ENDOWMENT REPORT
PAULA BURCH-CELENTANO
ENDOWMENT MANAGEMENT COMMITTEE Carol L. Bernick Polished Nickel Capital Management Ex-Officio Michael A. Corasaniti Tourmalet Advisors, LP Vice Chair Douglas J. Hertz United Distributors, Inc. Ex-Officio
Barry A. Malkin GEM Realty Capital, Inc. William A. Marko Jefferies LLC David M. Mussafer Advent International Corporation
Andrew B. Wisdom Crescent Capital Consulting Chair E. Pierce Marshall Jr. Élevage Capital Management, LLC
Table of Contents
Letter from the CIO 1 Endowment Support
2–4, 13
Market Events 5 Endowment Returns
6–12, 14
Staff 15–16 Location 17
LETTER FROM THE CIO Dear Faculty, Staff, Alumni and Friends of Tulane University, I am pleased to provide an update on the investment results of Tulane’s endowment for fiscal year 2020. This year’s returns of +2.6% for the Pooled Endowment and +4.6% for Eminent Scholars were modest, but masked increased volatility throughout the year surrounding the COVID-19 pandemic. After capping 2019 with a decent return on the back of what was then a strong global economic outlook and favorable market conditions, the Total Endowment entered an unprecedented year. The COVID-19 pandemic has taken a heartbreaking human toll with over 28 million cases and nearly 1 million deaths globally at the time of writing. The initial market reaction in March to the economic implications of the pandemic was quick and dramatic. Global equity markets fell over 30% from peak-to-trough, high yield credit spreads blew out to over 1000 basis points, and oil prices collapsed to under $20. Liquidity began to dry up at an alarming rate with even a back-up in the commercial paper market. These market moves and the economic uncertainty surrounding the pandemic escalated into the largest globally coordinated government stimulus effort. In the U.S. alone, fiscal stimulus has totaled $2.4 trillion and the Fed balance sheet is projected to reach nearly $7 trillion by December 2020. This unprecedented level of stimulus caused the drawdowns in the financial markets to promptly reverse course and has since propelled the markets to near pre-pandemic levels driven largely by U.S. mega-cap technology stocks. The Pooled Endowment and Eminent Scholars were not immune from both sets of macro shocks in 1H20. The portfolios largely participated in the initial drawdown and subsequent recovery as nearly all asset classes correlated to one and there were few places to seek diversification. However, strong active management in the global equity, private equity and marketable alternatives portfolios drove significant excess returns, resulting in Pooled Endowment and Eminent Scholars to exceed their respective benchmarks by 1.5% and 2.1%, respectively, for the fiscal year. The success of an investment program for an endowment is measured not in years, but in decades. Furthermore, success is measured by preserving the purchasing power of the endowment after spending (i.e., distributions to the University to support the operating budget), after inflation and after all fees and expenses. I am pleased to report that over the last ten years both the Pooled Endowment and Eminent Scholars portfolios have met, and materially exceeded, that objective. Our ten-year report card shows persistent value added across asset classes, a testament to the investment process executed by an experienced and stable staff and the vigilant oversight by the Endowment Management Committee. Over the last decade, that value added has compounded to $137.7 million of incremental market value across both portfolios. Last, but not least, it is with a bittersweet note that I write my last CIO letter for the Annual Report. For nearly 13 years I have had the honor to serve as the Chief Investment Officer for Tulane University. Effective September 30, 2020, I will be retiring from the University. I am grateful to the leadership at Tulane for providing me this opportunity and the many dedicated members of the board with whom I have had the privilege of working. While I am pleased by our investment results, I am most proud of the members of my team, both current and past, that I have had the pleasure of working with over the years. Many of them started their investment careers in our training program and those alumni of our program have gone on to work at other endowments, foundations and retirement plans across the country. I am confident that the close working relationship between the board and staff will continue to produce strong results long into the future.
Jeremy T. Crigler Chief Investment Officer, Tulane University
FISCAL YEAR 2020 ACCOMPLISHMENTS: F Hired three new managers and exited four across the marketable portfolios F Added to or trimmed from 18 existing managers F Committed $20 million to two new Enhanced Fixed Income managers F Committed over $130 million to private capital partnerships and co-investments F Added four new private capital relationships and re-upped with nine others F Completed an extensive (10th annual) review of all managers in the portfolio F Attended annual meetings across the US and globally F Conducted 800+ manager meetings, calls and conferences F Hired a new Performance Analyst, Mary Kopas, to our operations team F Completed our 12th annual summer analyst program and sponsored a Girls Who Invest scholar F Successfully transitioned to work-fromhome environment since March
2020 ENDOWMENT REPORT | 1
E NDOWMENT SUPPORT IMPORTANCE OF AN ENDOWMENT Protection – Innovation – Commitment After 186 years, Tulane University has established itself as one of the world’s preeminent educational and research institutions. The University’s mission exists in perpetuity. However, to continuously offer new programs and new services requires an ever-growing pool of financial resources. The Endowment is unique among the University’s revenue streams since it provides perpetual support for Tulane’s students, both current and prospective. To put the power of the Endowment in perspective, a $1.0 million gift made ten years ago and invested in the Pooled Endowment generated more than $556,000 in distributions used to recruit the highest quality students regardless of financial need, to pay professorships and fund basic research, and to perpetuate community service initiatives. Most importantly, that original gift remains intact today and will continue to fund Tulane in the future. We urge you to support the Endowment because these specific gifts ensure the long-term financial strength of the Institution, benefiting future generations of Tulanians.
