xt7c599z0q8r https://exploreuk.uky.edu/dips/xt7c599z0q8r/data/mets.xml Lexington, Kentucky University of Kentucky 20080616 minutes English University of Kentucky Contact the Special Collections Research Center for information regarding rights and use of this collection. Minutes of the University of Kentucky Board of Trustees Minutes of the University of Kentucky Board of Trustees, 2008-06-16ic. text Minutes of the University of Kentucky Board of Trustees, 2008-06-16ic. 2008 2011 true xt7c599z0q8r section xt7c599z0q8r 
IN ATTENDANCE:
Minutes Investment Committee Board of Trustees June 16, 2008
Investment Committee Members:
Mr. Billy B. Wilcoxson, Chair Mr. Stephen P. Branscum Mr. James F. Hardymon Ms. Myra Leigh Tobin Ms. JoEtta Y. Wickliffe
Board of Trustees Members:
Ms. Mira S. Ball
Dr. Charles R. Sachatello, M.D.
Investment Staff & Consultants:
Others:
Mr. Marc A. Mathews Ms. Susan I. Krauss Ms. Donna Counts
Mr. Russ Kuhns (R.V. Kuhns & Associates) Mr. Rob Palmeri (R.V. Kuhns & Associates) Mr. Bruno Grimaldi (R.V. Kuhns & Associates)
Dr. Lee T. Todd, Jr. Mr. Frank A. Butler Ms. Barbara W. Jones Mr. Henry Clay Owen Mr. Sergio Melgar
The meeting was called to order at 3:15 pm. Mr. Wilcoxson asked for a motion to approve the March 4, 2008 minutes and the May 12, 2008 minutes. Mr. Hardymon made a motion to approve the minutes, Mrs. Wickliffe seconded the motion and all approved.
Mr. Mathews discussed IC1, and explained that the current Endowment Investment Manager contracts expire June 30, 2008, and then recommended extension of the contracts with the Endowment Investment Managers for a 12-month period ending June 30, 2009. Mr. Mathews noted that it may seem odd to extend contracts based on the upcoming proposed asset allocation changes to be discussed later in the meeting. However, since the contracts expire on June 30, 2008 the extensions are needed. In addition, the University retains the right to cancel the contracts without cause with 30 days written notice. Mr. Hardymon made a motion to approve the extension of the contracts, Mrs. Wickliffe seconded the motion and all approved.
Mr. Mathews discussed the proposed revised investment policy recommended in IC2. The changes include the new asset allocation and new manager structure discussed at the last meeting. The target allocation would be changed as follows:
• U.S. Core Fixed Income would be reduced from 22% to 18%.
• Broad U.S. Equity would be reduced from 46% to 26%.
• Broad International Equity would increase from 11% to 20%.


 

