University of Virginia Returns 5.8% in 2019, Misses Benchmark

The University of Virginia endowment’s portfolio returned 5.8% for the fiscal year ended June 30, falling short of its benchmark portfolio’s 7.9% return, and down from last year’s 11.4% return. The returns raised the endowment’s total asset value to $9.6 billion from $9.5 billion a year ago.

Despite underperforming for the year, the endowment has outperformed both its benchmark portfolio and the Wilshire Trust Universe Comparison Service (TUCS) All Master Trust Universe over the long term.

For the five-, 10-, and 20-year periods ending June 30, Virginia’s long-term pool portfolio earned annualized returns of 7.0%, 11.0%, and 10.3%, respectively. This is compared with its benchmark portfolio’s 6.0%, 9.2%, and 5.9% returns, respectively, over the same time periods. The Wilshire TUCS All Master Trust Universe median in comparison showed returns of 5.8%, 9.1%, and 6.2%, respectively. The long-term pool’s passive policy portfolio benchmark is comprised of 60% equity, 10% real assets, and 30% fixed income.

“After several years of below-average levels of market volatility, fiscal year 2019 was characterized by the return of volatility to equity markets,” Robert Durden, CEO and CIO of the University of Virginia Investment Management Co. (UVIMCO), said in the endowment’s annual report. “Although we anticipate the market environment will remain challenging, we will continue to follow our long-term investment philosophy and consistent investment process.”

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It was the first full year the portfolio was managed by Durden, who joined UVIMCO in April 2018.

“During my first year as CEO/CIO, my primary priority was to review our existing investment policy and process,” said Durden. “As part of this effort, our team dedicated time to reviewing the risk tolerance of the university. We also conducted a deep-dive review of the long-term pool and re-underwrote our strategic asset allocation and liquidity framework, which will guide future decisions about the construction of our long-term portfolio.”

Private equity was by far the top performing asset class for the portfolio during the year returning 21.9%, followed by fixed income and public equity, which returned 6.6% and 6.1%, respectively. Real estate returned 5.1%, cash and currency returned 2.1%, and marketable alternatives and credit returned 1.4%. Resources was the worst performing asset class for the portfolio, losing 10.5% for the year.

California, Texas, Virginia Endowments Report 2018 Returns

Virginia Will Lower Assumed Rate of Return for Its Retirement Fund

Tags: Endowments, Robert Durden, TUCS, University of Virginia, VIMCO, Wilshire Trust Universe Comparison Service

The Securities and Exchange Commission (SEC) has obtained a temporary restraining order and asset freeze against a California solar panel company and three of its executives who allegedly defrauded more than 100 investors. The complaint said the three used the ill-gotten funds to pay for a yacht, several sports cars, and cosmetic surgery.

The SEC’s complaint was against Nanotech Engineering, Inc. CFO Michael Sweaney, whom the regulator refers to as a “convicted securities fraudster,” his nephew CEO David Sweaney, and COO Jeffery Gange. It said that all have been engaged in an ongoing fraudulent offering of Nanotech Engineering securities.

During the past two years, the SEC said the three solicited more than $9.4 million in investments from more than 100 people “through deceptive acts,” including misrepresenting and omitting material facts in filings with the SEC, and in private placement memoranda.

“The SEC acted quickly to stop what we allege is an egregious fraud,” said Antonia Chion, associate director of the SEC’s Division of Enforcement, in a release. “The emergency relief we obtained on behalf of investors prevents the dissipation of the defendants’ assets.”

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Starting in September 2017, Nanotech began selling shares of its stock through a private placement memorandum, according to the complaint. But the securities were not registered with the SEC. The shares were priced at $2.80 per share, and the company planned to sell 24 million shares for proceeds of $67.2 million.

This allegedly represented 25% of the equity of Nanotech. The stated minimum investment amount was $28,000, although Nanotech sometimes accepted investments of smaller amounts, said the regulator.

According to the complaint, Michael Sweaney pleaded guilty in 1998 to one count of felony securities fraud in Nevada and was ordered to pay restitution to 10 investors. He was also given a 12-to-32-month suspended prison sentence, and two years of probation. The SEC said he tried to hide his identity from Nanotech investors by “masquerading under the pseudonym Michael Hatton.”

The SEC said Nanotech employees were pressured to cold-call potential investors from Alaska to Florida, many of whom purchased Nanotech shares. The complaint alleged that Nanotech employed numerous sales agents who were unlicensed stockbrokers being paid on a commission basis in a “boiler-room” environment.

“These sales agents cold-called potential investors across the country,” said the complaint. “Investors were convinced to invest by dubious claims of a patent-pending invention that would change the world: the allegedly revolutionary ‘Nanopanel’ solar panel.”

In its private placement memorandum, Nanotech boasted that it “has invented what we believe to be the last generation Solar Panel, thin, lightweight, stronger than steel, yet flexible and three to four times more efficient … also, our panels will allow the use of solar in parts of the world that would otherwise not use solar due to a lack of sunny weather.”

The SEC’s complaint, filed in federal court in Washington, D.C., charges Nanotech Engineering and the three executives with violating the antifraud provisions of the federal securities laws. It seeks emergency relief as well as permanent injunctions, return of allegedly ill-gotten gains with prejudgment interest, and civil penalties.