COMPONENTS OF THE ENDOWMENT Pooled Endowment Eminent Scholars
MARKET VALUE $1,057.4 $209.8
Separately Invested
$145.1
University-Owned Real Estate
$16.6
Gift Annuities/Life Income Trusts
$16.8 $1,445.7 PAULA BURCH-CELENTANO
TOTAL ENDOWMENT
2 | 2020 ENDOWMENT REPORT
$1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200
POOLED ENDOWMENT
EMINENT SCHOLARS
SEPARATELY INVESTED
SEPARATELY INVESTED
FY 2019
FY 2020
FY 2017
FY 2018
FY 2015
FY 2016
FY 2013
FY 2014
FY 2011
FY 2012
FY 2010
FY 2009
FY 2007
FY 2008
FY 2005
FY 2006
FY 2003
FY 2004
FY 2001
FY 2002
FY 1999
EMINENT SCHOLARS
POOLED ENDOWMENT
FY 2000
FY 1997
FY 1998
FY 1995
FY 1996
FY 1993
FY 1994
FY 1991
FY 1992
FY 1989
FY 1990
FY 1987
FY 1988
$0 FY 1986
TOTAL ENDOWMENT (IN $MM)
EN DOWM EN T S U PPO RT
GIFTS, ANNUITIES & LIFE INCOME TRUSTS
GIFTS, ANNUITIES & LIFE INCOME TRUSTS
s
A. B. Freeman School of Business 7% School of Social Work 1%
Busines Financial Aid 15% School of Architecture 1%
School of Liberal Arts 14%
ork Social W
Law School 6%
Arts Liberal s Athletic
l Univ
Athletics 2%
School of Medicine 24%
General University 19%
Genera
, Centers
Ins
Science Centers, Institutes & Libraries 5%
School of Public Health & Tropical Medicine 3%
School of Science & Engineering 5%
ENDOWMENT SUPPORT BY PROGRAM 2020 2020 ENDOWMENT REPORT | 3
an
Public H
Medicin Law
Arch
E NDOWMENT SUPPORT Gift establishes Oliver and Carroll Dabezies Endowed Chair at Tulane School of Medicine A graduate and longtime clinical professor at Tulane University School of Medicine and his wife will be honored with a new endowed chair bearing their names. The Oliver and Carroll Dabezies Endowed Chair at Tulane School of Medicine will be established through a gift from Elizabeth Dabezies Goodyear and Charles W. Goodyear. The Oliver and Carroll Dabezies Chair will be held by the chairperson of the Department of Ophthalmology and will provide support for the chairperson’s work in clinical practice, research, professional development or service. “Dr. Dabezies lived a life devoted to service and family,” Tulane President Michael Fitts said. “This generous gift from Elizabeth Dabezies Goodyear and Charles W. Goodyear will ensure that the impact of Dr. Dabezies’ work as an internationally known leader in the field of ophthalmology continues through future generations.” “I have long wanted to do something that recognized my father’s contributions to the field of ophthalmology and specifically at Tulane,” said Elizabeth Goodyear. “I also wanted to honor my mother’s important supportive role in my father’s tremendous success in his academic work. With inspiration from my uncle, Eugene Dabezies, we decided that the best way to honor both of my parents was through this endowed chair at Tulane.” “My brother was dedicated to his family, his career in ophthalmology and was a fine member of the New Orleans community,” said Dr. Eugene Dabezies (A&S ’57, M ’60). “Honoring Oliver’s contributions with Carroll’s partnership in this way would have been so meaningful to them.” Dr. Oliver Dabezies received his undergraduate degree from Tulane in 1951 and his medical degree in 1954 and completed his residency at Tulane in 1958. Post-residency, he spent two years in the U.S. Army Medical Corps as a captain and director of the Resident Education Program at Walter Reed National Medical Center in Bethesda, Maryland. He returned to New Orleans in 1960 and taught in the Department of Ophthalmology until his retirement in 1999. Dr. Dabezies was recognized for his leadership roles in national organizations and was one of the pioneers in the development and use of contact lenses. Among his other achievements, Dr. Dabezies served as a founding member and president of the Contact Lens Association of Ophthalmologists (CLAO), served as its executive vice president for 11 years and authored its textbook on contact lenses. Through his association with CLAO, he became involved with the American National Standards Institute and chaired the group that formulated standards for contact lens solutions. He also created the International Contact Lens Society of Ophthalmologists.