• Global Equity asset class would be eliminated.
• Absolute Return would be a new asset class with a target of 10%. The investment approach would be a Hedge Fund of Funds.
• Real Return would be a new asset class with a target of 7%. The goal would be a rate of return equal to inflation plus 5%.
• Real Estate - Core would be reduced from 8% to 4%.
• Real Estate - Value Added would be a new asset class with a target of 4%.
• Real Estate - Opportunistic would be a new asset class with a target of 4%.
• Private Equity would increase from 5% to 7% by adding another manager.
Mr. Mathews explained that the purposes of the proposed allocation changes are to increase return and reduce risk. Overall, the target allocation to fixed income would be 18%, the equity allocation would be 46%, and the alternatives allocation would be 36%.   The implementation of this new asset allocation would begin immediately and continue over the next six months, with the objective of having the new manager structure in place by January 1, 2009. Ms. Tobin made a motion to approve the new investment policy, Mr. Branscum seconded the motion and all approved.
Ms. Krauss discussed the implementation plan for the new asset allocation and manager structure outlined in IC3. She indicated that first the new asset allocation policy would be communicated to all existing managers. Then the manager searches would be initiated and completed consistent with UK procurement rules. Next a transition plan would be developed taking into consideration transition of assets from current to new managers. Next, contracts would be negotiated with new managers or existing contracts would be modified where strategy changes are implemented. New account information would be communicated and coordinated with Northern Trust. Finally, the Endowment Investment Policy Addendum, which contains individual manager guidelines, would be updated.   It is anticipated that at the committee meeting held on September 9, 2008, UK Staff and RVK would present recommendations on Real Return, Passive U.S. Equity and International Equity managers. There will be a special meeting on October 13, 2008 for the Investment Committee to interview and approve three Absolute Return Strategy manager candidates. At that meeting staff and RVK will also present finalist recommendations for Opportunistic Private Equity managers.   Finally, a special meeting is scheduled for December 8, 2008 for the Investment Committee to interview and approve Value Added and Opportunistic Real Estate managers. Ms. Tobin made a motion to approve the implementation plan, Mr. Hardymon seconded the motion and all approved.
Ms. Krauss reported on the endowment asset allocation, reporting the endowment pool had a market value of $946.8 million as of May 31, 2008, comprised of the following asset allocation:
5/31/08 Allocation
Policy Target
Policy Range
U.S. Equity Global Equity
48.3% 8.2%
11.2% 1.5%
22.2% 8.3%
46.0% 8.0%
11.0% 5.0%
22.0% 8.8%
41.0-51.0% 5.0-11.0% 8.0-14.0% 0.0-8.0% 17.0-27.0% 5.0-11.0%
Non-U.S. Equity
Private Equity Fixed Income Real Estate
Ms. Krauss noted that the asset classes were slightly off their policy targets in effect at the time, however the asset classes were well within the policy ranges established in the investment policy.


 

Next Mr. Grimaldi of RVK presented the performance report and market update for the quarter ended March 31, 2008. Mr. Grimaldi highlighted the volatility in the capital markets amid growing concerns of U.S. recession, a further decline in the U.S. Dollar, escalating energy prices and continued fallout from the subprime bond market. During the quarter the Federal Reserve lowered the Fed funds rate three times bringing the benchmark rate to 2.25% at the end or the quarter. Next Mr. Grimaldi reported on the University of Kentucky performance. The University of Kentucky portfolio experienced a negative net of fees return of -6.41% for the quarter versus its current policy benchmark of -6.06%. Mr. Palmeri noted that it was the worst quarter in equity markets since 2002 and that the asset allocation changes approved by the Committee should help reduce losses in the future.
Mr. Palmeri then referred to the RVK investment performance report. It was noted that the investment allocation will be changing over the next six months and the format of the reporting was new to the committee. Therefore rather than go into detailed analysis of the returns, Mr. Palmeri led the committee members through the quarterly reports the committee would be receiving in the future. Mr. Palmeri explained the general organization of the report and pointed out particular tables and graphs that RVK would be presenting in future reports.   He noted that the investment performance analysis began with a review on the performance of the overall capital market and asset class benchmarks. The report then presents performance information on the total University of Kentucky portfolio and each asset class held by UK. The report then provides an in-depth analysis of each investment manager.
Mr. Wilcoxson then referred to Ms. Counts to discuss the next item on the agenda. Ms. Counts referred to the Overnight and Short-term Investment Report. She stated that this is a new report for the committee and was anticipated in the Overnight and Short-term Investment Policy approved by the committee on January 23, 2008. The report is divided into two major sections. The top half of the report includes cash and investments covered by the investment policy and under the investment control of the committee. The bottom half of the report includes UK cash and investments held by the state and not subject to the investment policy. These will both reported to the committee for general information purposes and in order for the committee to be able to compare to cash and investments reported in the quarterly financial reports.
Ms. Counts reported that as of April 30, 2008 the total portfolio subject to the investment policy was $293.8 million. Overnight investments totaled $213.6 million. Of this, $143.0 million was invested in the Kentucky Office of Financial Management (OFM) overnight repurchase agreement with an annualized monthly return of 2.65%, $67.0 million was invested in the OFM short term investment pool with an annualized monthly return of 3.5%.  Short term investments totaled $80.2 million. Of this, $60.0 million was invested in the OFM intermediate pool with an annualized monthly return of -1.15%. Another $20.2 million was invested directly in federal agencies and instrumentalities having yields ranging from 3.5% to 4.1%.
With no further business the meeting adjourned at 4:30 p.m.
Donna Counts Office of the Treasurer


