Friends - UofL Foundation 6-27-2016

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From the desk of Jim Ramsey
June 27, 2016


I wanted to send you a note, especially those of you who have invested in the academic programs of the University of Louisville, and inform you about where the University of Louisville Foundation (ULF) stands with regard to its overall portfolio performance.

The ULF endowment is like any other long-term investment fund that has been affected by a short-term ebb and flow in growth, based upon the overall activity of the equity market.  Like many other investments last quarter, we experienced a slight drop but we have seen, before Brexit, signs of a strong recovery at the beginning of the 4th quarter.  These short-term swings and a recent dip in investment earnings, however, have constrained our allocation to funded programs by 7 percent.

The S&P 500 and national higher education endowments similar to ours experienced a comparable decrease near the end of the last calendar year.  This downturn  is minimal compared to our long term trajectory of providing a fiscal insulator from future budget cuts to the University of Louisville, so the impact on our students, faculty, and staff is minimized.

At the June 24th ULF Finance Committee, Cambridge & Associates (CA) reported significant improvement since the 3rd quarter:

  • The ULF endowment portfolio is up over 6% since January, with over $30M in unrealized gains.
  • During March and April, the ULF pool outperformed its policy benchmark of 5.8%.
  • ULF private equity and venture capital portfolio are among the best performers since inception, producing a 16% annual internal rate of return.
  • ULF long-term result has compounded at over 9% average annual return for 20 years.
  • CA reiterates ULF is in the top 10 percent of colleges and universities reporting to their firm.
  • Year-to-date, the ULF performance has exceeded the S&P 500 by 1%.

Cambridge's report to the ULF Finance Committee occurred last Friday before Great Britain voted to leave the European Union (Brexit).  While there may be some uncertainty in the equities market (S&P; DOW; etc.), the diversity of the UofL Foundation's portfolio should moderate those fluctuations.  CA praised, at the Finance Committee meeting, the ULF for its innovative and diversified investment strategy, and CA indicated other universities have followed our lead.  ULF returns are consistent with other large, elite institutions around the nation.

In addition to the good news from Cambridge, Moody's reaffirmed our Aa3 rating and signaled continued confidence in the University and the Foundation, even with the ambiguity resulting from our Board of Trustees.

The ULF is firmly committed to assisting the University of Louisville with its statutory mandate to become a nationally-recognized metropolitan research university by 2020.  The citizens of Kentucky deserve no less.

Thank you for confidence and trust in our leadership.

President James Ramsey


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