4 | 2020 ENDOWMENT REPORT
He served on the board and was vice president of the American Academy of Ophthalmology and was secretary of the American Medical Association Ophthalmology section. He was a widely published writer and editor, held four active hospital affiliations, was a member of 11 medical societies, a lecturer at national and international meetings, and maintained a busy practice. Dr. Dabezies helped to establish the Southern Eye Bank, serving on the board for 42 years and was president at the time of his death. He was the first recipient of the Eye Bank Distinguished Service Award. Dr. Dabezies was President of the Tulane Medical Alumni Association from 1991-1992, received Tulane Medical School’s Distinguished Service Award in 1994 and was named Tulane Alumni Association’s Outstanding Alumnus in 1994. “Dr. Dabezies had a tremendous impact on the future of eye health here in New Orleans, across the country and around the world,” said Dr. Lee Hamm, dean of Tulane University School of Medicine. “This endowed chair will further his legacy in education and outreach.”
MARKET EVENTS FISCAL YEAR 20 The MSCI ACWI ended the fiscal year up a muted +2.1%, disguising much of the market turmoil that prevailed, including VIX levels that surpassed GFC peak levels. Despite some volatility due to the US-China trade war, risk assets enjoyed a strong 2H19 with the MSCI ACWI returning +8.9%. However, the onset of the COVID-19 pandemic and the related economic shutdowns in 1Q20 caused steep declines in global equities and risk assets, leaving FY 2020 returns either muted or down, despite the sharp rally in 2Q. Once again, the S&P 500 led other developed markets with a return of +7.5% driven largely by information technology (+36%). In fact, the six largest technology companies in the index – Facebook, Apple, Amazon, Netflix, Google and Microsoft (FAANGM) – returned +49.1% for the year on a market cap weighted basis and now represent nearly 24% of the Index. Conversely, more cyclical sectors such as energy (-36%), financials (-14%), and industrials (-9%) were all hit hard by the pandemic as these sectors are strongly tied to economic growth. International markets fared less well and ended the fiscal year down -4.3%. Europe was down -5.9%, with the UK (-18%) serving as a notable detractor, as the country has been hard hit by the pandemic and is still dealing with Brexit uncertainty. The broader Asian markets were up marginally at +1.5%, led largely by Greater China (+13%) and to a lesser extent Japan (+4%), offsetting losses in India (-18%) and Southeast Asia, which have struggled with economic recessions and weak currencies. Latin America was hit particularly hard, posting losses of -32.0%, as the region has been roiled by a collapse in the commodity sector while it struggles to contain an exponential surge in COVID cases. In private markets, strong fundraising and mounting dry powder combined with robust debt markets kept private equity valuations afloat. However, due to COVID-19, both deal volume and exits have fallen sharply in 2020, reflecting the economic recession and market uncertainty. Consequently, private equity distributions have dried up, especially for buyout strategies. During the 12 months ending 1Q20, Cambridge Associates’ global private equity benchmark generated a pooled IRR of +3.6%, led by Venture Capital which generated a pooled IRR of +9.1%. Private energy markets suffered from the largest ever drop in crude demand, supply shocks, a dearth of capital, and lack of investor interest due to ESG concerns. Cambridge Associates’ natural resources benchmark generated a pooled IRR of -28.3% in the 12 months ending 1Q20. Meanwhile, investors sought safety in core sovereign bonds, which benefitted from central bank rate cuts. The Fed’s $7 trillion in monetary stimulus allowed corporate bonds and the majority of structured credit instruments to retrace steep Q1 declines and, in the case of U.S. investment grade credit, to finish the year higher. Spurred by inflation concerns and risk-off sentiment, gold outperformed among real assets, returning +26.3%. Meanwhile, all
other major commodities declined due to a fall in global demand. The headline numbers obfuscate the large divergence between sectors and market capitalizations. While the technology-heavy NASDAQ-100 Index was up over 27%, the smaller cap Russell 2000 Index was down -6.7%. The Russell 1000 Pure Growth Index outperformed the Pure Value Index by nearly 50% and has now outperformed by 18% annually over the last 5 years. Moreover, while the S&P 500 exceeds the 90th percentile in historical valuation, international markets offer far more compelling valuations. It appears for now that investors have remained sanguine on the prospects of a V-shaped recovery, despite disconcerting economic data and no enduring signs of a decline in COVID-19 cases. Meanwhile, risks continue to mount surrounding the implications of unprecedented government stimulus, deglobalization, and the upcoming U.S. elections. We continue to closely monitor the portfolio, deploy capital opportunistically and manage risk accordingly.
