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TULANE UNIVERSITY ENDOWMENT REPORT
Table of Contents
ENDOWMENT MANAGEMENT COMMITTEE William A. Marko Jefferies LLC Chair Suzanne B. Grant Delaware State Pension Fund Vice Chair Carol L. Bernick Polished Nickel Capital Management Ex-Officio
Michael A. Corasaniti Tourmalet Advisors, LP
Letter from the CIO
1
Richard M. Lerner
Endowment Support
2–4, 13
Barry A. Malkin GEM Realty Capital, Inc. E. Pierce Marshall Jr. Élevage Capital Management, LLC David M. Mussafer Advent International Corporation
Market Events Endowment Returns Staff Location
5 6–12, 14 15–16 17
LETTER FROM FROM THE THE CIO CIO LETTER DearFaculty, Faculty, Staff, Alumni Friends of Tulane University, Dear Staff, Alumni andand Friends of Tulane University, difference a yearyou makes. a historic yearEndowment for returnsReport. in fiscal year 2021, this past fiscalayear much ItWhat is my apleasure to provide with After our Fiscal Year 2023 Tulane’s endowment reached new proved high of $2.11 more difficult generate strongtoorgenerous even positive returns. MSCI ACWI down -15.8% and Barclay’s Aggregate billion as of Juneto30, 2023, thanks donations, solid With financial management and strong investment performance. Our investment patient long-term creation withbonds prudentwould risk management and diversification, has also downstrategy, doublegrounded digits, a in traditional blendedvalue portfolio of coupled stocks and have been highly correlated and yielded enviable results. generated dismal results. Fortunately, our long-term commitment to alternative assets proved to be much needed
diversifiers and enabledmyTulane’s endowment to generate outsized returns. This year commemorates 10th year working in Tulane’s investment office. The past decade was marked by waves of untethered investor exuberance—as the NASDAQ, S&P 500 and Bitcoin sailed to all-time highs—and abrupt investor pullbacks, triggered During Pooled Endowment and Eminent generated 6.2% and -7.7%,it respectively, well by events FY2022, ranging from a global pandemic to major shifts inScholars the geopolitical and returns financialof landscape. Through all, our dedicated ahead of their and and the generated 65/35 passive benchmark return ofThe -13.7%. Performance wasasset led by strong results in investment teambenchmarks remained focused significant outperformance. changes we made to our allocation, upgrades to manager portfolio, and improvements to processes governance all contributed to our impressive our privaterelationships capital andthroughout marketablethe alternatives portfolios. The private capitaland portfolio continues to generate a significant results. Overpremium the last tenthat years, Pooled and Eminent Scholars delivered annual returnsWith of 9.7% and 7.9%,alternatives, respectively, illiquidity will be a Endowment driver of endowment performance for years to come. marketable and combined return of 9.4%, ranking among all endowments, to Cambridge Associates. Our endowment ouracommitment and patience finally paidtheofftopas5% ourof managers were according able to capitalize on idiosyncratic opportunities performance over the past decade has been exceptional, significantly outperforming the passive benchmark return of 6.4% (65% throughout the year. I am confident our marketable alternatives portfolio will hold up well and be a good diversifier in MSCI ACWI / 35% Barclays Agg). this particularly volatile and uncertain market environment. The stark difference in returns between Pooled Endowment
Looking ahead, ongoing andthe uncertainties remainpower on theof horizon, but I am confident investment team continue and Eminent Scholarschallenges speaks to diversification alternative assets in an our environment wherewilltraditional to outperform by capitalizing on opportunities and building upon our extraordinary momentum. The factors that drove our historical asset classes have become highly correlated. Eminent Scholars’ limitation on alternative assets caused it to trail Pooled outperformance will serve as the foundation for our continued success, namely:
Endowment by nearly 1400 basis points during the fiscal year. Despite the difficult investment environment in FY2022, Tulane’s reachedOur a new high of $2.05 billion of June 30, 2022.selection and risk management 1) Aendowment ctive Management: proactive approach to assetasallocation, manager has yielded meaningful value-add.