 

IC 1
Office of the Treasurer June 16, 2008
Members, Investment Committee
EXTENSION OF ENDOWMENT INVESTMENT MANAGER CONTRACTS
Recommendation: that the Investment Committee approve extension of the contracts with the Endowment investment managers listed below for a twelve-month period ending June 30, 2009, subject to the terms and conditions of the existing contracts.
• Capital Guardian Trust (Non-U. S. Equity Manager)
• Capital Guardian Trust (U.S. Whole-Stock Equity Manager)
• Chrysalis Ventures (Regional Venture Capital Manager)
• Commonfund Capital (Private Equity Fund-of-Funds Manager)
• Fort Washington Capital (Regional Venture Capital Manager)
• Pacific Investment Management (Core-Plus Fixed Income Manager)
• Pantheon Ventures (Private Equity Fund-of-Funds Manager)
• Reams Asset Management (Core-Plus Fixed Income Manager)
• RREEF America (U.S. Real Estate Manager)
• State Street Global Advisors (MSCI ACW ex-U.S .Index Manager)
• State Street Global Advisors (Russell 3000 Enhanced Index Manager)
• State Street Global Advisors (Wilshire 5000 Index Manager)
• UBS Realty Investors (U.S. Real Estate Manager)
• Wellington Funds (Global Equity Manager)
• Wellington Funds (U.S. Small-Cap Equity Manager)
Background: The Investment Committee and University Staff assisted by the Endowment Investment Consultants conducted national searches for equity, fixed income, real estate and private equity managers. Requests for Proposals (RFP) were distributed to a list of qualified investment firms recommended by the Investment Consultants. All proposals submitted were evaluated using criteria established by the Investment Committee. The investment managers listed above were selected based on their proposals and/or presentations to the Investment Committee.
The Investment Committee monitors each investment manager's performance on a quarterly basis, assisted by University staff and the University's investment consultant.
The Investment Committee approves extensions of the investment manager agreements in June for the next fiscal year. The University retains the right in each of these contracts to cancel without cause with 30 days written notice.
Action Taken:        EZf Approved □ Disapproved □ Other


 

IC2
Office of the Treasurer June 16, 2008
Members, Investment Committee
APPROVAL OF REVISED ENDOWMENT INVESTMENT POLICY
Recommendation: that the Investment Committee approve the attached Endowment Investment Policy.
Background: The University's current Endowment Investment Policy was approved by the Investment Committee on January 1, 2006. Investment Staff and newly hired Investment Consultant, R.V. Kuhns & Associates, have performed a detailed review of the current policy in conjunction with the recent asset allocation study. Major changes to the policy include a revised asset allocation and manager structure, which includes new asset class allocations to absolute return, real return and value-added and opportunistic real estate. The asset allocation changes are proposed in order to increase future endowment returns and decrease the (risk) volatility of future returns.
Minor changes to the policy include the addition of a "purpose of the policy" section and an explicit requirement to review the policy on an annual basis. Additional changes include clarification of the assignment of responsibilities, delegation of authority, proxy voting, and performance evaluation. Lastly, a section on transition management has been added to reflect the practice already employed.
Action Taken:        EZf Approved □ Disapproved □ Other


 

UNIVERSITY OF KENTUCKY
ENDOWMENT INVESTMENT POLICY
Amended June 16, 2008
University of Kentucky University of Kentucky Research Foundation University of Kentucky Athletic Association The Fund for Advancement of Education and Research in the UK Medical Center University of Kentucky Business Partnership Foundation, Inc. University of Kentucky Mining Engineering Foundation, Inc. University of Kentucky Equine Research Foundation, Inc.
University of Kentucky Humanities Foundation, Inc. University of Kentucky Center on Aging Foundation, Inc.