FISCAL YEAR 2020 ENDOWMENT HIGHLIGHTS
F Total Endowment ended the year at $1.4 billion F Distributions to support the operating budget totaled $61.2 million F 45 new Endowment Funds were created during the fiscal year F New gifts and transfers into the Endowment totaled $26.6 million F Combined return of +3.0% for Pooled Endowment and Eminent Scholars
CAPITAL MARKETS PERFORMANCE AS OF FISCAL YEAR END 2020
US EQUITY
1 YEAR
3 YEARS
5 YEARS
10 YEARS
NASDAQ 27.0% 19.2% 16.4% 18.3% RUSSELL 2000 -6.7% 2.0% 4.3% 10.5% S&P 500 7.5% 10.7% 10.7% 14.0% _______
INTERNATIONAL EQUITY
MSCI AC ASIA EX-JAPAN 1.9% 3.9% 4.7% 6.2% MSCI AC WORLD EX-US -4.3% 1.7% 2.8% 5.5% MSCI EMERGING MARKETS -3.1% 2.2% 3.3% 3.6% _______
FIXED INCOME
BARCLAYS AGGREGATE 8.7% 5.3% 4.3% 3.8% BARCLAYS 5-YR OTR TIPS 3.4% 2.7% 2.0% 1.7% MERRILL LYNCH HY MASTER II -1.1% 2.9% 4.6% 6.5% _______
MARKETABLE ALTERNATIVES
HFRI EQUITY HEDGE HFRI FUND OF FUNDS HFRI EVENT DRIVEN
0.6% 0.5% -4.4%
3.0% 2.3% 0.7%
3.1% 1.5% 2.0%
4.5% 2.8% 4.0%
2020 ENDOWMENT REPORT | 5
E NDOWMENT RET URNS POOLED POLICY PORTFOLIO
POLICY PORTFOLIO
The market value of the Pooled Endowment was $1.057 billion as of June 30, 2020. The investment of Tulane University’s endowment assets is governed by the Investment Policy Statement, which is reviewed at least annually by the Endowment Management Committee of the Board of Administrators. This document sets forth governance principles, investment objectives, and risk parameters. The Policy Portfolio for the Pooled Endowment included in the Investment Policy Statement represents the expected allocation of assets that will satisfy these return objectives and risk parameters. While formulated based on long-term data series, the Policy Portfolio is dynamic and responsive in its implementation to prospective economic conditions, risks, and opportunities presented by market dislocations. The static benchmark uses the Policy Portfolio’s weights as shown to the right and serves as one of the Pooled Endowment’s performance benchmarks. Over the long term, the goal is to preserve the endowment’s purchasing power after spending and inflation.
Cash 1.0%
Fixed Income 9.0%
Cash
Private Real Assets 10.0%
Global Equity 30.0%
Private
Public Real Assets 2.5%
Public R
Market Marketable Alternatives 27.5%
Private Private Equity 20.0%
Global
HISTORICAL PERFORMANCE (NET OF FEES)
15%
10%
8.1% 5.7%
6.2%
6.8% 5.3%
6.6%
6.3%
5%
6.9%
6.8%
5.1%
2.6% 1.1% 0%
CHERYL GERBER
-5%
6 | 2020 ENDOWMENT REPORT
Fixed In
1 YEAR POOLED
3 YEARS STATIC BENCHMARK
5 YEARS
10 YEARS SPENDING + CPI
EN DOWM EN T RET U RN S POLICY PORTFOLIO Cash 1.0%
Cash
Fixed Income 25.0%
Fixed Inc Global Equity 51.5%
Private R
Public Re
Private Real Assets 2.5%
Marketab
Public Real Assets 5.0%
Private E Marketable Alternatives 10.0%
Global Eq
CHERYL GERBER
Private Equity 5.0%
HISTORICAL PERFORMANCE
EMINENT SCHOLARS POLICY PORTFOLIO The Endowed Chair and Endowed Professorship programs under the Louisiana Board of Regents matching program are collectively known as the Eminent Scholars Endowments. The same Investment Policy Statement governs both the investment of these assets as well as the Pooled Endowment. However, the Eminent Scholars’ Policy Portfolio is tailored to satisfy specific conditions of this matching program. These conditions include greater reliance on public stocks and bonds and limited use of hedge funds and private capital. Therefore, the resulting benchmark for the Eminent Scholars Endowments shown to the right is different from that of the Pooled Endowment. Despite these differences, both the Eminent Scholars and Pooled Endowment portfolios have generated similar 3 and 5-year annualized returns. In recent years, the matching program conditions were broadened, allowing for a more dynamic, diversified asset allocation. Mindful of the conditions under which these funds are generously matched by the state, many of the same investment managers and strategies are used in both portfolios.
(NET OF FEES)
15%
10%
8.3% 6.8% 5.7% 4.6%
5%
5.9%
6.1%
5.3%
7.2%
6.6%
6.8%
5.3%
2.5%
0%
1 YEAR
3 YEARS
EMINENT SCHOLARS
5 YEARS
STATIC BENCHMARK
10 YEARS CPI + 5%
2020 ENDOWMENT REPORT | 7
E NDOWMENT RET URNS
8 | 2020 ENDOWMENT REPORT
EN DOWM EN T RET U RN S ASSET CLASS SUMMARIES
PUBLIC REAL ASSETS
GLOBAL EQUITY
The Endowment’s Public Real Assets portfolio is intended to protect against unanticipated spikes in inflation and provide liquidity for growing the Private Real Assets portfolio. Inflationary spikes can manifest in various ways, so Tulane holds a diversified mix of assets to hedge against inflation risk. The portfolio currently includes one active manager that invests in US midstream energy assets and MLPs. The Endowment also added a passively managed mutual fund that provides diversified exposure to energy, agriculture, industrial metals, precious metals, and livestock. During the fiscal year, the portfolio detracted -21.9%, largely driven by the COVID-19 induced demand shock and subsequent decline in commodity prices. We remain underweight the asset class but will continue to pursue tactical opportunities to deploy capital given the discounted environment.
