Board of Trustees of the Endowment
Fund of UNCW
October 15, 2015
Page 2
Agenda: Thursday, October 15, 2015
Welcome
Mr. Michael Shivar
Approve Minutes of November 20, 2014 and April 16, 2015
Mr. Michael Shivar
Review of Endowment Portfolio & Performance for FY 2015
Ms. Roberta LaSure
Investment Performance through August 31, 2015
Ms. Roberta LaSure
Endowment Giving Update
Mr. Eddie Stuart
Endowment Spending for FY 2016-17
Ms. Roberta LaSure
Update on Cell Tower lease at South CREST Campus
Dr. Rick Whitfield
Closed Session
Mr. Michael Shivar
Open Session – Closed Session Recommendations
**
Mr. Michael Shivar
Going Forward Initiatives
Dr. Rick Whitfield
Conflict of Interest Disclosure forms
Dr. Rick Whitfield
Adjournment
Mr. Michael Shivar
** Action Item
Page 3
STATUTORY AUTHORITY OF
ENDOWMENT:
GENERAL STATUTE 116-36
Page 4
Statutory Authority for Endowments
North Carolina General Statutes (G.S.)116-36 requires each
constituent institution to establish an endowment fund.
G.S. 116-36 highlights:
 Establishment of investment board known as “Board of Trustees
of the Endowment Fund of ______ (name of institution)
 Authority to receive and administer gifts and property of any
kind from any source, excepting State appropriations, tuition
and fees
 Responsibility of trustees for prudent investment of endowment
fund
 Authority to expend principal or interest consistent with any
restrictions imposed by original donor
Page 5
UNC Policy for Endowments
The UNC Board of Governors established regulations to assist with
creation and operation of Endowment Fund (EF) under N.C G.S. 11636. Guidelines include:
 Board of Trustees of EF shall consist of no fewer than six and no more than
nine members
 Three members designated as ex officio are the Chancellor, the chair of the board of
trustees and an additional trustee
 Remaining three to six members may be trustees or members at large
 Any real property coming to endowment board may be placed into
endowment fund without reference to N.C.G.S. Chapter 143 and 146:
 Not subject to Executive Budget Act, Capital Planning and Improvement Act, State
Procurement Rules, Public Contracts, Personal Services Contracts, Open Public
Meetings, State Property Act and Department of Administration rules and
requirements
Page 6
ENDOWMENT MARKET VALUE
JUNE 30, 2015
Page 7
Growth of Endowment
Market Value Endowment Net Assets 2003-2015 *
100.0
90.0
85.3
80.0
$ Million
70.0
88.1
73.8
60.0
62.8
55.4
50.0
49.9
65.9
52.0
47.9
40.0
40.2
30.0
33.5
28.7
20.0
23.3
10.0
2003
2004
2005
2006
2007
2008
2009
2010
2011
Year
*Includes Watson Foundation endowment of $1.5M, a blended component unit of University
Excludes endowments of $4.3M of Foundation of UNCW, a related party of University
2012
2013
2014
2015
Page 8
University Endowment at August 31, 2015
Investment Fund
Market Value
UNC Investment Fund (UNCIF)
TIFF Multi-Asset Fund
GMO Quality Strategy Fund
GMO U.S. Equity Fund
State Treasurer's Short-Term Investment Fund
Investable Assets
$ 45,067,150
13,191,693
11,952,543
6,131,874
318,017
$ 76,661,277
55%
16%
15%
8%
0%
94%
4,991,964
27,711
5,019,675
6%
0%
6%
Real Estate *
Other
Non-investable Assets
Total Portfolio
* See slide #15 for details
$
$ 81,680,952
% of Portfolio
100%
Page 9
ENDOWMENT INVESTMENT FUNDS
Page 10
University of NC Investment Fund (UNCIF) Overview
• Inception:
• Total Assets:
January 1, 2003
$4.6 Billion
 UNC-Chapel - $2.9B
 NC State – approx. $800M
• Minimum Initial Investment
• Long-term Benchmark:
Short-term Benchmark:
$5,000,000
CPI +5.5%
Strategic Investment Policy Portfolio (SIPP)
UNC Investment Fund is structured as a “fund of funds” and makes investments in a
wide array of asset classes including domestic and international equities, emerging
market equities, domestic and foreign bonds, venture capital, private equity, energy
and natural resources, commodities and real estate
Alternative strategies are heavily employed in various asset classes – >60% of
portfolio- and as a result has relatively low sensitivity to equity and bond indices (Beta)
and low volatility of returns
Page 11
TIFF* Multi-Asset Fund Overview
•
•
•
•
•
Inception:
Total Assets:
Minimum Initial Investment
Long-term Benchmark
Short-term Benchmark
March 31, 1995
$5.8 Billion
$2,500,000
CPI + 5%
Blended index (“CI”)
TIFF is structured as a “fund of funds” and has both direct and indirect investments in
global equities (60%) as well as high yield bonds and hedging instruments such as
commodities, REITs and inflation-linked bonds
* The Investment Fund for Foundations
Page 12
GMO* Quality Strategy Overview
•
•
•
•
Inception:
Total Assets:
Minimum Initial Investment
Benchmark:
February 29, 2004
$12.2 Billion
$10,000,000
S&P 500 Index
GMO’s Quality Strategy fund is an equity mutual fund with primarily domestic
investments and seeks return potential through under valuations in the
marketplace.