Over the last ten years, Pooled Endowment and Eminent Scholars generated returns of 10.6% and 8.4%, respectively, 2) Long-term Perspective: Our commitment to long-term strategies has allowed us to remain patient, ride out ahead ofshort-term their benchmark returns of 8.0% and 6.7%, respectively. Our consistent performance has led to long-term volatility, and capitalize on illiquidity premiums. success. That consistency has been anchored by a wonderfully talented and incredibly stable team as well as unwavering 3) Diversification: Our well-structured and diversified portfolio, utilizing a broad range of asset classes, has support from our Endowment Management Committee. mitigated risks and capitalized on opportunities across markets.
While the current dauntingteam given persistent professionals inflation, rising a privilege loomingofrecession, In conclusion, I want tomarket express environment my gratitude tofeels the dedicated of investment that I rates, have the working geopolitical and global I am confident that our portfolio withstand potential with every day.tensions, Additionally, I want energy to thankshortages, our Endowment Management Committee forcan their unwavering supportheadwinds and trust. Together, have achieved resultsour that willand benefit Tulane University foragenerations to come. along theweway. Over moreremarkable than a decade, staff Committee have built well-diversified, multi-asset class portfolio that can weather near-term challenges and uncertainty while enabling it to achieve its long-term return objectives. On behalf of myself and my entire team, we are honored to have the opportunity to manage the endowment and remain Sincerely, committed to serving the Tulane community. Thank you for your continued support of Tulane University.
FISCALYEAR YEAR2023 2022 FISCAL ACCOMPLISHMENTS: ACCOMPLISHMENTS:
five new FF HHired ired three new managers managers and and exited six funds across the exited ten funds across the marketable portfolios marketable portfolios F Added to or trimmed from 21 F Added to or trimmed from eleven existing managers existing managers F Added three new private capital F Arelationships dded two new capital andprivate re-upped with relationships and re-upped with 13 others ten others F Closed three new co-investments F Closed four new co-investments F Completed an extensive (12th annual) F Creview ompleted extensive (13th annual) of allan managers in the portfolio review of all managers in the portfolio F Completed operational due diligence F Con ompleted operational due diligence 21 new and existing managers on all marketable managers F Conducted 550+ manager meetings F Hcalls iredand a new Investment Analyst, conferences Matthew Yam (BSM ’23) F Hired a new Investment Analyst, Pearlson ’22) summer F CHarrison ompleted our 15th(Bannual analyst program and sponsored a F Completed our 14th annual summer Girls Who Invest scholar analyst program and sponsored a Girls Who Invest scholar
Richard RichardChau Chau Chief Investment Officer 2022 ENDOWMENT REPORT | 1 2023 ENDOWMENT REPORT | 1
E N DOWMENT SUPPORT IMPORTANCE OF AN ENDOWMENT Protection – Innovation – Commitment After 189 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 $542,000 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
MARKET VALUE
Pooled Endowment
$1,624,943.2
Eminent Scholars
$242,688.8
Separately Invested
$201,024.2
University-Owned Real Estate
$16,647.4
Gift Annuities/Life Income Trusts
$23,034.0
TOTAL ENDOWMENT
2 | 2023 ENDOWMENT REPORT
$2,108,337.6
EN DOWM EN T S U PPO RT
$2,000
$1,500
$1,000
POOLED ENDOWMENT
Athletics 1%
EMINENT SCHOLARS
SEPARATELY INVESTED
School of Public Health and Tropical Medicine 2% A.B. Freeman School of Business 6%
FY 2023
FY 2021 12/31/21
12/31/18 FY 2018
FY 2020 2020 FY
FY 2017
12/31/15 FY 2015
FY 2014