The Endowment’s Global Equity portfolio is comprised of 14 managers who invest in publicly- listed companies across the U.S. and international markets. The portfolio aims to capture the growth of the global economy and outperform passive indices through investments with high quality active managers. During the fiscal year, the portfolio returned 7.3%, strongly outperforming the 2.1% return of the MSCI All Country World Index. The domestic portfolio beat its US benchmark by over 900bps while the international portfolio beat its benchmark by over 300bps. Longer term results also remain strong with Global Equity having outperformed the MSCI ACWI over the last three, five, and ten years. During the year, our team added one new manager focused on international micro-cap companies and terminated a Japan manager.
PRIVATE EQUITY The Endowment’s Private Equity portfolio consists of 38 firms investing globally across buyout, venture capital, growth equity, and distressed strategies. The portfolio generated a strong return of 12.2% during the year on a mark-to-market basis, well ahead of the Cambridge Associates PE Index return of 3.6%. Our team was very active during the year, adding three new managers including two in venture and one in growth equity. In addition, we re-upped with nine of our top managers, including one distressed, two buyout, two venture, and four growth equity managers.
MARKETABLE ALTERNATIVES The Endowment’s Marketable Alternatives portfolio aims to achieve attractive risk-adjusted returns that are uncorrelated to traditional asset classes, providing valuable diversification and downside protection in times of market stress. The Marketable Alternatives portfolio consists of 19 managers providing exposure to strategies such as long/short equity, multi-strategy, event-driven, as well as private and opportunistic credit. During the fiscal year, the Marketable Alternatives portfolio returned 1.7% versus the HFRI Fund of Funds Composite return of 0.5%, largely driven by returns in Long/Short Equity, which was up 13.6%. A long/short TMT manager, healthcare manager, and Asia manager were the largest contributors to returns. Detractors included a few credit managers and an alternative risk premia manager. During the year, we added 5 funds (1 new manager) and terminated 3 managers.
PRIVATE REAL ASSETS The Endowment’s Private Real Assets portfolio consists primarily of energy, real estate and mining. Following a difficult year for the asset class in fiscal year 2019, the Private Real Assets portfolio again faced significant headwinds in fiscal year 2020 as the COVID-19 pandemic significantly stressed commodity markets and select real estate assets. The challenged environment led to a -21.6% return for the asset class. While we believe the portfolio has embedded value at today’s valuations, we remain underweight the asset class and continue to be cautious when considering new commitments. As a result, we added just one new manager in Private Real Assets over the past year.
CORE FIXED INCOME The Endowment’s Core Fixed Income portfolio includes exposure to U.S. Treasuries, agency mortgages, and investment grade bonds. Fixed income generally provides moderate returns but dampens volatility as a hedge against deflation and declining equity markets. We view this portfolio as a source of liquidity under crisis conditions. During the fiscal year, fixed income markets remained challenging with increased credit risk due to COVID-19 disruptions and historically low yields, including nearly $13 trillion in negative yielding bonds globally. The Core Fixed Income portfolio generated a return of 4.8%, underperforming the 7.1% return of the Barclays’ U.S. Intermediate Treasury Index, largely due to credit exposure and shorter duration. Given today’s risk versus reward, we remain underweight the asset class, which is offset by a higher allocation to cash.
2020 ENDOWMENT REPORT | 9
EN DOWMENT RET URNS PAULA BURCH-CELENTANO
TOTAL POOLED AND EMINENT SCHOLARS VALUE ADDED Together, the Endowment Management Committee and Staff strive to add value over the Policy Portfolio through manager selection, constructive asset allocation, and tactical implementation without adding undue risk. As shown in the graph below, our collective effort over the last ten years has produced a compounded $137.7 million of additional value, resulting in $28.7 million of additional payout to the University. During this period, the Endowment has also had a lower realized volatility. Our collective investment process seeks to continuously enhance the portfolio’s risk-adjusted returns to preserve the purchasing power of the Endowment over time, given the current economic environment.
POOLED + EMINENT VS. STATIC BENCHMARKS $20.8 $24.8
-$0.7
$160.0 $140.0 $120.0
$45.0
$100.0 $80.0
$32.1
$60.0
-$8.6
$15.6
$40.0
$21.2
($14.3)
$1.7
FY 11
FY 12
$20.0 $
FY 13
FY 14
FY VALUE ADDED
10 | 2020 ENDOWMENT REPORT
FY15
FY16
FY17
FY18
CUMULATIVE VALUE ADDED
FY19
FY20
$(20)
EN DOWM EN T RET U RN S PAULA BURCH-CELENTANO
ENDOWMENT PERFORMANCE VS. CAMBRIDGE PEERS A wide variety of metrics, such as a constructed asset class benchmark based on our policy portfolio or a passive market index, are used to evaluate the performance of our portfolios. Most importantly, we measure our long-term results versus our principal objective, which is to preserve the purchasing power of the Endowment after spending and inflation. However, we also pay attention to how our colleagues at other foundations and endowments manage similar long horizon portfolios. In this regard, Tulane had a strong year given that the average endowment returned 0.7% and the cutoff for top quartile was 2.4%. Of the ~400 institutions reporting to Cambridge Associates, Tulane’s 3.0% for fiscal year 2020 is well within the top quartile of all returns in the country. Even more importantly, our three-, five-, and ten-year returns also fall in the top quartile. Much like U.S. News & World Report rankings, these data points make for good cocktail chatter but are not our primary objective. We have immense respect for our industry colleagues, each of whom has a unique risk profile driven by institutionally specific criteria. We often invest in many of the same managers and openly share our research and analysis. And so, while our peer ranking is noteworthy, it is just one metric among many that we use to evaluate results.