 

Table of Contents
Page
I. General 3
II. Purpose of Investment Policy 3
III. Roles and Responsibilities 3
IV. Delegation of Authority 5
V. Financial and Investment Objectives 5
VI. Investment Policies 6
VII. Performance Evaluation 8
VIII. Investment Manager Structure 10
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I. General
The University of Kentucky Endowment ("Endowment") is an aggregation of gifts provided by donors with the requirement they be held in perpetuity to generate earnings now and in future years to support the University's programs of instruction, research and public service. Earnings from endowment investments support scholarships, chairs, professorships, basic research, as well as academic and public service programs. The Endowment provides stability since the principal is invested and earnings are generated year after year.
The University of Kentucky has a fiduciary responsibility to manage the Endowment prudently and to preserve the purchasing power of the Endowment in order to evenly support present and future beneficiaries. This fiduciary responsibility constitutes both a legal and moral obligation to donors who intend that their gifts provide support for the University in perpetuity.
II. Purpose of the Investment Policy
In general, the purpose of this policy is to outline a philosophy and attitude which will guide the management of the investment assets toward the desired results. It is intended to be sufficiently specific to be meaningful, yet flexible enough to be practical.
This investment policy is set forth by the Investment Committee ("Committee") of the University of Kentucky Board of Trustees in order to:
a. Define and assign the responsibilities.
b. Establish a clear understanding of the investment goals and objectives of the Endowment assets.
c. Offer guidance and limitations regarding the investment of Endowment assets.
d. Establish a basis of evaluating investment results.
e. Manage the Endowment's assets according to industry best practices and applicable laws.
The investment policy will be reviewed annually by the Committee and investment staff.
III. Roles and Responsibilities
Responsibilities of the Investment Committee
The Board of Trustees has established the Committee with members appointed annually by the Chair of the Board of Trustees. The Committee is responsible for the review and oversight of endowment investments of the University of Kentucky and its affiliated corporations, consisting of the Research Foundation, Athletic Association, The Fund, Equine Research Foundation, Business Partnership Foundation, Humanities Foundation, Mining Engineering Foundation, and Center on Aging
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Foundation.
Governing Regulation II, A.6.f of the University of Kentucky sets forth the specific responsibilities of the Investment Committee as follows:
Under delegation from the Board of Trustees, and consistent with KRS 164A.550 through 164A.630, the Investment Committee is responsible for review and oversight of the endowment investment programs of the University and its affiliated corporations. These responsibilities include: formulating and reviewing investment policies; appointing, monitoring and evaluating investment managers and consultants; and reviewing and approving plans for the general management of the endowment funds of the University.
The Investment Committee Chair reports to the Board of Trustees after each meeting of the Committee on the performance results of endowment investments. Policies of the Committee are implemented by the Office of the Treasurer in carrying out the day-to-day operations of the University's endowment funds.
NOTE: Revisions to the above Governing Regulation have been proposed to allow for the Chair of the Board of Trustees to appoint Community Advisory Members to the Investment Committee. The Investment Policy will be updated with the revised regulation upon approval by the Board of Trustees. Final approval of the revised regulation will be recommended to the Board of Trustees at the June 17, 2008 meeting (PR 3).
Responsibilities of Investment Staff
Investment staff ("Staff) will consist of the University Treasurer and the Assistant Treasurer for Investments. Staff is responsible for executing the policies and decisions enacted by the Committee and the general daily activities and administration of the Endowment assets. The Staff will prepare analysis and recommendations for the Committee on development of policies and guidelines, selection of an appropriate long-term asset allocation, and selecting an appropriate manager structure. The Staff will provide recommendations to the Committee as to the managers most appropriate for managing the Endowment's assets.
Responsibilities of Investment Consultant
