Asset Allocation

 

The asset allocation policy should reflect a proper balance of financial and investment objectives, risk tolerance and need for liquidity. The Endowment’s investments shall be diversified by manager, by asset class (e.g. equities, bonds, and alternative assets) and within asset classes (e.g. within equities by economic sector, industry, quality, and size). The purpose of diversification is to provide reasonable assurance that no manager, class of securities, or individual holding will have a disproportionate impact on the Endowment’s aggregate results.


The purpose of the equity allocation (including developed and emerging market stocks as well as marketable and non-marketable alternative assets) is to provide a stream of current income and principal appreciation that more than offsets spending plus inflation. It is recognized that pursuit of this objective could entail the assumption of significant variability in price and returns.


The purpose of the fixed income allocation is to provide a steady stream of income relative to an all-equity fund, a hedge against deflation and a diversification benefit relative to the equity allocation.


The purpose of the real asset allocation (e.g. investments in hard assets such as real estate, oil and gas, natural resources, and commodities) is to achieve equity-like returns and provide potential protection against the risk of unanticipated severe inflation. Given return, risk tolerance, and liquidity requirements, The Endowment has determined that a diversified portfolio of permissible assets will likely to achieve the funds' objectives.


It is understood that both the choice of asset classes and the targeted percentages will be reviewed periodically to ensure that the long –term needs of the fund are being met in the most appropriate and prudent manner. The Endowment believes that the following asset mix will produce a pattern of returns over time that will conform to the desired return requirements and risk tolerance:


Endowment Portfolio Target Strategic Allocation
Total 100%
Stocks 55.0%
Bonds 15.0%
Alternative Investments 25.0%
Cash 5.0%

Asset Allocation