Investment Performance

We are proud to be responsible for protecting, growing and managing sizable investments for the University at Buffalo.

These funds, which have grown substantially in recent years under our stewardship, include:
  • An endowment that, through the generosity of our donors, currently totals more than $600 million
  • Approximately $200 million in working capital and special reserves, some with investment restrictions
  • Charitable remainder trust and gift annuity investments, some with investment restrictions

Total Investments

Providing reliable returns

Our goal—which we consistently achieve—is to control risks while generating resources from the total investment portfolio, which ensures a reliable return on these funds. This provides UB with a predictable and substantial source of revenue, allowing UB to fulfill its mission.

Total Endowment

What does the endowment support?

The endowment—which consists primarily of funds donated for UB through the years—is managed by the UB Foundation in accordance with each donor’s wishes. As of June 30, 2016:
  • $104 million supports scholarships, fellowships, student awards and prizes, and general student aid
  • $71 million supports chairs and professors
  • $110 million supports research

An increasingly important funding source

A strong endowment ensures a certain level of financial stability for UB, an institution that is expected to last in perpetuity. We are committed to helping grow the endowment for the benefit of the university. In keeping with best practices, only the returns on the principal are made available for spending; the endowment principal is protected and invested in order to ensure the buying power stays consistent over the years.

JUNE 30, 2016

The portfolio and its management

At June 30, 2016 the market value for total investments of the University at Buffalo Foundation and Affiliates (UBF) amounted to $842.5 million, as compared to $867.7 million at June 30, 2015 and $864.4 million at June 30, 2014.

Endowment funds included in total investments amounted to $601.0 million at June 30, 2016, as compared to $619.3 million at June 30, 2015 and $624.8 million at June 30, 2014. These funds are managed under the supervision of UBF’s board investment committee.

More than 90 professional investment managers currently share in the administration of the portfolio, with performance monitored by the trustees. Included in this total are certain investments, known as the Long-Term Portfolio and having a market value of $799.8 million at June 30, 2016, which are managed and administered on a pooled basis.

Long-term portfolio investment strategy

The primary investment objective is to maximize total investment return while preserving the inflation-adjusted purchasing power of the portfolio. This should provide a relatively predictable, constant and stable (in real terms) stream of funds for current use. Total investment return is the sum of interest, dividends and capital appreciation.

Long-term portfolio performance compared to benchmarks for fiscal 2016

Total annualized return
1 Year 3 Year 5 Year
Long-Term Portfolio -0.4% 5.5% 5.5%
Policy Benchmark* -0.4% 5.7% 5.2%
CPI + 5%  6.1% 6.1% 6.4%

24% S&P 500 / 16% MSCI EAFE / 2% Barclays US TIPS / 10% Barclays Capital Aggregate / 20% HFRI Fund of Funds Composite Index / 2% MSCI Emerging Markets / 4% Vanguard Spliced Emerging Markets Index / 3% S&P North American Natural Resources Sector Index / 3.5% NCREIF Townsend Blended Index / 12% Burgiss Global Private Equity Index / 3.5% Mercer Illiquid Natural Resources Index

U.S. equity return
1 Year 3 Year 5 Year
Long-Term Portfolio 6.1% 11.7% 12.1%
Dow Jones US Total 2.0% 11.0% 11.5%
S&P 500* 4.0% 11.7% 12.1%

*Standard and Poors 500 Index

International equity return
1 Year 3 Year 5 Year
Long-Term Portfolio  -8.2% 2.3% 2.0%
MSCI* AC World ex USA -10.2% 1.2% 0.1%

*Morgan Stanley Capital International

Fixed income return
1 Year 3 Year 5 Year
Long-Term Portfolio 5.7% 3.7% 3.9%
Barclays Aggregate 6.0% 4.1% 3.8%
Real assets return
1 Year 3 Year 5 Year
Long-Term Portfolio   -0.9%   2.8%  1.3%
S&P North American Natural Resources   -5.6%  -2.2% -3.1%
Hedge funds return
1 Year 3 Year 5 Year
Long-Term Portfolio  -4.7%  3.4%  4.4%
HFRI* Fund of Funds  -5.4%  1.9%  1.6%

*Hedge Fund Research, Inc.

Private equity return
1 Year 3 Year 5 Year
Long-Term Portfolio  5.9% 11.4%  9.7%
Burgiss Global Private Equity 9.9% 14.2% 12.6%
Long-term portfolio performance compared to benchmarks

The accompanying chart reflects the ten-year performance for the Long-Term Portfolio in comparison with over 800 other colleges and universities across the country.

Average Annual Compounded Nominal Return Fiscal Years Ended June 30

Return NCSE Mean
2016 -0.4% -1.9%
2014-2016 5.5% 5.2%
2012-2016 5.5% 5.4%
2007-2016 4.5% 5.0%

NCSE – NACUBO – Commonfund Study of Endowments

Asset allocation policy

The proper distribution of investments among various asset classes allows us to honor spending policies, maintain risk tolerance and stability, produce appropriate investment returns, and achieve long-term objectives.

Asset allocation at June 30, 2016 was as follows:

By Manager Type Long-Term Portfolio Current Target Long-Term Target
Growth Assets
• US Equity
•• Large 14.8% 15.0% 11.0%
•• Large Quality  5.8%   6.0%   5.0%
• International Equity
•• Large 12.3% 13.0% 10.0%
•• Emerging Markets   4.9%   5.0%   4.0%
• Global Equity   4.7%  7.0%  7.0%
• Private Equity 12.5% 12.0% 20.0%
Risk Reduction Assets
• Cash   2.7% —– —–
• US Fixed Income   9.9% 10.0%   8.0%
• Hedge Funds 20.1% 20.0% 20.0%
Inflation Protection Assets
• US Inflation Protected Fixed   1.8%   2.0% —–
• Real Assets  10.5% 10.0% 15.0%
TOTAL 100.0% 100.0% 100.0%

NOTE: Long-term target is goal for 2022.

Spending policy

Spending is defined as funds made available from the portfolio for university programs and administrative expenses, exclusive of management, brokerage and custodial fees.

Generally, a formula governs the portion of total return made available each year for spending with an objective of maintaining purchasing power relative to inflation. This formula allows spending to increase by the predetermined annual growth rate of 3% as long as spending stays within 4% and 6% of the three-year average market value of principal. Special spending rules are followed for individual endowments where the value has fallen below historic dollar value.

Long-term portfolio performance

A $1,000,000 gift on July 1, 1996 invested in the Endowment Portfolio would have been worth $1,268,996 as of June 30, 2016, prior to the Fiscal Year 2017 distribution. In addition, $1,280,996 would have been distributed for spending needs from Fiscal Year 1998 through Fiscal Year 2017.

A $1,000,000 gift on July 1, 1996 invested in the Long-Term Portfolio would have generated $44,098 for spending in Fiscal Year 1998, with the annual distribution growing to $63,008 for Fiscal Year 2017. This annual growth in spending is comparable to inflation rate growth over this same period.