The Committee may engage an independent Investment Consultant ("Consultant") to assist the Committee and Staff in developing policies and guidelines, selecting an appropriate long-term asset allocation, selecting an appropriate manager structure, identifying investment managers, evaluating investment performance, and offering other services as requested. The Consultant will prepare quarterly and annual assessments of investment performance that include results for the total endowment and each individual investment manager compared to appropriate market indices and manager universes. The Consultant will provide in-depth and detailed analysis of each manager's portfolio.
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IV.   Delegation of Authority
The Committee may delegate the following investment related activities to qualified industry experts, but will be responsible for the selection and oversight of the vendors.
Investment Custodian
The Committee will hire a Custodian for the University's endowment investments to establish and maintain direct account relationships with each investment manager and perform standard custodial functions, including security safekeeping, collection of income, settlement of trades, collection of proceeds of maturing securities, distribution of income, and daily investment of cash. The Custodian will provide monthly account statements and other reports as requested by the Staff.
Investment Managers
The Committee will delegate the selection, buying and selling of individual securities to qualified industry experts. Each individual investment manager will exercise discretion over assets in accordance with specified investment guidelines.
Investment managers that utilize separate accounts to manage Endowment assets will adhere to specific investment manager guidelines established by Staff with the assistance of the Consultant. Each investment manager using a separate account is required to summarize its holdings and transactions on a monthly basis.
Investment managers that utilize a mutual fund investment structure, a commingled trust fund structure or a limited partnership structure will have discretion to manage the assets in accordance with the policies and guidelines outlined in the respective mutual fund's prospectus, the commingled trust fund's offering memorandum or limited partnership's private placement memorandum.
All investment managers' guidelines and policies are located in the addendum of the Policy.
V.    Financial and Investment Objectives
The Investment Committee has established the following financial and investment objectives for the Endowment:
1. To preserve the purchasing power of the endowment assets and the related revenue stream over time to evenly allocate support between current and future beneficiaries (intergenerational equity).
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2. To manage the endowment assets in a single investment pool, employing multiple investment managers to gain specialization and diversification benefits of different investment asset classes and strategies.
3. To establish an annual spending rate policy of 4.5% of the average market value over the preceding 36 months.
4. To establish an annual management fee of .5% of the current market value.
5. To earn an average annual real return, after inflation and expenses, of at least 5% per year over full economic market cycles.
Uniform Management of Institutional Funds Act (KRS 273.520 to 273.590)
Endowment assets will be managed effectively and prudently in accordance with the provisions of the Uniform Management of Institutional Funds Act (KRS 273.520 to 273.590), which specifically requires trustees to consider both the long-term and short-term needs of the University. The Committee has established policies intended to accomplish the primary goal to preserve or increase the purchasing power of the Endowment by maximizing real total return, subject to risk constraints.
Spending Rate and Management Fee
The Investment Committee has established an annual spending rate policy of 4.5% of the average market value of the Endowment over the preceding 36 months to establish financial equilibrium for the Endowment by creating a balance between annual spending and the expected real (after inflation) return on assets. Additionally, the Endowment is assessed an annual management fee of .5% of the current market value to support administrative costs. The spending rate of 4.5% and the management fee of .5%, in concert with the target asset allocation policy is intended to support current and future program needs and allow the endowment value to grow at least equal to annual inflation.
VI.   Investment Policies
Diversification