TULANE VS. CAMBRIDGE ENDOWMENT COMPOSITE (PERIODS ENDING 6/30/20201)
10.0%
TOP 5% 7.5%
X
5.0%
X
TULANE 25%–50%
X
50%–75%
2.5% 0.0%
X
X
MEDIAN BOTTOM 5%
-2.5% -5.0%
1 YEAR
TULANE2 3.0% TOP Q 2.4% MEDIAN 0.7% N 404
3 YEARS
6.2% 5.6% 4.6% 398
5 YEARS
6.3% 5.4% 4.7% 392
10 YEARS 8.2% 7.7% 7.0% 365
Preliminary performance as of September 17, 2020 Represents the performance of the Endowment's Total Combined Assets
1 2
2020 ENDOWMENT REPORT | 11
E NDOWMENT RET URNS 5- AND 10-YEAR PERFORMANCE VS. PEERS
SHARPE RATIO (5 YR.)
Tulane’s Endowment has enjoyed particularly strong results over the last five and ten years. Generally, strong returns should be viewed with some skepticism, since higher returns are often the result of taking additional risk. However, Tulane has achieved strong returns without taking on additional risk, as evidenced by the Sharpe ratio. Over the last five years, the Endowment’s Sharpe ratio was 0.73x, ranking Tulane in the 95th percentile among peers. Similarly, over the last ten years, the Endowment achieved a Sharpe ratio of 1.1x, placing it in the 92nd percentile among peers. 5TH 25TH 50TH 75TH PERCENTILE PERCENTILE PERCENTILE PERCENTILE
95TH PERCENTILE
TULANE UNIVERSITY
0.2 0.4 0.5 0.7 0.8
Another way to show the relationship between risk and return is using a scatter plot. When compared to the 359 endowments in the Cambridge Associates Endowment Composite database, the Endowment ranks in the 86th and 9th percentiles for both return and volatility, respectively, as shown in the upper left quadrant of the chart below. The combination of unusually muted market volatility along with Tulane’s asset allocation and strong manager selection has resulted in exceptional risk-adjusted returns over the last12.0 five and ten years.
10 YEAR RISK VS. PEERS
11.0 11.0
10 YEAR RETURN
10.0 10.0
9.0 9.0 TULANE
8.0 8.0 MEDIAN
7.0 7.0
THE HERTZ FAMILY
6.0 6.0 5.0 5.0 4.0 4.0
4.0 4.0
5.0 5.0
6.0 6.0
7.0 7.0
8.0 8.0
9.0 9.0
10 YEAR VOLATILITY 12 | 2020 ENDOWMENT REPORT
10.0 10.0
11.0 11.0
12.0 12.0
13.0 13.0
14.0
EN DOWM EN T S U PPO RT Tulane Center for Sport receives $5.5 million gift from Hertz Family Foundation
Sport, a common thread that can unite people from every culture across the globe, is an integral part of everyday life. The central mission for the Tulane Center for Sport is devoted to the study, research and support of all areas where sport engages society, not only as entertainment or competition on the field of play but in human health, complex legal issues, labor agreements, sports marketing and finance, media, data analytics, venue architecture and much more. Tulane University is uniquely situated to bring together academics and the subject of sport through the Tulane Center for Sport, which is designed to harnesses the unique power of sport to educate, improve and inspire. This innovative and interdisciplinary center has received a $5.5 million gift from the Douglas J. Hertz Family Foundation, Inc. The Hertz Family Foundation fund will support initiatives for current faculty members and leadership, attract prominent faculty members, visiting professors and adjunct instructors to the center while continuing to support and expand its existing nationally recognized programs, along with building on emerging industry sectors. The gift will also assist with an administrative position that will oversee the planning, coordination and implementation of sports law competitions, the Tulane Sports Executives Club, the Tulane Center for Sport Speaker Series, career services opportunities and other initiatives. “This generous gift continues the Hertz family tradition of providing transformative support to the academic mission of Tulane,” said President Michael Fitts. “This gift will strengthen the Center for Sport’s role as a national leader in the study of athletic competition and its far-reaching impact on so many aspects of the human condition.” “Our family is thrilled to support the vision of interdisciplinary studies on a subject that has become so important in the daily lives of many Americans,” said Doug Hertz (A&S ’74, B ’76), the immediate past chair of the Board of Tulane.
