University of Virginia Returns 5.8% in 2019, Misses Benchmark

But endowment’s $9.6 billion portfolio outperforms over five, 10, and 20 years.

The University of Virginia endowment’s portfolio returned 5.8% for the fiscal year ended June 30, falling short of its benchmark portfolio’s 7.9% return, and down from last year’s 11.4% return. The returns raised the endowment’s total asset value to $9.6 billion from $9.5 billion a year ago.

Despite underperforming for the year, the endowment has outperformed both its benchmark portfolio and the Wilshire Trust Universe Comparison Service (TUCS) All Master Trust Universe over the long term.

For the five-, 10-, and 20-year periods ending June 30, Virginia’s long-term pool portfolio earned annualized returns of 7.0%, 11.0%, and 10.3%, respectively. This is compared with its benchmark portfolio’s 6.0%, 9.2%, and 5.9% returns, respectively, over the same time periods. The Wilshire TUCS All Master Trust Universe median in comparison showed returns of 5.8%, 9.1%, and 6.2%, respectively. The long-term pool’s passive policy portfolio benchmark is comprised of 60% equity, 10% real assets, and 30% fixed income. 

“After several years of below-average levels of market volatility, fiscal year 2019 was characterized by the return of volatility to equity markets,” Robert Durden, CEO and CIO of the University of Virginia Investment Management Co. (UVIMCO), said in the endowment’s annual report. “Although we anticipate the market environment will remain challenging, we will continue to follow our long-term investment philosophy and consistent investment process.”

It was the first full year the portfolio was managed by Durden, who joined UVIMCO in April 2018.

“During my first year as CEO/CIO, my primary priority was to review our existing investment policy and process,” said Durden. “As part of this effort, our team dedicated time to reviewing the risk tolerance of the university. We also conducted a deep-dive review of the long-term pool and re-underwrote our strategic asset allocation and liquidity framework, which will guide future decisions about the construction of our long-term portfolio.”

Private equity was by far the top performing asset class for the portfolio during the year returning 21.9%, followed by fixed income and public equity, which returned 6.6% and 6.1%, respectively. Real estate returned 5.1%, cash and currency returned 2.1%, and marketable alternatives and credit returned 1.4%. Resources was the worst performing asset class for the portfolio, losing 10.5% for the year.

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Virginia Will Lower Assumed Rate of Return for Its Retirement Fund

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