The Investment Committee is comprised of UConn alumni with a diverse set of experience in the financial services and investment industry, allowing the Foundation to create an asset allocation program at the forefront of endowment management best practices. We successfully compete against our peers with the best advisor and management talent in the market.
The UConn Foundation Investment Process
The UConn Foundation is evolving to embrace and define best-practices in endowment management by implementing innovative strategies across both its public and private portfolios. Through a combination of forward-thinking investment tactics and comprehensive risk management, the Foundation can not only meet its current financial objectives but also positions itself to thrive in the future.
By adopting best practices in portfolio construction and governance, the Foundation is positioned to successfully compete with its larger peers.
Risk Management & Governance: A Comprehensive & Structured Approach
The UConn Foundation’s success is underpinned by evolving its governance and risk management framework to be more robust and precise. This comprehensive approach ensures that investment decisions are aligned with the Foundation’s long-term objectives, while also providing multiple layers of oversight.
The governance process begins with the origination of investment ideas by its public and private market advisors, who act as independent resources for the Foundation staff and Investment Committee (“IC.”) These ideas are then vetted by the Foundation’s staff, who work closely with external advisors to assess risk and alignment with the Foundation’s overall portfolio strategy. This is followed by a review and due diligence from a working group of the IC, which includes both staff and advisors, before a full vote by the IC. This structured, multi-step process ensures that every investment decision is thoroughly evaluated, minimizing risk and maximizing alignment with the Foundation’s long-term goals.
The construct of the IC is an important element of the Foundation’s portfolio oversight. The current IC is composed of UConn alumni with both public and private markets experience in a diverse range of roles from portfolio managers to executives and administrators. All of the major asset classes (equity, credit, and real assets) are represented on the IC, which also benefits from the participation and perspective of non-financial experts as well as a non-voting member from a large endowment management team. Working groups to diligence specific ideas are assembled to leverage the expertise of individual IC members, which provides the broader IC with more comprehensive information prior to the approval of a new investment strategy, manager, or fund.
Risk management in the public portfolio involves hedging strategies like Buffer ETFs, which provide protection against market downturns while capturing growth. In the private portfolio, risk is managed through liquidity scenario analyses, commitment pacing, and diversification across asset classes and managers. Stress tests on both public and private portfolios are regularly conducted to ensure the Foundation can meet future cash flow needs and that the overall portfolio remains resilient during market downturns.
By making calculated adjustments to hedge fund allocations, introducing new asset classes like cryptocurrency and Buffer ETFs, and managing its exposure to underperforming or volatile assets, the UConn Foundation uses its size to its benefit. Its ability to swiftly reallocate resources in response to market changes—whether through redeeming positions in underperforming funds or reallocating cash flows to fixed income—exemplifies adaptability in managing a diverse portfolio under changing market conditions.
The Foundation’s focus on maintaining a balanced and well-governed approach to both public and private assets demonstrates its commitment to long-term sustainability. By actively managing risk, ensuring liquidity, and making informed investment decisions, the Foundation is building a durable investment model that will endure changes in the market, the board, and the IC.
A Strategic, Forward-Thinking Approach to Both Public and Private Assets
The endowment’s asset allocation is designed to create top-tier performance over the long-term while maintaining the necessary liquidity to support the University and the Foundation. We utilize best practices in manager selection and risk management to create a return profile that can exceed our investment mandate and preserve endowment gift values over time.
Public Assets: Innovative & Proactive Strategies
The UConn Foundation’s public asset strategy reflects its commitment to balancing growth with risk mitigation. The public portfolio is diversified across equities, fixed income, and smaller allocations to cash and alternative investments. This diversification is key to the Foundation’s approach, ensuring it is well-positioned to navigate different market environments.
The Foundation’s decision to utilize Buffer ETFs to hedge its passive equity exposure is a critical innovation in its public portfolio. These ETFs offer upside participation in equity markets while providing downside protection, a crucial strategy in volatile market conditions. The Foundation has strategically rotated out of high-fee hedge funds into these lower-cost, risk-adjusted solutions, which has reduced overall costs while maintaining exposure to market growth. Additionally, the Foundation regularly rebalances its public equity exposures to capture outperformance and protect against market corrections, reflecting a proactive and dynamic approach to asset management.
By reducing the volatility of the public equity portfolio, the Foundation can take a measured approach to cryptocurrency that represents a thoughtful balance between innovation and caution. With a target allocation of 1.5% of the portfolio and plans to annually rebalance this position based on volatility thresholds, the foundation illustrates how an institution can thoughtfully engage with emerging asset classes while managing risk.
Beyond equities, the Foundation manages a portion of its fixed-income portfolio as a liquidity reserve, ensuring that it has the flexibility to meet obligations in both its support of the Foundation’s mission and the funding of its private asset commitments. This strategic liquidity management allows the Foundation to be an opportunistic buyer during market downturns, taking advantage of the long-term nature of the assets under management.
Private Assets: A Strategy for Long-Term Value
Private assets are a central pillar of the UConn Foundation’s portfolio, with a focus on private equity and an opportunistic approach to private credit, real assets, and infrastructure. The Foundation’s partnership with Stepstone Group (SSG) has been crucial in improving performance in this area. Previously, investments in private assets through fund-of-funds strategies yielded lower returns. Since engaging SSG, the Foundation has shifted to direct investments with top-quartile managers, producing significant alpha over its ACWI benchmark.
The Foundation currently targets a 40% allocation to private equity, with a strategic (long-term) allocation of 35%. This strategy reflects the decision to take the majority of its equity risk in private markets, where illiquidity premiums and the potential for outperformance offer attractive long-term returns. Commitments to private equity have increased in recent years, especially in areas like venture, growth, and buyout investments. These commitments are expected to deliver returns that will help the Foundation exceed its CPI+ mandate while maintaining lower volatility than its 70/30 public benchmark.
In addition to private equity, the Foundation is selectively expanding into other private asset classes, including private credit and real assets, providing diversification and exposure to different return streams. SSG plays a key role in identifying top-tier managers in these sectors, ensuring the Foundation’s portfolio remains both resilient and poised for growth.
A significant portion of the Foundation’s private asset strategy also focuses on managing pacing and liquidity. The Foundation’s consistent contribution and distribution scheduling ensures that private assets remain a net contributor to overall portfolio growth. By maintaining a careful balance between public and private assets, the Foundation ensures it can meet its financial obligations while also capturing the benefits of long-term private market investments.