12/31/12 FY 2012
FY 2011 2011 FY
12/31/09 FY 2009
12/31/06 FY 2006
FY FY2008 2008
FY 2003 12/31/03
FY 2005 2005 FY
12/31/00 FY 2000
FY 1999
12/31/97 FY 1997
FY 1996
FY 1994 12/31/94
FY FY 1993 1993
FY 1991 12/31/91
FY 1988 12/31/88
FY 1990
$0
FY 2002 2002 FY
$500
FY FY 1987 1987
TOTALTOTAL ENDOWMENT (IN $MM) ENDOWMENT (IN $MM)
$2,500
GIFT ANNUITIES & LIFE INCOME TRUSTS
School of Social Work 1%
General University 25%
School of Liberal Arts 11%
Law School 5%
Centers, Institutes and Libraries 7%
School of Architecture 1%
School of Medicine 23% Financial Aid 14% School of Science and Engineering 4%
ENDOWMENT SUPPORT BY PROGRAM 2023 2023 ENDOWMENT REPORT | 3
E N DOWMENT SUPPORT Longtime Tulane supporters Libby and Robert Alexander are donating more than $12 million to advance a university-wide data science initiative that will transform teaching and research across all disciplines at Tulane and position the university as a leader in data pedagogy. Tulane’s Data Hub will be renamed the Connolly Alexander Institute for Data Science. Connolly is the family name of Libby Alexander, a Tulane graduate and member of the Board of Tulane. With data pervading almost every aspect of modern life, the Connolly Alexander Institute for Data Science will enable Tulane students across all disciplines to understand how data shapes our environment, to think critically about data-based arguments and to use data in their studies and careers. The Alexanders’ gift will elevate the institute as the university’s centralized resource for fostering data literacy and data science through education, research and service to the community. As Tulane continues to grow as a powerhouse of research and scholarship, this institute will fuel an even more ambitious future of meaningful exploration and discovery. “Understanding data in 2023 is as fundamental a skill as reading, writing and arithmetic, and its role in society will only grow in the coming years, especially with the emergence of artificial intelligence,” the Alexanders said. “Whatever their majors, Tulane students must know how to navigate data, and integrating data science across the curricula will cultivate their data literacy. We are thrilled to play a role in Tulane’s data-centered evolution.” Libby Alexander, a member of the club sailing team at Tulane, graduated with a bachelor’s degree from the university in 1984. She and her husband, Robert, helped build Connolly, Inc. into a global leader in payment integrity solutions. Libby led Connolly’s healthcare division and ultimately served as CEO of the parent company. The success of Connolly, Inc. under Libby’s leadership led to its rebranding as Cotiviti, where Libby served as vice chair of the board until 2018. A devoted alumnus, Libby joined the Board of Tulane in 2017 and also serves on the Executive Campaign Council and the Tri-State National Campaign Council as part of Tulane’s Only the Audacious campaign. She credits a programming course she took at Tulane for showing her the capabilities of data combined with computing technology. Robert, who majored in computer science at Boston University, ran his own computer company before joining Connolly, Inc. as its Chief Information Officer. “If anyone understands the importance of data management and analytics to the present and to the future, it’s Libby and Robert Alexander,” Tulane President Michael Fitts said. “Through their expertise and generosity, they have been instrumental in furthering and developing Tulane’s strategy for implementing data literacy and data science at every level of the university. We’re extremely grateful that the business success they achieved is now helping to drive this initiative at Tulane. Our students will reach new heights academically thanks to the support of this amazing Tulane couple.”
