The Faculty Affairs committee met with the student group Divest UNF and their faculty advisor, Dr. David Jaffee. The group wishes to see UNF and the UNF Foundation divest from investments in fossil fuels. The group also requested the establishment of an Investor Responsibility Advisory Committee, to be formally recognized by the Board of Trustees and the Foundation Board. The Faculty Affairs committee also met with Vice President Shari Shuman, who discussed the UNF Foundation investment policies, strategies, and procedures (see below). In particular, it was noted that UNF does not directly invest in any public companies, but rather in mutual funds as well as some other investment vehicles. Given this investing model, the difficulty of divestment from fossil fuel companies was discussed as well as the fact that most public companies can be considered objectionable by one group or another. The goal of maintaining a good return on our investments, in order to fund scholarships and other needs, was also discussed. Vice President Shuman also discussed UNF's efforts regarding sustainability (see below). The UNF Board of Trustees Sub-Committee for Socially Responsible Investments considered a resolution on divestment in March of 2015 and decided to "maintain the current investment policy" (see March 3, 2015 minutes). The UNF Foundation Board has also considered divestment and also decided to maintain current policy. The Faculty Affairs committee has decided not to put forth any resolution at this time. Should the Divest UNF group wish to further pursue the formation of an investment committee, we recommend that such a request be made directly to the UNF Foundation Board. Should such a request be approved, the Faculty Association will facilitate the election of committee members.
The University of North Florida Foundation is a separate 501c3 entity that is created to support the University. They have their own board and governance structure. One of the committees of the Foundation Board is an investment committee that oversees the endowed and non-endowed investments.
Previously, the Foundation invested with the assistance of a Consultant. Using the Investment Policy as a guideline, the Consultant provided research, due diligence and manager and securities recommendations. For each sector, the consultant would recommend two to three companies, managers or funds for the particular investment style, such as equity growth, equity value, or fixed income. The committee would then make the final decision on the investment selection. This resulted in a bifurcated decision-making process in which neither side, the committee or the consultant, is fully responsible for the end results, and with the ever increasing complexity of investment options a fiduciary gap. With a quarterly meeting schedule, this method of management made it difficult to be responsible to sudden moves in the market, which did not support tactical asset-allocation in the portfolio.
The committee reflected on best practices in endowment management and recognized that the focus of bigger endowments has been on a wide array of assets which include a small portion of traditional stocks and bonds and a large portion of non-traditional alternative assets in the form of hedge funds, private equity, venture capital and real assets. The benefit fit of this style of investment is greater diversification, which mitigates risk, and decreased volatility, which can smooth out distribution streams. However, given the size of the University’s endowment, directly investing in this manner was not possible.
With the desire to diversify the portfolio and remain responsive in an environment of heightened volatility and investment complexity, the committee decided to switch to an outsourced chief investment officer (CIO) management model. Using this model, the committee would serve as the governing fiduciary, setting the investment strategy including asset allocation and selecting the CIO. The CIO would then be responsible for portfolio construction based on the asset allocation, manager due diligence & ongoing monitoring, portfolio rebalancing, risk management and reporting.
The selection of a CIO provided the university with the benefit of an entire team of investment professionals. The size of the endowment however still made it difficult to invest relatively small amounts of assets in a diversified manner. The solution to this is to hold a customized portfolio of commingled pools of investment funds. With this model, the University invests in commingled pools of funds managed by the outsourced chief investment officer to gain economies of scale and access to higher-level managers, and exposure to assets in the alternative space, such as private assets, private equity, real estate, natural resources, and hedge funds. The multiple-pool structure allows the CIO to tailor the University’s investment to the asset allocation, mandated by the Investment Policy, using pools of funds in the various asset classes.
The pooled portfolio is constructed by deploying assets to best-in-breed managers in each respective investment class. The University’s endowment is a portfolio of managers, not a portfolio of direct investments. Many of these managers maintain a “black box” around the proprietary mix of assets he has selected given his investment mandate. As such, the University does not have full transparency into the holdings of these managers. The University’s assets are pooled with those of other institutions, precluding the ability of institution specific cut-outs.
The Foundation investment committee believes that their fiduciary responsibility is to maximize the rate of return for the Endowment. This then enables the Foundation to provide the maximum amount of scholarships, fellowships and professorships. The investment model outlined above provides the most prudent and efficient course for fulfilling this mandate.
Since its founding in 1972, UNF has strived to protect the natural environment and has identified "responsibility to the natural environment" as one of its core values. UNF works to positively impact our environment through a variety of small and large ways. Through our actions, we seek to be a leader for our community in environmental responsibility. Below we list some of the broad spectrum of actions UNF has taken to be stewards of our environment and reduce our energy footprint. We believe that this multipronged approach encourages us to focus on all the various ways humans impact our environment.
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