* Grantham, Mayo and Van Otterloo
Page 13
GMO* US Equity Allocation Fund Overview
•
•
•
•
Inception:
Total Assets:
Minimum Initial Investment
Benchmark:
September 18, 1985
$6.4 Billion
$10,000,000
S&P 500 Index
The GMO U.S. Equity Allocation fund is an equity mutual fund solely invested in US
equities, primarily large cap stocks.
* Grantham, Mayo & Van Otterloo
Page 14
Endowment Real Estate
Description
Carrying Value
Leasehold improvements at 803 South College Road
- Center for Innovation & Entrepreneurship
- Small Business Technology Development Center (SBTDC)
$
Student parking lot at Old College Road Cinema
2,237,832
2,013,366
Land for Center for Marine Science/MARBIONIC Facility
- at 5600 Marvin K. Moss Lane
580,000
Residential property at 4758 College Acres Drive
- used for hospitality purposes
160,000
Land: one-sixteenth interest in lots at Wrightsville Beach
Total real estate
766
$
4,991,964
Page 15
INVESTMENT PERFORMANCE
Page 16
Total Portfolio Returns
Portfolio vs. Benchmarks
UNCW Endowment Portfolio
CPI + 4.5% (spend rate)
CPI +5.75% (spend rate + admin fee)
12.0%
Annualized Net Returns @ June 30, 2015
Return since
Date
1 YR
3 YR
5 YR
10 YR
inception
of inception
5.4%
10.9% 10.4%
8.0%
7.7% 07/01/87
4.6%
5.8%
6.3%
6.6%
7.2%
5.9%
7.1%
n/a
n/a
8.4%
10.9%
10.4%
10.0%
8.0%
8.0%
6.0%
7.1%
5.9%
5.4%
5.8%
6.6%
6.3%
4.6%
4.0%
2.0%
n/a
n/a
0.0%
1 YR
UNCW Endowment Portfolio
3 YR
5 YR
CPI + 4.5% (spend rate)
10 YR
CPI +5.75% (spend rate + admin fee)
Page 17
Fund Performance
Annualized Net Returns @ June 30, 2015
UNCW
Investment Fund
1 YR
3 YR
5 YR
Date
Fund
Date
of UNCW of Fund's
10 YR Inception Inception Inception Inception
UNC Investment Fund, net return
9.0%
12.0%
10.4%
8.6%
9.4%
9.4% 08/01/03 01/01/03
Strategic Investment Policy Portfolio (SIPP)
3.7%
9.6%
10.7%
7.6%
8.8%
8.8%
TIFF Multi Asset Fund (MAF), net return
-0.7%
8.2%
8.7%
7.4%
6.5%
8.1% 03/20/06 03/31/95
Constructed Index
-1.9%
6.3%
7.5%
5.8%
GMO Quality Fund , net return
5.4%
13.0%
15.7%
7.5%
14.9%
6.5% 04/30/09 02/06/04
S&P 500
7.4%
17.3%
17.3%
8.0%
17.4%
7.5%
GMO U.S. Equity, net return
3.6%
13.5%
15.8%
6.1%
8.9%
S&P 500
7.4%
17.3%
17.3%
7.9%
12.8%
7.3%
11.1% 04/30/09 09/18/85
11.1%
Page 18
Asset Allocations at June 30, 2015
Cash & Cash Equiv
8.70%
Distressed Debt
2.2%
Commodities
1.4%
US Equity
34.2%
Marketable Alternatives
20.5%
Private Strategies
17.8%
Global ex US Equity
13.0%
Fixed Income
2.4%
Page 19
ENDOWMENT GIVING UPDATE
Page 20
Gift Support for Endowments (2014-2015)
Academic Support
Research Support
Facilities Support
Scholarship Support
Distinguished Professorship Support
Total Endowment Support
$343,360
8,811
150
986,444
151,688
$1,490,453
19.2% of Total Giving in 2014-2015
Page 21
ENDOWMENT SPENDING
DISTRIBUTIONS
FY2016-17
Page 22
Spending by Purpose: 2009-2017
$4,000,000
$148,754
$3,500,000
$3,000,000
Endowment Distributions
$2,500,000
$$292,093
$39,643
$229,408
$149,511
$1,500,000
$338,259
$50,000
$232,651
$64,490
$354,537
$359,823
$1,000,000
$303,247
$937,713
$787,109
$$255,704
$204,653
$223,750
$310,534
$260,217
$$179,402
$49,773
$263,443
$684,996
$$193,861
$87,382
$328,985
