University of Virginia's $7.6 billion long-term investment pool returned -1.5% in the fiscal year ended June 30.
The return lagged the 1.8% policy benchmark, said the annual report of the University of Virginia Investment Management Co., Charlottesville, which oversees the long-term pool. It returned 7.7% the previous fiscal year.
The report attributed the loss to a 3.2% decline in global equities, citing global growth concerns, geopolitical events and “unprecedented” monetary policy and low interest rates.
Those dropping interest rates helped UVIMCO's global public real estate portfolio gain 16.5% and bonds gain 6.7%, the report said, citing underweight allocations to them as a reason for the overall underperformance.
The long-term performance for five, 10 and 20 years exceeded the policy benchmarks and the university's spending rate. Returns were 8.5% annualized over five and 10 years, and 11.3% over 20 years. The policy benchmarks for five, 10 and 20 years are 6.1%, 5.4%, and 6.5%, respectively.
Lawrence E. Kochard, UVIMCO's CEO and chief investment officer, said in the report that the fund's long-term investment philosophy and approach “remain unchanged.” He said the increasingly macro-oriented market and short investor time horizons “create opportunities for managers to exploit differences between long-term value and current prices.”
As of June 30, the actual allocation was 24.6% public equity, 21.7% long/short equity, 17.1% private equity, 14% marketable alternatives and credit, 11.5% fixed income and cash, 6.6% real estate and 4.5% real asset resources.