4 | 2023 ENDOWMENT REPORT
Tulane launched the Data Hub in 2021 as part of the university’s reaccreditation process. “The Connolly Alexander Institute for Data Science will make data fluency a defining characteristic of the Tulane experience,” Tulane Provost Robin Forman said. “Libby and Robert’s gift will energize and empower us to enrich our curriculum, provide opportunities for both students and faculty to carry out compelling data-intensive projects and create cocurricular programming that allows all members of our community to come together to share their interests and to learn from each other.” Under Executive Director Patrick Button’s leadership, the institute is adding staff and launching new programming, including an Introduction to Data course (DATA 1010) debuting this fall. The institute also provides data-related grants to undergraduates through NewcombTulane College’s common grants application and summer research grants for PhD students. In addition, it is incentivizing TIDES instructors to create or update TIDES courses to spotlight data. “The Alexander gift will allow us to hire more professors, instructional designers and data scientists who can help us offer substantial additional programming and services, including establishing a data help desk for students and faculty, providing hands-on support for instructors developing new courses, and facilitating research collaborations,” Button said. The university will soon announce another major gift from the Alexanders in support of Tulane’s sailing program.
MARKET EVENTS FISCAL YEAR 23 Following a challenging FY2022, risk assets enjoyed mostly positive returns in FY2023. Equities rebounded strongly, with the MSCI ACWI returning +16.5%, as fears over a possible recession moderated and high levels of inflation eased, indicating that central banks, through aggressive monetary tightening, could very well engineer a soft landing. In fact, it was investors’ optimism that drove over 100% of the year’s global returns, with strong multiple expansion more than offsetting a decline in corporate earnings growth as profit margins narrowed. The US markets enjoyed much of the positive momentum. The S&P 500 was up +19.6%, as investor enthusiasm for AI technologies led a handful of large-cap technology stocks to drive much of the returns for the index. Meanwhile, the small-cap Russell 2000 Index was up only +12.3%, while the Russell 3000 Value Index meaningfully underperformed the Russell 3000 Growth Index (+11.2% vs. +26.6%). Recovering from the doldrums of 2022, information technology was the highest-performing sector in the S&P 500 (+40.3%), followed by industrials (+25.2%) and consumer discretionary (+24.3%). Despite the regional bank fiasco in March 2023, large-cap financials returned +9.5%, although the KRE Regional Bank Index was down -30.2%. International developed market sentiment remained similarly sanguine. The MSCI Europe Index returned +21.8%, buoyed by investor optimism that the energy crisis has largely been contained, although UK equities underperformed (+13.2%). The MSCI Japan Index posted an 18.1% return, reflecting a relatively benign inflationary environment, the Bank of Japan’s commitment to ultra-easy monetary policy, and the much-awaited shareholder-friendly reforms. Meanwhile, Emerging Markets lagged (+1.7%), driven by China (-16.8%), as investors focused on deteriorating economic trends and expressed skepticism on the positive contribution from an economic re-opening. Private markets posted negative returns over the trailing one-year ending March 31, 2023, due to a lag to public market counterparts, as well as the adverse impact of higher interest rates and slowing growth on valuations. The Cambridge US Private Equity Index returned -1.5% versus -7.4% for the Russell 1000 public market equivalent, while the Cambridge Venture Capital Index (-18.2%) underperformed its public market equivalent, as the collapse in Silicon Valley Bank put pressure on sources of financing. Despite the 1-year challenges, private equity and venture capital meaningfully outperformed the public markets on a 5- and 10-year horizon. After 11 rate hikes over 17 months, the yield curve significantly steepened to levels last seen in 1981. This continued to pressure long-duration assets, with 10 YR US Treasuries down -4.0%. Higher yields and easing hard landing fears caused most spread products to rally in concert with other risk assets. In corporate high yield and leveraged loans, a large spread bi-
furcation exists between high- and low-quality securities. Meanwhile, leveraged loans trade wider as rising rates on floating rate debt are pressuring companies’ free cash flow generation. The US economy shows signs of a soft-landing scenario in growth, jobs, inflation, and corporate earnings. However, there is still a good chance that inflation will prove to be stickier, tempting the Fed into further rate hikes, or that some shock to the real economy could tip it into a recession, pressuring the Fed to cut rates to fight economic weakness. Meanwhile, the rest of the world is diverging in both monetary and fiscal policies to combat their own set of economic battles. We continue to remain vigilant and opportunistic, all the while partnering with the highest quality managers who are adept at navigating challenging environments and continue to focus on the long-term compounding of capital.
