund. The rate of inflation is measured by the Consumer Price Index.
“The Foundation aids many student enrichment programs that wouldn’t normally be funded by the University. It is instrumental in augmenting the educational experience of the students by funding endowed chairs, graduate assistants and scholarships. It also plays an important role in the Bucks for Brains program by raising private gifts to match every state dollar dedicated for endowed chairs, professorships and increased research activities.”
–Mike Curtin, Vice President of Finance for UofL, and Assistant Treasurer for the Foundation
“The Foundation acts as a repository of the funds, which are invested wisely. The returns are used to support the university’s programs. The Foundation’s disciplined and diversified investment strategy has helped it in maximizing the return on the endowment, which has been in the top performance most of the time relative to other endowments, providing a higher return to the University on a regular basis, which in turn places it in the top tier among similar universities. This performance is maintained in the bear as well as bull markets.”
–Burt Deutsch, Chair, Finance Committee of the Foundation, and Vice Chair of the Foundation