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 $789 million
  • Approximately $235 million in spendable and special reserves, some with investment restrictions
  • Approximately $14 million in charitable remainder trust and gift annuity investments, some with investment restrictions

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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.

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, 2019:
  • $141 million supports scholarships, fellowships, student awards and prizes, and general student aid
  • $87 million supports chairs and professors
  • $121 million supports research
  • $199 million supports specific needs of academic units

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 betterment 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.

Investment performance and policies

The portfolio and its Management

The market value for total investments of the University at Buffalo Foundation and Affiliates (UBF) can be summarized as follows:

Type of fund June 30, 2020
(in millions)
June 30, 2019
(in millions)
June 30, 2018
(in millions)
Endowment Funds $788.9 $797.9 $725.0
Non-Endowed Funds 259.5 268.3 301.1
Total 1,048.4 1,066.2 1,026.1

 

Portfolio June 30, 2020
(in millions)
June 30, 2019
(in millions)
June 30, 2018
(in millions)
Long-Term Portfolio $1,022.4 $1,041.8 $1,000.5
Other Portfolios 26.0 24.4 25.6
Total 1,048.4 1,066.2 1,026.1

These funds are managed under the supervision of UBF’s board investment committee. More than eighty professional investment firms currently share in the administration of the portfolios.
Long-Term

​Long-Term Portfolio (LTP) Investment Objectives

The LTP’s investment strategy uses the “total return” approach for calculating investment returns.  The long-term net return objective of the LTP is to maintain the purchasing power of the overall portfolio in order to support at least the annual payout rate (plus the expected rate of inflation as measured by the CPI).  The LTP’s return objective is based upon a long-term investment horizon, with an expectation that returns will fluctuate over the interim.  While there cannot be complete assurance that the defined objectives will be realized, it is believed that the likelihood of their realization is enhanced through portfolio diversification.

Long-Term Portfolio Performance Compared to Benchmarks for Fiscal Year 2020

Investment performance, on a total return basis net of fees, is most appropriately reviewed over the longer term with benchmarking to proper indices.  Policy Benchmark returns are average returns of indices weighted consistent with portfolio allocation (see Key to Indices).

Total annualized return

Total Annualized Return at June 30, 2020 was as follows:

  1 Year 3 Year 5 Year 10 Year
Long-Term Portfolio 0.3% 5.1% 5.5% 7.5%
Policy Benchmark* 4.8% 6.7% 6.2% 7.6%
CPI + 5% 5.7% 6.8% 6.6% 6.8%

20% Russell3000 / 14% MSCI EAFE / 12.5% Blmbg Barc US Aggregate / 12.5% HFRI Fund of Funds Composite Index / 6% MSCI Emerging Markets / 5% NCREIF Townsend Blended Index / 20% Burgiss Global Private Equity Index / 5% Mercer Illiquid Natural Resources Index / 5% Burgiss Senior Debt/Burgiss Mezzanine

U.S. equity return

U.S. Equity Return at June 30, 2020 was as follows:

  1 Year 3 Year 5 Year
Long-Term Portfolio 7.6% 10.8% 11.1%
Dow Jones US Total 6.4% 10.0% 10.0%
S&P 500* 7.5% 10.7% 10.7%

*Standard and Poors 500 Index

International equity return

International Equity Return at June 30, 2020 was as follows:

  1 Year 3 Year 5 Year
Long-Term Portfolio -5.5% 0.0% 2.1%
MSCI* AC World ex USA -4.8% 1.1% 2.3%

*Morgan Stanley Capital International

Fixed income return

Fixed Income Return at June 30, 2020 was as follows:

  1 Year 3 Year 5 Year
Long-Term Portfolio  7.7% 5.0% 4.1%
Barclays US Aggregate  8.7% 5.3% 4.3%

 

Real assets return

Real Assets Return at June 30, 2020 was as follows:

  1 Year 3 Year 5 Year
Long-Term Portfolio   -10.5% 2.8%   5.9%
NCREIF* Townsend Blended   6.6% 8.6% 10.1%

*National Council of Real Estate Investment Fiduciaries

Hedge funds return

Hedge Funds Return at June 30, 2020 was as follows:

  1 Year 3 Year 5 Year
Long-Term Portfolio  -3.6%  0.8% 1.1%
HFRI* Fund of Funds   0.1% 2.1%  1.4%

*Hedge Fund Research, Inc.

Private equity return

Private Equity Return at June 30, 2020 was as follows:

  1 Year 3 Year 5 Year
Long-Term Portfolio 4.1% 11.3% 10.1%
Burgiss Global Private Equity 18.6% 16.7% 13.5%

 

Long-term portfolio performance compared to benchmarks

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

Average Annual Compounded Nominal Return Fiscal Years Ended June 30

  Return NTSE Median NTSE Rank
2019  5.9%   5.1%  33%
2017-2019  9.3%   8.6%  29%
2015-2019  5.8%   5.1%  27%
2010-2019 8.6% 8.5% 45%

NTSE:         NACUBO – TIAA Study of Endowments (over 800 colleges and universities)
NACUBO:   National Association of College and University Business Officers

Asset allocation policy

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

Asset allocation at June 30, 2020 was as follows:

  Manager Type Long-Term
Portfolio
Long-Term
Target
US Equity 21.5% 20.0%
International Equity 19.1% 20.0%
Private Debt 1.0% 5.0%
Private Equity 18.0% 20.0%
Cash 3.1% —–
Fixed Income 13.1% 12.5%
Hedge Funds 13.7% 12.5%
Real Assets 10.5% 10.0%
TOTAL 100.0% 100.0%

NOTE: Long-term target is goal for 2022.

Spending policy

Spending is defined as funds made available annually from the Long-Term Portfolio for university programs and administrative expenses.

Spending on university programs will be approximately 4% of the donor’s entire original contribution after the first full year of participation in the Long-Term Portfolio.  Afterwards, spending will increase annually at the average rate of inflation, regardless of market performance.  This approach provides a stable and predictable annual stream of funds for use that maintains its purchasing power over time.

The Spending Rate will be determined and approved annually by the Investment Committee.  The desired result is to achieve a year to year spending increase for individual funds that approximates the Inflation Rate[1], not to exceed 3%.

Total spending dollars are limited to a floor of 4% and a ceiling of 6% of the three-year average market value of the Long-Term Portfolio, measured on a quarterly basis.  Special spending rules are followed for individual endowments where the value has fallen below historic dollar value.

[1] Inflation Rate is the average of the Higher Education Price Index (HEPI) and the Consumer Price Index (CPI) for the most recent three calendar years.

Long-term portfolio performance

A $1,000,000 gift on June 30, 2000 invested in the Long-Term Portfolio would have been worth $1,086,985 as of June 30, 2020, prior to the Fiscal Year 2021 distribution. In addition, $1,025,002 will be cumulatively distributed for spending needs from Fiscal Year 2002 through Fiscal Year 2021, with annual spending growing from $46,119 in Fiscal Year 2002 to $51,120 in Fiscal Year 2021.