FISCAL YEAR 2023 ENDOWMENT HIGHLIGHTS F Total Endowment ended the year at $2.11 billion F Distributions to support the operating budget totaled $78.0 million F 65 new Endowment Funds were created during the fiscal year F New gifts and transfers into the Endowment totaled $38.2 million F Combined return of 4.0% for Pooled Endowment and Eminent Scholars
CAPITAL MARKETS PERFORMANCE
AS OF FISCAL YEAR END 2023 1 YEAR 3 YEARS 5 YEARS 10 YEARS US EQUITY NASDAQ 26.2% 12.0% 14.0% 16.3% RUSSELL 2000 12.3% 10.8% 4.2% 8.2% S&P 500 19.6% 14.6% 12.3% 12.9% _______ INTERNATIONAL EQUITY MSCI AC ASIA EX-JAPAN -0.9% 1.4% 1.2% 4.8% MSCI AC WORLD EX-US 12.7% 7.2% 3.5% 4.8% MSCI EMERGING MARKETS 1.7% 2.3% 0.9% 3.0% _______ FIXED INCOME BARCLAYS AGGREGATE -0.9% -4.0% 0.8% 1.5% BARCLAYS 5-YR OTR TIPS -1.2% 1.2% 2.6% 1.8% MERRILL LYNCH HY MASTER II 9.0% 3.2% 3.2% 4.4% _______ MARKETABLE ALTERNATIVES HFRI EQUITY HEDGE 7.6% 9.0% 5.5% 5.7% HFRI FUND OF FUNDS 3.6% 5.0% 3.3% 3.4% HFRI EVENT DRIVEN 5.3% 8.5% 4.1% 4.5%
2023 ENDOWMENT REPORT | 5
E N DOWMENT RET URNS POOLED POLICY PORTFOLIO
POLICY PORTFOLIO Core Fixed Income 9.0%
The market value of the Pooled Endowment was $1.625 billion as of June 30, 2023. 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%
Global Equity 32.5% Marketable Alternatives 22.5%
Private Capital 35.0%
HISTORICAL PERFORMANCE (NET OF FEES)
HISTORICAL PERFORMANCE (NET OF FEES)
Pooled
Static Benchmark
Spending + CPI
20% 15%
14.2% 10.6% 11.0%
10% 5% 0%
6 | 2023 ENDOWMENT REPORT
8.1% 3.3%
10.0% 7.7%
9.1%
9.7%
7.6% 7.8%
4.8%
1 Year
3 Year
5 Year
10 Year
EN DOWM EN T RET U RN S POLICY PORTFOLIO Cash 1.0% Fixed Income 25.0% Global Equity 56.5%
Marketable Alternatives 10.0% Private Capital 7.5%
HISTORICAL PERFORMANCE (NET OF FEES)
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. 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.
Eminent Scholars
Static Benchmark
Spending + CPI
20% 15% 10%
8.4% 9.2% 8.1%
8.7%
11.0% 7.7%
7.1% 6.4%
3 Year
5 Year
9.1%
7.9%
6.7%
7.8%
5% 0%
1 Year
10 Year
2023 ENDOWMENT REPORT | 7
E N DOWMENT RET URNS
8 | 2023 ENDOWMENT REPORT
EN DOWM EN T RET U RN S ASSET CLASS SUMMARIES GLOBAL EQUITY
The Endowment’s Global Equity portfolio comprises 14 managers who invest in publiclylisted companies across the U.S. and international markets. The portfolio aims to capture the growth of the global economy and outperform passive indices by investing with highquality active managers. In fiscal year 2023, global equity markets rebounded with investor sentiment, as reflected by rising valuation multiples. The MSCI All Country World Index returned +16.5% for the year, while Global Equity generated an additional 2.0%, returning +18.5%. The portfolio’s long-term results remain strong, with Global Equity having outperformed the MSCI ACWI over the last three, five, and ten years. During the year, we added one new relationship, a U.S. small-cap growth strategy, to replace an existing manager, exited a pan-Asia regional manager, and initiated terminations with three other managers.