The Committee will invest in different asset classes and engage multiple investment managers to ensure proper diversification of the Endowment. Investment diversification is essential to limit risks that include return volatility, the magnitude of potential losses, and manager underperformance. Equity investments will be diversified by market capitalization (company size), style (growth or value), industry, and country of domicile (as it will include non-U.S. based companies). Fixed income investments will be diversified by market sector, maturity, credit quality and issuer. Real estate investments will be diversified by property type, geographic location and investment style. Private equity investments will be diversified by strategy, including multiple venture capital, leveraged buyout,
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and special situation funds, by geographical allocation including U.S. and non-US investments, and by vintage year of investment. Real Return strategies will be diversified by asset class and manager. Absolute Return Strategies will be diversified by manager, investment strategy, and geographic location including U.S. and non U.S. managers.
In an effort to optimize and efficiently utilize due diligence research and diversification within the alternative asset classes, which includes Private Equity, Real Return, Absolute Return and Real Estate, a "fund of funds" ("FOF") investment structure will generally be used. Investing in an individual manager will need the approval of the Committee.
Asset Allocation
The Committee has established asset class targets and ranges as follows:
Asset Class	Investment Policy	
	Target	Range
Broad U.S. Equities	26%	21-31%
Broad Non-U.S. Equities	20%	15-25%
Total Equities	46%	41-51%
Private Equity	7%	1-9%
Real Return	7%	5-9%
Absolute Return	10%	8-12%
Real Estate	12%	10-14%
Total Alternatives	36%	31-41%
Fixed-Income	18%	15-20%
Total	100%	
Rebalancing
The Committee intends to maintain the actual asset class allocations within the target ranges outlined above. Allocations relative to targets will be reviewed at least on a quarterly basis to determine if rebalancing transfers between asset classes are necessary. In general, Staff will direct new endowment gifts to undertarget asset classes.
Liquidity
The Endowment is intended to provide a stream of annual income to the University in perpetuity. As a result, the Endowment has a long-term orientation. In addition, the withdrawal rate from the Endowment fund is well defined, predictable, and of modest size relative to the total assets, so the Endowment's need for liquidity is significantly lower than other institutional investors.
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Proxy Voting
The Committee delegates full authority for proxy voting to its investment managers for the securities under their discretionary authority and requires the investment managers to vote all proxies in the best interest of the Endowment. In addition, when requested, the managers will report to the Committee on their proxy-voting policies and activities on the Endowment's behalf.
Proxy voting related to governance issues regarding investment managers hired to manage Endowment assets, and their related investment legal structures, terms and conditions, will be voted on by the Staff in the best economic interest of the Endowment. The Staff may solicit assistance of the Consultant on governance issues.
Transaction Costs
The Committee requires the investment managers, in their capacity as fiduciaries, to manage the transactions costs they incur on the Endowment's behalf in the best interests of the University. When requested, the managers will report to the Committee on the transactions costs incurred and the brokers used on the Endowment's behalf.
Transition Management
Transitions between investment managers are an important and inevitable element of portfolio management, typically resulting from manager terminations or changes to the investment strategy of the portfolio. The optimal method to use in executing a transition may vary significantly from one transition to another based on the types of assets involved and the timeframe in question. Generally, the Endowment's objective in a manager transition is to implement the change in a cost-effective, timely manner while maintaining the appropriate market exposure. It is imperative to note that the cost of transition is not commissions alone, but also bid/ask spread, market impact and opportunity cost. The market impact cost is the effect trading will have on the market price of the shares being traded. The opportunity cost, sometimes referred to as implementation shortfall, is the cost of market movements over the time it takes to trade. Efforts should be made to minimize the total cost rather than any single cost component. Selecting a transition manager can be done at the Staffs discretion with the assistance of the Consultant.
VII.   Performance Evaluation
Endowment performance will be monitored and reviewed over full market cycles, generally three to five years, at three levels; total Endowment, asset class and individual manager. All three levels will include a passive index and peer group measurement review. Performance will be reviewed on a gross and net return basis and will include risk and risk adjusted returns.