add substantial new programming that I am certain will be of great interest to our students and many others.” In addition to his role on the Board of Tulane, Doug Hertz has served his alma mater in several capacities, including the business school council, the Yulman Stadium Steering Committee and as past chair of the Tulane Board Committee on Intercollegiate Athletics. He received the A. B. Freeman School of Business’ Outstanding Alumnus Award in 2003. Lila Hertz was a member of the former Dean’s Advisory College for Newcomb College. Both Doug and Lila are past members of the Tulane Parents Council. Amy Hertz Agami is the president of the Douglas J. Hertz Family Foundation, Inc., which primarily supports nonprofits that serve children and community, health and medical research, higher education and Jewish causes in the cities of Atlanta and New Orleans. Michael J. Hertz is the executive vice president and chief operating officer of United Distributors, a beverage distribution company that operates in the Southeastern United States. The Hertz family established the Lila L. and Douglas J. Hertz Endowed Chair in Psychology in 2007, named the Doug and Lila Hertz Center in 2011, were lead donors to Yulman Stadium, donated to the A. B. Freeman School of Business and the New Orleans Culinary & Hospitality Institute and has made numerous other significant contributions in support of Tulane. Gabe Feldman, the Sher Garner Professor of Sports Law (the first endowed sports law professorship in the country), the Paul and Abram B. Barron Professor of Law and the Director of the Tulane Sports Law Program, and Dr. Greg Stewart, the Chief of the Section of Physical Medicine and Rehabilitation and W. Kennon McWilliams Professor in Sports Medicine, are the co-founders and co-directors of the Tulane Center for Sport.
Hertz and his family are the catalysts behind the gift. Hertz, along with his wife, Lila Loewenthal Hertz (NC ’76), daughter Amy Hertz Agami (NC ’02), son Michael J. Hertz (B ’05), and sister Patricia Jill Hertz Reid (B ’79) each graduated from Tulane.
“Through the support of the Hertz family, we will be able to enhance our interdisciplinary study, research, teaching and community engagement of all levels of the sports industry,” said Feldman. “There is no better or more important time than now to leverage the expertise across Tulane’s campus- from law to business, medicine, social work and many others- to harness the power of sport to educate our students and to impact social change. We are grateful to the Hertz family for all of their support and their vision in helping us continue to be an academic leader in the sports industry.”
“The Center for Sport is an exciting opportunity to further enhance the reputation of Tulane University, building on our national leadership in sports medicine and sports law,” said Robin Forman, Tulane’s Senior Vice President for Academic Affairs and Provost. “This extraordinary gift from the Hertz Family Foundation will greatly energize the work of the center and allow us to
“The ongoing support of the Hertz family has played a vital role in the development of the Tulane Center for Sport,” said Stewart. “This gift allows us to start a new, exciting chapter by funding immediate needs and moving strategic projects to the next stage. This contribution truly sets the foundation for the future of the Tulane Center for Sport.” 2020 ENDOWMENT REPORT | 13
E NDOWMENT RET URNS SEPARATELY INVESTED FUNDS
Large endowments, typically $1 million or more, which are not invested in the Pooled Endowment due to specific donor restrictions are invested separately. These funds are overseen by the Department of Treasury and Trust Investment Office in New Orleans. At fiscal year-end, the Separately Invested Endowment Funds totaled over $145 million. They are comprised of common stock, fixed income, private equity, venture capital, money market, and donor-directed externally managed accounts.
GIFT ANNUITIES AND LIFE INCOME TRUSTS Tulane University Life Income Trusts and Annuities totaled over $16 million as of June 30, 2020. Most of these assets are managed by State Street Global Advisors (SSGA), and payments are made to the donor or other designated beneficiaries for a specified term or life of the beneficiaries. The remainder assets are typically contributed to Tulane’s Endowment. These funds are comprised of common stock, fixed income, and real estate investment trusts. The asset allocation is determined based on age of beneficiaries, term of trust, payout rate, and any special circumstances.
SEPARATELY INVESTED ENDOWMENT FUNDS
MARKET VALUE
Murphy Institute
$80.3
Celia Scott Weatherhead
$39.3
Samuel Stone CIPR Trust
$17.8
Vanselow / Pediatric
$3.4
All Others Combined
$4.2 $145.1 SALLY ASHER
TOTAL SEPARATELY INVESTED
14 | 2020 ENDOWMENT REPORT
PAULA BURCH-CELENTANO
STA F F
JEREMY CRIGLER, CHIEF INVESTMENT OFFICER
Jeremy joined the Investment Management Office in January 2008 and is responsible for all aspects of managing the endowment and related assets. His 25+ years of investment experience include Senior Investment Officer at Cornell University and Investment Director at Duke Management Company. He has a BSM in Finance from Tulane’s A. B. Freeman School of Business and an MBA from the Fuqua School of Business at Duke University. He is also Chairman of the Board of Trustees of Cardigan Mt. School.
RICHARD CHAU, MANAGING DIRECTOR
Richard joined the Investment Management Office in September 2013. Prior to Tulane, he helped manage a multi-billion dollar global private equity portfolio in Bessemer Trust’s Private Equity Funds Group. Before Bessemer, Richard worked in the investment office at The Andrew W. Mellon Foundation. His previous experience also includes investment banking at Houlihan Lokey and investment consulting at Cambridge Associates. Richard has a BA in Economics and Chinese from Williams College and an MBA from Columbia Business School.