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 declined slightly amidst sustained inflation and rising central bank policy rates, resulting in a deeply inverted yield curve. The Core Fixed Income portfolio fell -0.3% for the year, outperforming the -1.0% return of the Barclays’ U.S. Intermediate Treasury Index, largely due to shorter duration. Given today’s risk versus reward, the portfolio is seeking to minimize credit and interest rate risk.
PRIVATE CAPITAL
The Endowment’s Private Capital portfolio consists of approximately 60 managers investing globally across buyout, venture capital, growth equity, distressed, natural resources, and real estate strategies. During the year, private investments faced a challenging environment with contracting valuations, slower deal pace, and fewer fundraises. Over the fiscal year, the Private Capital portfolio returned -3.5%, ahead of the Cambridge Associates combined Private Equity and Real Assets index return of -3.9%. Our team remained active, adding two new venture capital managers. In addition, we completed four co-investments and reupped with ten managers, including six buyout managers, three venture managers, and a growth equity manager.
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. This portfolio consists of 19 managers providing exposure to strategies such as long/short equity, multi-strategy, event-driven, and opportunistic credit. During the fiscal year, the Marketable Alternatives portfolio returned +6.4% versus the HFRI Fund of Funds Composite return of +3.6%. All three sub-portfolios performed driven largely by Long/Short Equity (+11.1%) and Absolute Return (+5.8%), while Enhanced Fixed Income lagged at +1.9%. A healthcare long/short manager, a midcap long/short manager, and a California carbon allowance strategy were the largest contributors to returns. During the year, there were no new commitments, four terminations were initiated, and six funds were subject to rebalancing.
2023 ENDOWMENT REPORT | 9
EN DOWMENT RET URNS 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 10 years has produced a compounded $365 million of additional value. 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 POOLED + EMINENT VS. STATIC BENCHMARKS
ENDOWMENT VALUE ADDED (IN $MM)
$350.0
$350.0 $110.1
$300.0
-$27.6
$250.0
$250.0
$200.0
$37.2
$100.0
$-
$200.0
$54.4
$150.0
$50.0
$300.0
$30.6 $22.1
FY13
10 | 2023 ENDOWMENT REPORT
$17.1
-$8.1
$150.0
$21.0
$100.0
-$7.0
$50.0
$13.0
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
$-
EN DOWM EN T RET U RN S 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 challenging year given the average endowment returned 7.4%, and the cutoff of the top quartile was 9.9%. Of the ~380 institutions reporting to Cambridge Associates, Tulane’s return of 4.0% for fiscal year 2023 falls within the bottom quartile. While Tulane’s one-year performance is disappointing,
the Investment Management Office believes that the portfolio’s asset allocation and manager selection will continue to produce outperformance over longer time horizons. More importantly, Tulane’s three-, five-, and ten-year returns fall within the top quartile. We have immense respect for our industry colleagues, each with 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 6/30/2023¹
TULANE VS. CAMBRIDGE ENDOWMENT COMPOSITE (PERIODS ENDING 6/30/20231)
15%
10%
TOP 5% TULANE 25%–50% 50%–75%
5%
X
MEDIAN BOTTOM 5%
0%
T ul ane² T op Q M edi an N
1 Year
3 Years
5 Years
10 Years
4. 0% 9. 9% 7 . 6%
13.4% 11.2% 9.5%
9. 6% 8. 1 % 6. 9%
9. 4% 7 . 8% 7.1 %
377
373
3 68
3 47
¹Cambridge data as of September 5, 2023 ²Represents the performance of the Endowment's Total Combined Assets
2023 ENDOWMENT REPORT | 11
E N DOWMENT 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 0.9, ranking Tulane in the 99th percentile among peers. Similarly, over the last ten years, the endowment achieved a Sharpe ratio of 1.22, placing it in the 99th percentile among peers. 5th Percentile
25th 50th Percentile Percentile
75th Percentile
95th Percentile
TULANE UNIVERSITY
0.17
0.37
0.57
0.77
0.97
1.17
A scatter plot is another way to show the relationship between risk and return. Compared to the 344 endowments in the Cambridge Associates Endowment Composite database, the endowment ranks in the 94th and 1st 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, Tulane’s asset allocation, and strong manager selection has resulted in exceptional risk-adjusted returns over the last ten years.
