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UW Foundation

Investments

Fiscal year 2021 was one for the record books. One-year performance set an all-time UW Foundation record at 36.5%, beating the second-best return of 19.7% by 16.8%. Three-year rolling investment results also set a record, compounding at 14.6%. From peak to trough, the endowment rallied 47% during the lockdown as federal stimulus packages combined with an environment favoring equities created investment opportunities the team was successful in implementing. Despite travel restrictions and subsequent disruptions to the research process, the UW Foundation investment team maintained focus and was relentless in pursuing investment opportunities.

As we reflect on FY 2022, a few things stand out. First, a small number of investments made in both traditional and nontraditional investment strategies over the past three years have helped sustain the portfolio through the current drawdown. Second, the UW Foundation investment team wants to give credit to the UW Foundation Board—in particular the UW Foundation Investment Committee—for supporting us with their time, intellect, and cumulative experience. It was a collaborative effort in positioning the portfolio.

The return for FY 2022 was -2.4%. Three-year rolling investment returns remain strong, compounding at 11.6%. The UW Foundation’s historical long-run cost of capital, which we define as 7.0%, has grown higher with the recent change in treasury yields because of inflationary pressures. Last year, the UW Foundation investment team noted that the sheer amount of stimulus entering the economy would most certainly create volatility in return expectations— talk about an understatement. Nonetheless, we are pleased that, on a 10-year basis, our returns remain strong at 8.7% per annum. Maintaining this pace of return will require creative analysis combined with identifying opportunities in assets that are either overlooked or where others fear to tread.

Inflation—the result of excess monetary and fiscal stimulus—has proven to be more than transitory and certainly made its appearance known even before Russia invaded Ukraine. COVID-19 lockdowns led to global supply chain disruptions that have not healed. Supply chain problems are further compounded by a growing trade war between the U.S. and China over advanced semiconductor technology. How much change can the global market handle? The global wrecking ball called the U.S. dollar is crushing international investment strategies, and energy has become weaponized. As a result, it doesn’t matter whether you are an emerging economy or a developed one—currency headwinds are epic.

Real assets were the stars of the inflation-fueled rising-rate environment. This includes private real estate and commodity-exposed industries. The foundation benefitted significantly from direct real estate investments and private real estate funds, as well as other private energy infrastructure investments and one systematic hedge fund. In addition, nontraditional exposure to fixed income via a short-duration SPAC portfolio fell only 1.5%, which helped to avoid the carnage in investment grade bonds of -10.3%. In aggregate, these investments help explain how the foundation avoided some but not all of the market drawdown.

The UW Foundation investment team continues to have three investment goals for FY 2023— reduce portfolio complexity, reduce fees, and increase long-term compounded returns. These overarching goals remain the same as FY 2022.


INVESTMENT ALLOCATION

The UW Foundation investment team continually evaluates the investment allocation with special attention to the investment objectives and cash-flow needs of the endowment. The liquidity profile of the pool remains adequate to meet the needs of UW for multiple years, even during turbulent markets. The UW Foundation investment team has updated the allocation targets for FY 2023 to help address an ever-changing financial landscape as the result of conversations between the board and our consultant, Meketa.

 

 

Contact Us

University of Wyoming Foundation

222 S 22nd Street

Laramie, WY 82070

Phone: 307-766-6300

Toll Free: 1-888-831-7795

Fax: 307-766-4045

Email: foundation@uwyo.edu

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