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Performance Benchmarks
The total Endowment performance will be measured against:
1. CPI plus 5% real return
2. A Policy Benchmark consisting of passive indexes reflecting the Endowments "strategic target" asset allocation percentages
3. An Active Benchmark consisting of passive indexes reflecting the Endowments "actual" asset allocation percentages
4. A peer group universe of similar plans The asset class performance will be measured against:
1. The asset class' core passive index
2. A peer group universe of similar asset classes The individual managers' performance will be measured against:
1. The managers' specific passive indexes identified in the investment manager guidelines located in the addendum of the Policy
2. A peer group universe of similar investment styles Performance Expectations
It is expected within each level the Endowment, the asset class, and the individual managers should exceed the passive index return and should be above median against the appropriate peer group universes.
It is expected that risk (and risk adjusted returns) will be in line with the risk associated with the specific passive index benchmarks.
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VIII. Investment Manager Structure
Below is the investment manager structure and corresponding target asset allocations as established by the Investment Committee:
Manager
Broad U.S. Equity:
Manager TBD Manager TBD Total Broad U.S. Equity
Investment Strategy
Passive Russell 1000 (Large-Cap) Active Russell 2000 (Small-Cap)
Target Allocation
23.95% 2.05% 26.00%
Broad Non-U.S. Equity:
Manager TBD Manager TBD
Total Broad Non-U.S. Equity
Active MSCI ACW Ex U.S. (Core-Plus) Active MSCI ACW Ex U.S. (Core-Plus)
10.00% 10.00% 20.00%
Private Equity:
Commonfund Capital, Wilton, CT Pantheon Ventures, San Fran., CA Manager TBD
Fort Washington, Cincinnati, OH Chrysalis Ventures, Louisville, KY Total Private Equity
Private Equity Fund-of-Funds ("FOF") Private Equity FOF Opportunistic Private Equity FOF Regional Venture Capital Regional Venture Capital
2.94% 2.94% 1.12% 0.00%1 0.00%1 7.00%
Real Return:
Manager TBD Manager TBD Total Real Return
Real Return FOF Real Return FOF
5.25% 1.75% 7.00%
Absolute Return:
Manager TBD Manager TBD Manager TBD Total Absolute Return
Core Absolute Return FOF Core Absolute Return FOF Non-Core Absolute Return FOF
4.00% 4.00% 2.00% 10.00%
Real Estate:
UBS, Hartford, CT Manager TBD Manager TBD Total Real Estate
Core Real Estate Value Added Real Estate Opportunistic Real Estate
4.00% 4.00% 4.00% 12.00%
1 The Committee has committed $2 million and $1 million to Fort Washington and Chrysalis, respectively, to enhance the total return for the Endowment and provide leadership in economic development for the Commonwealth of Kentucky.
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Manager Investment Strategy Target Allocation Fixed Income:
PIMCO, Newport Beach, CA Core-Plus Fixed Income 9.00%
Reams, Columbus, IN Core-Plus Fixed Income 9.00% Total Fixed Income 18.00%
The target manager allocations shown above may be revised from time to time as a result of changes in the composition of the capital markets or the styles of individual managers. In addition, the allocations may be revised as a result of risk modeling analysis.
Definitions of the investment strategies are located in the addendum of the Policy.
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IC3
Office of the Treasurer June 16, 2008
Members, Investment Committee
APPRO VAT OF IMPTEMENTATION PTAN
Recommendation: that the Investment Committee approve the attached Implementation Plan Summary.
Background: The attached document details the implementation plan of the asset allocation and manager structure approved by the Investment Committee in IC2. Upon approval, the investment staff and consultant will move forward with requests for proposals and other actions outlined in this plan.
Action Taken: EZf Approved □ Disapproved □ Other


 

Implementation Plan Summary
High Level Action Items
1) Communicate new asset allocation policy to all existing managers.
2) Initiate and complete searches consistent with UK procurement rules.
3) Develop transition plan. All public equity assets are invested in commingled trust vehicles making the transition of cash from current to new managers a simple trade order process. UK will need to communicate with current managers to confirm liquidity constraints (daily, weekly, or monthly). Also, a decision must be made and affirmed on where to hold funds committed to private equity funds (both current and prospective) and new real estate funds prior to being able to deploy into these strategies.
4) Negotiate contracts with new managers; modify contracts with existing managers where strategy changes are implemented.
5) Coordinate and complete new account documentation for newly selected managers