University of New Orleans Outsources Endowment

(March 28, 2015) -- The University of New Orleans Foundation has picked Northern Trust as its outsourced chief investment officer (OCIO) provider.

"We look forward to helping manage the assets of, and being a resource to, the foundation for years to come," said Darius Gill, a managing director for Northern Trust’s non-profit institutional division.

The Louisiana-based endowment is the third non-profit Northern Trust has admitted to snagging in the past 10 months.

Last May, it announced a deal to manage $30 million for Indiana’s Marshall County Community Foundation.

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A larger deal for Northern Trust’s foundation and institutional advisory OCIO business followed less than two months later: a $45 million mandate from Minnesota State’s Mankato branch to manage its endowment.

The University of New Orleans Foundation has topped both previous clients in size.

The endowment fund held $88 million in total assets as of December 31, 2012, according to the most recent available financial statements.

Of that, $63 million was invested in public and private markets. Mutual funds dominated the portfolio (48%), followed by fixed income (22%), domestic equities (16%), hedge fund investments (8%), international equities (4%), and real estate investment trusts made up the remainder.

In 2012, the foundation paid out more than 10% of its assets ($9.8 million). Program operations accounted for roughly half of that ($5 million), while salaries, asset write-downs, and general overhead accounted for the balance.

Investment income replaced less than half of what the endowment spent in the same period.

(March 27, 2014) — Over the past decade, the investment game has changed for 401(k) plan members, with passive strategies winning the latest round, a survey has found.

Vanguard, a predominantly passive investment manager, published a report this week showing a 51% relative decline in pension scheme members who exclusively used active strategies to manage their 401(k) plans.

“In 2004, 39% of participants were invested exclusively in active funds. By 2012, this all-active group had dropped to 19%,” the report said. “Conversely, in 2004, 10% of participants were invested solely in index funds. By 2012, that figure was 38%, a nearly fourfold increase.”

For those using a blend of the two approaches, Vanguard found passive strategies had won out. In 2004, some 30% of 401(k) assets were invested passively; by 2012, this had increased to 60% of the entire portfolio.

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The difference in approaches is starkly displayed when looking at who is doing the investing.

Some older 401(k) plan members remained 100% invested in active strategies, which Vanguard attributed to “inertia”. Younger investors often had 100% passive strategies in their plan, “largely because they were automatically enrolled in plans with index-based target-date funds as the default investment,” Vanguard said.

Employers and plan sponsors have played a significant part in this structural shift, Vanguard added: “In recent years, more index funds—primarily indexed target-date funds—have been added to plans because of the sponsors’ desire to reduce participants’ investment costs and exposure to active fund risk.”

Vanguard also found a shift out of funds that were non-indexable, such as money market funds over the 2004 to 2012 period. These options used to make up 32% of an average portfolio in 2004; by 2012, they made up just 19%.

This month, a study by professors at Yale School of Management and the University of Virginia found 16% of young US investors would be better off opting out of their 401(k) plan and saving for retirement in a retail index fund.