CharitableGiving

Endowment
Investment Policy
Statement
May 6th, 2015

CharitableGiving Mission
To offer
higher
education
opportunities
to children
from lowincome
families And
By providing

a reliable
source of
funds for
current and
future
students

enhancing
equitable
opportunity
for social
mobility

Investment Portfolio
Outflows
Asset
managem
ent fee
0.75%
Scholarshi
p payouts
2.5%

Inflows
Nominal
rate of
return
9.0%
CPI
inflation
2.0%

Risks
Sharpe
ratio 0.77
Standard
deviation
under
12.0%

Strategic Asset Allocation

Given the large size of CharitableGiving investment portfolio ($1

bn) the asset allocation favors alternative investments (40%) and
fixed income securities (38%). Expense ratio of 2.5% per annum,
and low liquidity needs enable the Endowment to accept higher
levels of risk.

Comparative Statistics

Source: National Association of College and University Business Officers,

Public NCSE Tables

Risk Tolerance
Endowments of similar size: Equity 40% and
Alternatives 44%
CharitableGiving: Alternatives 40% and Fixed Income
38%
CharitableGiving portfolio allows for high risk
tolerance due to its long-term horizon and low
liquidity
Nominal required rate of return of 9% is achievable
under barbell strategy (Alternatives high risk vs.
Bonds lower risk)
Equity allocation substantially lower compared to
peer group

Efficient Frontier

Optimal Asset Allocation

Strategic asset allocation meets investment risk and return
parameters:

Simulated Annual Rate of

Return

Monte Carlo Simulation

Asset Classes Return And Risk

Characteristics

Comparative Statistics

Simulation For Optimal Asset

Allocation

Diversification
Negative correlations across asset classes reduce overall risk of the
portfolio as illustrated in Fixed Income and Alternative Investments

Comparative Spending Rate

Thank You!