Annual Report 2008-09
KU Endowment invests endowed funds and other long-term funds collectively in our Long-term Investment Program, which includes more
than 2,700 individual funds. The value of these funds makes up 68 percent
of KU Endowment’s total assets.
Due to the severe global economic downturn, in FY09, the return on long-term investments declined 22 percent. The diversification of the investment program moderated our loss, which could have been considerably worse. Over the same time period, U.S. markets fell by more than 26 percent¹, and international markets lost more than 31 percent.² We are confident that our investment practices have positioned us well for the inevitable recovery.
KU Endowment has engaged an independent service provider since June 1988 to compare growth of long-term investments with a benchmark (spending plus inflation). Over most periods, the total return of long-term funds has exceeded the benchmark. This has enabled KU Endowment to provide a consistent level of support to the university.
¹Standard & Poor’s 500 Index; ²Morgan Stanley Capital International/Europe, Australia and Far East Index
The Long-term Investment Program is designed to maximize returns and minimize volatility. It is diversified both by asset class and within asset classes.
Seeking increased diversification and enhanced returns, the KU Endowment Investment Committee has gradually increased allocations to international equities, inflation protection and alternative investments. Alternatives include investment strategies intended to produce consistent returns with less volatility than the overall market.
Over the long term, the absolute objective is to achieve a total return that meets or exceeds the rate of inflation, measured by the Consumer Price Index, plus the Long-term Investment Program’s total spending rate. The relative objective is to achieve a total return that meets or exceeds a combined benchmark of appropriate capital market indices, weighted according to the portfolio’s target asset allocation. This chart shows the total return for the portfolio since the inception of performance measurement in June 1988.
Past performance is not necessarily indicative of future performance. Performance is net of external
investment-related expenses (e.g., managers, custodians and consultants).
