Annual Report 2007-08
Assets and investments
The value of KU Endowment’s total assets, according to audited financial statements, dropped to $1.52 billion in 2008, a decrease of 2.9 percent from the previous year. Marketable securities compose 82.7 percent of KU Endowment’s total assets; the balance is made up primarily of real estate owned by KU Endowment, loans to KU students and faculty, and outstanding pledges.
The value of KU Endowment’s total assets represents the book value of assets plus the unrealized gain or loss on marketable securities. It does not include unrealized appreciation on real estate or other special holdings. This unrealized appreciation is included in the market value of total assets, which decreased 2.1 percent in 2008. The market value of endowed funds changed to $1.22 billion,
a 1.7 percent decrease from 2007.
Long-term investments
KU Endowment invests its endowed funds and other long-term funds collectively in its Long-term Investment Program, which includes more than 2,700 individual funds. The value of these funds makes up 71 percent of
KU Endowment’s total assets.
Our goal is to provide a stable stream of support for the university from one generation to the next. In keeping with our long-term perspective, we invest our endowed, or permanent, funds with the intent that they will grow steadily over time.
In FY 2008, the return on long-term investments was negative 2.6 percent, following four years of double-digit positive returns. Compared to the broad economic downturn, this was a modest decrease, thanks to the investment program’s diversification. These periodic and unpredictable declines are part of the market’s investment cycle.
KU Endowment has engaged an independent service provider since June 1988 to compare growth of its long-term investments with a benchmark (spending plus inflation). Over most periods, the total return of long-term funds has exceeded the benchmark. This performance has enabled KU Endowment to provide a consistent level of support to the university.
Growth of a $100,000 endowed fund
Invested in the Long-term Investment Program (1988-2008)
A $100,000 endowed fund established in June 1988 (when independent measurement of performance began) would have grown to $249,184 as of June 2008. During the 20-year period, the fund also would have provided $162,664 in support for KU.
Asset allocation
The Long-term Investment Program is designed to maximize returns and limit volatility.
It is diversified both by asset class and within asset classes.
To further diversify program investments and to enhance returns, the KU Endowment Finance Committee has gradually been increasing allocations to international equities, inflation protection and alternative investments. Alternatives include investment strategies designed to produce consistent returns with less volatility than the overall market.