10 YEAR RISK VS. PEERS 12%
Tulane
10 YEAR RETURN
10% 8%
Median
70/30 Index
6% 4% 2% 0% 0%
2%
4%
6%
8%
10 YEAR VOLATILITY
12 | 2023 ENDOWMENT REPORT
10%
12%
14%
EN DOWM EN T S U PPO RT Gift from Tulane alumnus establishes Herb Weil, PhD Professorship in the Humanities
Tulane alumnus and retired English professor Herbert S. Weil Jr. has made a gift to the university that will establish the Herb Weil, PhD Professorship in the Humanities, an endowed faculty position in Tulane’s School of Liberal Arts. “Our faculty is Tulane’s greatest strength, and Herb Weil’s gift ensures that we will continue to recruit scholars of highest caliber in this critical field — ones who push the boundaries of humanities research while collaborating with other disciplines and inspiring their students to do the same,” Tulane President Michael A. Fitts said. “We are incredibly grateful to Herb Weil for his generous support.” Weil, an emeritus professor of English at the University of Manitoba in Canada, has published extensively on various writers. Perhaps best known for his writings on Shakespeare, his scholarship extends from Sophocles to contemporary authors such as Alice Munro and Carol Shields, as well as filmmakers including Ingmar Bergman and Yasujir¬ō Ozu. He authored or co-edited works including Reading, Writing and Rewriting: A Rhetoric Reader; Discussions of Shakespeare’s Romantic Comedy; and The First Part of King Henry IV. The latter was co-authored with his wife, Judy Weil, who also is an emeritus professor at Manitoba. A New Orleans native, Weil grew up blocks away from Tulane’s uptown campus. He attended one year at Yale before enrolling at Tulane on a Navy ROTC scholarship, where he earned a bachelor’s degree in English in 1954 and was senior class president and editor of the Jambalaya yearbook. After studying in France as a Fulbright Fellow at the University of Lille and serving
as a Navy officer, Weil, a Woodrow Wilson Fellow, completed a double PhD in English and Humanities at Stanford in 1964. He taught at the University of Connecticut from 1962 to 1978. Weil credits Tulane’s help in obtaining scholarships for his own education, as well as his time as president of the Canadian Association of Chairs of English, as inspiration for his desire to give back. “In nine years at four universities, I paid only $35 in tuition,” he said. “No wonder I now want to help younger scholars. I have increased my giving to Tulane because the global humanities are being prioritized. Outstanding teaching in the humanities not only provides a more rewarding life for people in all fields including those in business and medicine, among others, it also provides an opportunity for experts to show mastery of broader humanistic matters.” “At a time when many pundits have proclaimed a crisis in the humanities, Herb Weil’s generosity makes a powerful statement about their continued vitality and centrality to understanding our world,” School of Liberal Arts Dean Brian Edwards said. “I have greatly enjoyed my conversations with Herb and Judy Weil and have been deeply impressed by their commitment to the advanced study of literatures and cultural production of multiple national traditions. This gift will have a tremendous positive impact on the humanities at Tulane and help us to fulfill ambitions to amplify research and teaching in literature and the global humanities more broadly.”
