Introduction
The objectives and policies of The University of Connecticut Foundation, Inc. for the investment of gift assets support the provision of a reliable income stream to the University while maintaining the real, inflation-adjusted value of the gifts and minimizing risk. Endowments are permanent; therefore, the Foundation invests with a long-term view.
 "Asset Allocation") |
 "Asset Allocation") |
| Pooled Investment Asset Allocation (Updated June 30, 2009) |
Asset Growth (Updated June 30, 2009) |
How Investments are Managed
The Investment Committee of the Foundation's Board of Directors oversees the investment of assets, hires professional investment managers, monitors performance and compliance with objectives, and recommends policies to the Board. Committee members, most of whom are UConn alumni, are recognized leaders in the investment industry with specialties ranging from emerging markets to high-yield bonds to international securities. Members generously volunteer their time and expertise to assure best business practices of investment management are followed. Members have also given generously of their own money for the benefit of UConn, further illustrating the depth of their commitment to the University.
Investment Guidelines
The Investment Committee adheres to specific guidelines for the pooled investment portfolio. This is a dynamic process, as target allocations for each asset class in the portfolio are reviewed and adjusted at least annually. The investment guidelines adhere to a broad policy approved by the Board of Directors.
| Investment Allocation Range Objective/Strategies |
Allocation Range as Percentage of Market Value |
|
Growth (1) |
40% - 85% |
| High yield fixed income | 0% - 10% |
| Global equities – high beta | 20% - 60% |
| Private capital | 0% - 20% |
| Long/short equities | 0% - 15% |
| Global macro strategies | 0% - 10% |
| Event driven strategies (ex diversified) | 0% - 10% |
| Real estate (public & private) | 0% - 10% |
| Other opportunistic | 0% - 10% |
|
Inflation hedge (2) |
5% - 25% |
| TIPS | 0% - 10% |
| Natural resources/commodities | 0% - 15% |
| Other inflation hedging strategies | 0% - 10% |
|
Risk minimizing (3) |
5% - 40% |
| Investment grade fixed income | 0% - 20% |
| Relative value/Event driven (diversified) | 0% - 15% |
| Cash equivalents | 0% - 10% |
| Other low volatility strategies | 0% - 10% |
Additional parameters
Maximum portfolio volatility: 12%
(annualized standard deviation for rolling 12-quarter returns)
Liquidity minimum equal to net outflows + 1% of portfolio market value (outflows include spending allocations, administrative fees, manager and consulting fees, and capital calls)
Manager allocation maximum
Publicly traded and liquid assets: 20%
Other: 5%
(1) Growth is defined as volatility >5%
(2) Inflation hedging is defined as having correlation to unexpected inflation >= 0.5
(3) Risk minimizing is defined as volatility <=5%
The Investment Committee will establish specific tactical allocation targets and ranges for each objective and strategy within the ranges approved by the Board. The Investment Committee will select investment vehicles and managers consistent with the Board approved strategic asset allocation policy.
The Board of Directors must approve any changes to this policy. Additionally, Foundation staff continually monitors the portfolio for compliance with the established allocation guidelines. Each professional investment manager hired by the Foundation is scrutinized for compliance with the investment mandate for which they were hired and for adherence to prescribed risk tolerances. Managers regularly come before the Investment Committee to discuss their portfolio and expectations. The Investment Committee replaces or adds investment managers as appropriate.
Endowment Spending Policy
The amount of funds allocated for expenditure for the purposes for which an endowed fund was established (“spending allocation”) will equal four and one-quarter percent (4.25%) of the rolling prior 12-quarter average unitized market value of the long-term pooled investment portfolio, multiplied by the number of units held by each endowed fund on the calculation date. The spending allocation will be transferred to the endowed fund spending account in equal quarterly installments on the first day of each quarter in the fiscal year following the calculation date.
In the event that the sum of the calculated spending allocation plus the calculated endowment administrative fee (“total endowment expenditures”) is less than three percent (3%), or greater than six and one-half percent (6.5%) of the current market value of the endowed fund, then the spending allocation and the endowment administrative fee will be proportionally increased or decreased such that the total endowment expenditures is increased to three percent (3%) or reduced to six and one-half percent (6.5%) accordingly.
Endowment Fees
All contributions to The University of Connecticut Foundation, Inc. are assessed certain administrative fees that are used to support Foundation operating expenses, as well as other priority needs determined by the school, college or unit receiving the gift.
A three percent (3%) contribution fee is applied to all gifts to endowed funds. Endowment funds are also subject to an annual endowment administrative fee of one and one-quarter percent (1.25%), based on the rolling prior 12-quarter average unitized market value of the long-term pooled investment portfolio, multiplied by the number of units held by each endowed fund on the calculation date. The full endowment administrative fee, as calculated, will be transferred to the Foundation’s operating funds in equal quarterly installments on the first day of each quarter in the fiscal year following the calculation date.
The contribution and administrative fees shall be applied to support the Foundation’s mission. For purposes of monitoring the long-term purchasing power of your endowment contribution, our accounting policies exclude the amount assessed as the contribution fee from your original gift value, unless you object by contacting us at the address below within thirty (30) days of the date of your gift.
The endowed contribution fee cited above are in effect as of February 1, 2009. The spending allocation and endowment administrative fees cited above are in effect as of January 1, 2009. All policies are subject to periodic review and amendment by the UConn Foundation Board of Directors.
Contact
Kevin Edwards
Associate Vice President of Treasury Services
860.486.1203
kedwards@foundation.uconn.edu
