A named endowed fund is a fund established in accordance with donor wishes from which gift amounts (frequently referred to as "Principal," "Corpus," or "Historic Dollar Value") cannot be spent. Named endowed funds are established "in perpetuity" (in other words, indefinitely or until the donor agreement provides otherwise).
- Portions of investment income and market value appreciation may be spent; the remainder is reinvested to maintain the endowment fund's purchasing power and for long-term growth.
- Once named endowed funds are fully funded, spending/beneficiary accounts are established. Spending/beneficiary accounts are the vehicle for spending money in accordance with donor wishes (i.e., student scholarships, student fellowships, professorships, chairs, etc.)
- Spendable Endowment Income is distributed to spending/beneficiary accounts using a spending rate distribution policy that is approved by the University's Board of Governors. Please refer to a more detailed description of the spending rate distribution policy below.
- All named endowed funds are maintained within a Common Trust Fund (CTF) – a pool of the aggregate of all named endowed funds that has been combined for investment and management purposes – unless there are specific reasons not to. Each individual named endowed fund's interest in the CTF is measured by the number of endowment fund units or shares of participation of the CTF that it owns.
The distribution rate policy is under the purview of the University's Board of Governors (BOG). The BOG has approved an annualized distribution rate of 4.5 percent. The approved distribution rate is applied to the aggregate Foundation endowment fund's twelve-quarter moving average market value to determine quarterly distributions of spendable endowment income. The objective of the distribution rate policy is to provide support to current students and academic programs while also preserving the Foundation endowment fund's Long Term purchasing power to support future students and academic programs.
Of the 4.5 percent distribution rate, an allocation of .45 percent will help to support the ongoing fundraising activities of the Division of Development and Alumni Affairs. The remaining 4.05 percent will be transferred to the spending / beneficiary accounts and used for donor-specified purposes.
Endowment fund investment management
Wayne State University Foundation's (Foundation) Board of Directors (Board) has approved a detailed statement of investment policy which defines the responsibilities of the parties involved in the investment management process, as well as general asset allocation guidelines. The Board's Investment Committee (Committee) establishes asset allocation targets to achieve the goal of maximizing long-term total returns within acceptable levels of risk. The actual endowment fund investments are well diversified across major global asset classes, as well as within each asset class by market capitalization and investment style or strategy. The Committee utilizes Strategic Investment Group (Strategic), an outsourced chief investment officer (OCIO) consulting firm to invest the Foundation's endowment fund assets. The OCIO consulting firm is responsible for selecting, monitoring and terminating the professional investment management firms that invest in asset classes and underlying securities within global investable capital markets. The Foundation's endowment fund ended fiscal year end 2017 with $355 million of investment assets.
Summary of the long-term investment program
- The WSU Foundation Board, through its Investment Committee, assumed responsibility of the management and oversight of the Common Trust Fund's Long-Term Investment Program effective October 2002.
- Endowment Investment Policy – The overall objective of the Common Trust Fund is to generate an annual total rate of return for the endowment fund that is sufficient to produce the following results, on average, over long periods of time:
- Provide periodic distributions of spendable endowment income as determined by the WSU Board of Governors;
- Inclusive of the above, grow the value of the corpus of the Common Trust Fund over longer periods of time equal to the rate of inflation (i.e., CPI); and
- Inclusive of (1) and (2) above, preserve the corpus of the Common Trust Fund with the goal of growing the real value of the Common Trust Fund.
- The statement of investment policy sets a general target allocations and ranges for asset classes as follows:
|Asset Class Descriptions|| |
|U.S. equities||18%||8% to 28%|
|Non-U.S. equities||15%||5% to 25%|
|Emerging Market equities||7%||0% to 17%|
|Fixed-income securities||20%||10% to 30%|
|Hedge funds||18%||8% to 28%|
|Real assets||10%||0% to 20%|
|Private markets||12%||2% to 22%|
|Cash||0%||0% to 20%|
Summary of investment performance
As of September 30, 2017 (Net of Fees)
- 3 Months Ending
- WSU's Fund +3.7%
- Peer Median +3.3%
- Since portfolio inception with new ocio firm (3/31/2017 - 9/30/2017)
- WSU's Fund +6.3%
- Peer Median +6.5%
The 'peer median' returns above include the "Wilshire TUCS Non-Profit Plans - $100M to $1B Peer Group".