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E N DOWMENT 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. The Department of Treasury and Trust Investment Office in New Orleans oversee these funds. The Separately Invested Endowment Funds totaled over $201 million at fiscal year-end. They comprise common stock, fixed income, private equity, venture capital, money market, and donordirected externally managed accounts.
GIFT ANNUITIES AND LIFE INCOME TRUSTS
Tulane University Life Income Trusts and Annuities totaled over $23 million as of June 30, 2023. State Street Global Advisors (SSGA) manages most of these assets, and makes payments to the donor or other designated beneficiaries for a specified term or the life of the beneficiaries. The remainder assets are typically contributed to Tulane's endowment. These funds comprise common stock, fixed income, and real estate investment trusts. The asset allocation is determined based on the age of beneficiaries, term of trust, payout rate, and any special circumstances.
SEPARATELY INVESTED ENDOWMENT FUNDS
MARKET VALUE
Murphy Institute
$112.9
Celia Scott Weatherhead
$56.2
Samuel Stone CIPR Trust
$25.3
Vanselow / Pediatric
$3.8
All Others Combined
$2.8
TOTAL SEPARATELY INVESTED
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$201.0
STA F F
RICHARD CHAU, CHIEF INVESTMENT OFFICER
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, DEPUTY CHIEF INVESTMENT OFFICER
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, a 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.
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.
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STAFF LILY KIM, DIRECTOR OF INVESTMENT OPERATIONS
Lily joined the Investment Management Office in June 2021. From January 2019 to June 2021, Lily was a Senior Vice President for Wells Fargo Global Manager Research, a division of Wells Fargo responsible for overseeing approximately $750 billion in assets. Prior to joining Wells Fargo, Lily was the Head of Legal Due Diligence for Alternative Fund Solutions at Credit Suisse. Lily started her financial career with K2 Advisors, a subsidiary of Franklin Templeton Investments. Lily earned her Juris Doctor from the University of Mississippi School of Law and received her BSBA from Mississippi College where she was a Presidential Scholar.
BRAD BAUGUSS, ASSOCIATE DIRECTOR
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 ASSOCIATE
Edward joined the Investment Management Office in August 2018 after completing an internship with the Office. He graduated 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 charterholder.
HARRISON PEARLSON, INVESTMENT ANALYST
Harrison joined the Investment Management Office in July 2022 after completing an investment banking internship with Deutsche Bank the previous summer. He graduated cum laude from Tulane’s A.B. Freeman School of Business in 2022 with a BSM in Finance and a minor in Accounting. Harrison is a CFA level II candidate.
MATTHEW YAM, INVESTMENT ANALYST
Matthew joined the Investment Management Office in July 2023 following a wealth management internship at Goldman Sachs in New York the previous summer. He graduated from Tulane in 2023 as a member of the Altman Program in International Studies and Business. He holds a dual BSM and BA degree in Finance and Political Economy with a Specialization in Entrepreneurial Management.
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. 16 | 2023 ENDOWMENT REPORT
ROBERT LYCOUDES, PERFORMANCE ASSOCIATE
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. Robert 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 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.
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. We were motivated to establish the office in the New York City region to provide staff with the best possible access to investment managers, research firms and industry conferences that frequently take place in the New York and Boston corridor. Conveniently located near the Metro North rail line and I-95, the location allows for a quick trip into Manhattan or other nearby financial centers including Greenwich, Stamford, Boston, and Washington, DC. 2023 ENDOWMENT REPORT | 17
This fall, our swimming and diving team are competing in the newly renovated Reily Center Natatorium after a nearly $13 million, three-year renovation project was successfully completed. The revitalized facility, complete with increased diving depth, new equipment, improved accessibility, and state-of-the-art pool surfacing, received an enthusiastic reception. This renovation marks a significant milestone in Tulane’s ongoing campus enhancements, reflecting its commitment to providing students with top-notch amenities and resources.
Tulane University • Investment Management Office • 9 Old Kings Hwy, South • Darien, CT 06820 • (203) 716-8470