UK Endowment

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The University of Kentucky Endowment ($1.51 Billion as of June 30, 2020) is an aggregation of funds comprised of gifts from donors and grants from the Commonwealth of Kentucky with the requirement that they be invested in perpetuity to generate a reliable and steadily growing reveune stream to support the mission of the University now and in the future. The revenue stream supports scholarships, chairs, professorships, basic research, as well as academic and public service programs, as defined by the individual endowment agreements. The Endowment is expected to provide fiscal stability since the principal is invested for long-term growth and total return spending distributions are generated year after year. 

Learn more about the Investment Committee of the Board of Trustees here

DOWNLOAD THE ENDOWMENT INVESTMENT POLICY FOR MORE INFORMATION. (Updated December 14th, 2020)

 

Financial and Investment Objectives

The Investment Committee has established the following financial and investment objectives for the Endowment:

  1. To preserve the long-term purchasing power of the endowment assets and the related revenue stream over time to evenly allocate support between current and future beneficiaries (intergenerational equity).

  2. To earn an average annual return, after expenses, of at least 7.5% per year over full economic market cycles.

Asset Allocation

Diversification of investments among assets that are not similarly affected by economic, political, or social developments is highly desirable. The general policy shall be to diversify investments so as to provide a balance that will enhance total return, while avoiding undue risk concentrations in any single asset or investment category. To ensure broad diversification, the asset allocation will be set with the following target percentages and within the following ranges:

 

Asset Class Target Range
GLOBAL EQUITY 53% 30-60%
Public Equity 33%  
Private Equity 20%  
GLOBAL FIXED INCOME 13% 5-25%
High Quality / Rate Sensitive 7%  
Public Credit 2%  
Private Credit 4%  
REAL ASSETS 14% 5-25%
Public Real Assets 3%  
Private Real Assets 11%  
DIVERSIFYING STRATEGIES 20% 5-25%

Note: Sub-asset category (e.g., Public Equity) figures reflect working targets. Investment staff has flexibility to adjust sub-asset category exposures within broader, asset category (e.g., Global Equity) ranges, based on market conditions and ongoing research. 

Definitions of the various asset classes that are utilized in the endowment can be found here.

 

Investment Strategies

Within the asset allocation approved by the Investment Committee, the endowment portfolio is invested in strategies managed by external investment firms. Investment staff has been delegated authority by the Investment Committee to evaluate and appoint external investment managers for the endowment. Each investment manager exercises discretion over these assets in accordance with specified investment guidelines. The complete listing of the UK endowment investments as of June 30, 2020 may be found here.

For investment managers interested in contacting the University of Kentucky Investment Office about their strategies, please contact InvestmentManagerResearch@uky.edu.

 

Endowment Performance

*The policy benchmark is a weighted average of various market index returns that are representative of the University's asset allocation. The benchmark has changed over time due to changes in the University's asset allocation, and was most recently updated effective June 30, 2020 as part of a staged implementation to reflect asset allocation targets approved in December 2018. Component weights of the policy benchmark are included below:

26% MSCI AC World Index, 20% Thomson One All Private Equity Index, 15% HFRI FOF: Conservative Index, 7% Bloomberg Barclays US Aggregate Index, 6.5% Thomson One Private Natural Resource Index, 6% HFRI Equity Hedge Index, 4.5% Thomson One Private Real Estate Index, 2.5% Thomson One Distressed Index, 2.5% Thomson One Mezzanine Index, 2% FTSE NAREIT All Equity Index, 2% Alerian MLP Index, 2% Bloomberg Commodity Index, 2% ML High Yield Bond Index, and 2% HFRI RV: Asset Backed Index. 

 

 Historical Endowment Values 

 

The Endowment and Sustainability 

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Investment staff recognizes that environmental, social and governance (ESG) considerations are a growing input in evaluating companies and investment managers and strive to understand the best practices in ESG integration. Staff includes these factors in our ongoing due diligence and monitors how investment managers incorporate ESG considerations within their organizations and processes, tracking changes over time.

The Endowment has made investments within the Private Real Assets portion of the endowment portfolio that are aligned with ESG considerations. For example, a $12 million commitment was made to a fund in 2019 that is focused on renewable energy, in particular U.S. wind energy, utility-scale solar and energy storage projects. We have also observed a growing ESG focus from existing fund investments in areas such as clean power generation and sustainable agriculture. 

We regularly meet with investment managers across asset classes who incorporate ESG into their investment approaches and will continue to seek best-in-class asset managers for UK endowment investments.

Breakdown of Total Endowment Assets 

           
As of June 30, 2020
*Operating Funds include $311M Hospital quasi endowment and $80M University Operating quasi endowment
**Fiduciary Funds include $174M Other Post-Employment Benefits (OPEB) quasi endowment                   
                                                                                                                            
As of June 30, 2020
*Fiduciary Funds include $174M Other Post-Employment Benefits (OPEB) quasi endowment
 
As of June 30, 2020

*UK Financial Services includes $174M Other Post-Employment Benefits (OPEB) quasi endowment, $80M University Operating quasi endowment, $18M Medical Malpractice quasi endowment, and other endowments administered by UK Financial Services
**Affiliated corporation

Staff

Eric Monday Executive Vice President for Finance & Administration (859) 257-6231
Todd Shupp Chief Investment Officer (859) 218-3901
Nancy Rohde Investment Officer (859) 323-8393
Kristina Goins Investment Operations Analyst (859) 323-4471