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Endowment Asset Management


The Citadel Foundation is a private, nonprofit corporation that provides financial assistance and support to The Citadel through ongoing fundraising efforts and an endowment devoted to the support and enhancement of academics.  The Foundation currently oversees the investment of a portfolio of approximately $145 million.  At the present time, The Citadel Foundation retains the services of Spider Management Company as its endowment investment manager.

Management

During the first quarter of 2008, The Citadel Foundation initiated a co-investment relationship with an affiliate of Spider Management Company, a wholly-owned subsidiary of the University of Richmond.  All invested funds are now managed by The Richmond Fund, a Virginia Limited Partnership.  The University of Richmond and The Citadel Foundation were among the initial limited partners in the fund.  The Richmond Fund is only available to a limited number of qualified 501(c)(3) organizations and ‘accredited investors’ within the meaning set forth in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended.

The change in investment strategy from a traditional relative return strategy via only equity/fixed income managers to an absolute return strategy provides a wider degree of diversification.  By engaging in this transaction, we have diversified our holdings from six active investment managers in two asset classes to one hundred thirty-four active managers across six asset classes.  The structure of the transaction leverages the size of the University of Richmond’s endowment with The Citadel Foundation and other limited partners, providing economies of scale that allow each partner to invest in asset classes to which it would not ordinarily have access.

Participation in the Richmond Fund allows The Citadel Foundation to benefit from long-term investments that were made prior to the creation of the fund through the use of a blended return strategy that provides quarterly balancing of returns between the University of Richmond’s endowment and the new investments made to the fund by the University of Richmond, The Citadel Foundation, and other investors.  All asset allocation decisions are made by the Spider Management Company.

The Richmond Fund investment goal is to provide steady long-term returns while minimizing volatility.  The fund’s approach is focused on preserving capital and avoiding higher risk investments.  The Foundation’s use of Spider Management Company and the Richmond Fund is subject to change at the discretion of The Citadel Foundation’s board of directors.

The Citadel Foundation’s overall asset allocation strategy as of December 31, 2012 appears below.  Return on investments for 2012, after all fees, was positive 11.6%.

The Citadel Foundation Endowment totaled $144,258,156 as of December 31, 2012.

Asset Allocation

 

Desired Range

12/31/12 Allocation

Equity

 

 

      Domestic Equity

5-25%

18.8%

      International Equity

5-25%

18.1%

      Global Equity

5-25%

10.9%

Opportunistic (PE, Venture)

10-25%

16.7%

Multi-Strategy

5-20%

11.6%

Credit

0-15%

11.5%

Real Estate

0-10%

3.8%

Real Assets

0-10%

6.5%

Cash

0-10%

2.1%

 

This strategy is designed to provide sufficient total return to cover endowment spending for academic grants to The Citadel, operating expenses of The Citadel Foundation, and growth in principal to provide for annual increases in purchasing power.

Investment Performance

 

4Q12

2012

5 Years

10 Years

Spider Management Investment Pool - Gross

3.2%

12.8%

4.5%

10.5%

The Richmond Fund, LP - Net

2.9%

11.6%

N/A

N/A

       

 

Selected Indices

 

 

 

 

S&P 500

-0.4%

16.0%

1.7%

7.1%

MSCI-ALL COUNTRY WORLD

2.9%

16.1%

-1.2%

8.1%

BARCLAYS AGGREGATE

0.2%

4.2%

6.0%

5.2%

 

Annual Allocation Policy

The annual allocation from endowed funds held at The Citadel Foundation is governed by the current distribution policy of the Foundation, calculated using a five-year rolling average of the fair market value as determined at December 31 each year.  Historic periods with no fund balance will be included.  An endowed fund is eligible for spending consideration once the corpus (cash receipts not including allocation income/gains) surpasses the endowed fund general minimum ($50,000 effective 2010).  The minimum award in an annual period is $500, subject to other requirements based upon the particular program of the fund.

 
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