NKU Endowment AA

The NKU Foundation manages the university's endowment. The definition of an endowment is a gift given by a donor that restricts what can be done with the resources. Usually, the principle is not to be touched.

At the recent RISE conference, I attended an interesting session on endowment management and learned some specifics about the Rutgers endowment and how its investment portfolio was allocated.

Similar info can be found for NKU's endowment, as the foundation produces a variety of reports for stakeholders.

The last annual report for the endowment was issued 6/30/10. In terms of financial securities (cash and investments, but not counting loans, land, and promised donations), the endowment manages about $65 million. That includes about $9 million that the Foundation manages for NKU at large, so the actual endowment part of the portfolio is more like $55-56 million.

The endowment breaks down its $55 investment portfolio (page 14), but that does not include the bulk of its $10.7 million in cash shown on the balance sheet. It appears that the reporting convention is that cash is not an investment class.

To get a feel for overall asset allocation, I added that cash to the investment portfolio. Here's how the asset allocation (cash plus investments) maths out (in $ thousands):

cash $10,754 (16.4%)
fixed income $11,264 (17.2%)
equities $28,313 (43.1%)
hedge funds $8,531 (13.0%)
alternative assets $6,015 (9.2%)
other $795 (1.2%)
total $65,672

Alternative assets are said to include private equity, venture capital, real estate, and real assets. Would guess 'other' includes these as well--and perhaps some credit instruments as well. If we add, hedge funds, alt investments, and other, we get a total of 23.4% allocated to broad 'alternative investments.'

At the end of 2010, the foundation issued this report that summarized overall investment fund performance on a percentage basis. It also reports annual portfolio performance for the past decade. Not surprisingly, the fund experienced some losses in 2008, 2009.

It also reports an allocation toward equites of about 68%--much higher than the 6/30/10 annual report. This suggests that either the investment managers increased commitment to stocks in late 2010, or something's getting lost in the translation.