JULIA MORD, MANAGING DIRECTOR
Julia joined the Investment Management Office in May 2014 and is responsible for all public markets investing. From 2006 to April 2014, Julia was an investment officer at AI International, an NYC-based family office, where she was responsible for co-managing a multi-asset class portfolio. Prior to her experience at AI International, Julia worked at Jefferies & Company and Ernst & Young. Julia has a BA in Economics from the University of Chicago, an MBA from The Wharton School at the University of Pennsylvania and is a CAIA charterholder.
PAUL WEAVER, DIRECTOR OF INVESTMENT ACCOUNTING
Paul joined the Investment Management Office in September 2008. From 2005 to 2008, Paul worked at OpHedge Investment Services as Director of Fund Accounting where he was responsible for managing the accounting group and for calculating NAVs of large, complex hedge funds. Before OpHedge, Paul had over 20 years of experience working in various accounting related roles for both hedge funds and large financial firms. Paul holds an MBA with a concentration in International Finance from Pace University
2020 ENDOWMENT REPORT | 15
STA FF JAKE KRIEGSFELD, DIRECTOR
Jake joined the Investment Management Office in June 2013 after previously completing an internship with the Office. He graduated summa cum laude from Tulane’s A. B. Freeman School of Business in 2013 with a BSM in Finance and as a member of the William Wallace Peery Society, which recognizes 15 graduating seniors for academic excellence. Jake also earned a minor in Spanish and completed an international business program in Madrid, Spain. Jake is a CFA charterholder.
BRAD BAUGUSS, INVESTMENT ASSOCIATE
Brad joined the Investment Management Office in July 2015 after completing an internship with Intrepid Capital Management the previous summer. He graduated cum laude from Tulane’s A. B. Freeman School of Business in 2015 with a BSM in Finance and Economics and a Specialization in Entrepreneurial Management. Brad is a CFA charterholder.
EDWARD ROMAN, INVESTMENT ANALYST
Edward joined the Investment Management Office in August 2018 after completing an internship with the Office. He graduated magna cum laude from Tulane’s A. B. Freeman School of Business in 2018 with a BSM in Finance and Management Consulting and a minor in Economics. Edward is a CFA Level II candidate.
JANINE JANDROSITZ, DEPARTMENT ADMINISTRATOR
Janine joined the Investment Management Office in August 2016. Before joining the team, she worked for ten years as the VP of Administration for Lincoln Healthcare Leadership where her role encompassed Human Resources and Office Management. She also worked as an Executive Assistant for Greenbriar Equity. Janine has a BS in Business Management from the University of Redlands.
ROBERT LYCOUDES, PERFORMANCE ANALYST
Robert joined the Investment Management Office in January 2017. From November 2014 to January 2017, Robert worked in the Margin Lending department at Goldman Sachs. Before that, he worked at Interactive Brokers and interned at UBS Private Wealth Management. He received his BS in Mathematics and Finance from Sacred Heart University in 2012.
MARY KOPAS, PERFORMANCE ANALYST
Mary joined the Investment Management Office in February of 2020. She has worked most of her career in accounting and finance roles for government contractors, Norden Systems, a division of United Technologies, as well as Northrop Grumman. She also has experience in the non-profit sector as an accountant at Norwalk Hospital Foundation and Americares Foundation. She is a graduate of the University of Connecticut with a BS in Accounting.
MAX GEVIRTZ, INVESTMENT ANALYST
PAULA BURCH-CELENTANO
Max joined the Investment Management Office in February 2019. From August 2016 to January 2019, Max worked at Grant Thornton LLP in their Advisory Services department. He graduated cum laude from Tulane’s A.B. Freeman School of Business in 2016 with a BSM in Finance and a Master of Accounting. Max is a CPA and is a CFA Level II candidate.
16 | 2020 ENDOWMENT REPORT
SALLY ASHER
LO C AT I O N
LOCATION, LOCATION, LOCATION As one of the first universities to locate their investment office away from campus - 1,354 miles away in Darien, Connecticut - Tulane has been recognized for its innovative approach to endowment management, paving the way for several other schools to follow our path and locate off-campus. Our motivation to locate the office in the New York City region was to provide staff with the best possible access to investment managers, research firms and industry conferences that are frequently held within the New York and Boston corridor. The central location allowed the team to participate in over 800 manager meetings, calls, and conferences in fiscal year 2020 alone. Conveniently located right off of the Metro North rail line and I-95, the office location allows for a quick trip into Manhattan or other nearby financial centers including Greenwich, Stamford, Boston, and Washington, DC. 2020 ENDOWMENT REPORT | 17
Temporary classrooms adorn Tulane University’s uptown campus. The new classrooms were designed and constructed to provide additional space to enable social distancing to minimize the potential spread of COVID-19.
Tulane University • Investment Management Office • 9 Old Kings Hwy, South • Darien, CT 06820 • (203) 716-8470