$286,052
$403,780
Public Service (1)
General Support (6)
$245,277
$610,441
$547,831
Facilities (7)
$485,044
$688,451
$186,990
$234,996
$500,000
$336,605
$125,790
$274,842
$2,000,000
$137,510
$644,600
$385,280
Academic Support (48)
$562,227
$410,769
Professorships (16)
$298,096
$759,953
$983,792
$-
Fiscal Year
$1,053,493
$1,236,504
$1,377,019
$1,507,354
Scholarships (316)
Page 23
Endowment Spending Dollars by Purpose
SPENDING PURPOSE
Scholarships
FY 2016-17 FY 2015-16 FY 2014-15 FY 2013-14 FY 2012-13
@ 4.5%
@ 4.5%
@ 4.5%
@ 4.5%
@ 4.5%
$1,507,354 $1,377,019 $1,236,504 $1,053,493 $ 983,792
Academic Support
610,441
547,831
485,044
385,280
328,985
Professorships
688,451
644,600
562,227
410,769
403,780
Facilities
260,217
245,277
223,750
204,653
186,990
Public Service
148,754
137,510
125,790
-
-
General Support
336,605
310,534
274,842
255,704
292,093
$3,551,822 $3,262,771 $2,908,157 $2,309,899 $2,195,640
Page 24
UPDATE: CELL TOWER LEASE AT
SOUTH CREST CAMPUS
Page 25
CMS Site Map
Page 26
Proposed ATC Site at CMS
Page 27
Construction of Cellular Tower on Endowment Property
Background:
 Unreliable cellular service to CREST South Campus at Center for Marine Science.
Problem for faculty and occupants in MARBIONIC Facility.
Actions:
 Lease with American Towers for cell tower approved by Endowment Board and
effective on September 24, 2015
 Cell tower to expand long-standing bandwidth needs, enhance required emergency
notification capabilities and address a functional vulnerability in attracting occupants to
the CREST Research site.
 Endowment to receive annual rent installments, beginning in year 1 at $20,000, and
increasing each year thereafter by 4% through term of lease
 Initial term of lease for 15 years . Subject to mutual written consent of both parties,
American Towers may request and extend lease for an additional five (5) years with a
minimum of six (6) months prior written notice.
Page 28
American Tower 195’ Pole
Page 29
CLOSED SESSION
Page 30
OPEN SESSION: REAL ESTATE
DISCUSSION
Page 31
Going Forward Initiatives
 Review of current Investment Policy Statement
 Review and analysis of current endowment spending
calculation an development of formalized spending policy
 Review of asset allocation among existing managers
 Review of Endowment Investment Structure – adding
additional managers or further evaluation of outsourced Chief
Investment Officer model for investment management
Page 32
Agenda: Thursday, October 15, 2015
Welcome
Mr. Michael Shivar
Approve Minutes of November 20, 2014 and April 16, 2015
Mr. Michael Shivar
Review of Endowment Portfolio & Performance for FY 2015
Ms. Roberta LaSure
Investment Performance through August 31, 2015
Ms. Roberta LaSure
Endowment Giving Update
Mr. Eddie Stuart
Endowment Spending for FY 2016-17
Ms. Roberta LaSure
Update on Cell Tower lease at South CREST Campus
Dr. Rick Whitfield
Closed Session
Mr. Michael Shivar
Open Session – Closed Session Recommendations
**
Mr. Michael Shivar
Going Forward Initiatives
Dr. Rick Whitfield
Conflict of Interest Disclosure forms
Dr. Rick Whitfield
Adjournment
Mr. Michael Shivar
** Action Item