UNC Investment Fund sees modest success

The lingering economic recession continues to take a toll on University budgets — in the form of the UNC Investment Fund.

The fund is composed of investments affiliated with many UNC-system institutions, but UNC-CH has the largest stake in the fund.

For the 2012 fiscal year, which ended June 30, the fund saw an $80 million overall loss. That comes even with a 2.1 percent return on the investment for the year, said Jon King, president and CEO of the UNC Management Company. But 5.4 percent of the funds were distributed, explaining the loss.

“(The fund is) an aggregation of literally thousands of individual funds of private contributions to support a specific program,” King said.

The UNC Management Company controls the investment of the money.

King said because of the volatile economy, the fund could not reach its goal of having a greater return than the payout.

“What we have to do over that course of time, we have to beat the payout rate and the inflation rate,” King said.

He said in general the fund is doing very well, and stressed the fact that the return represents a $45 million increase — if the distribution of the funds is taken out of the equation.

Sallie Shuping-Russell, a member of the UNC Board of Trustees, said board members are pleased with how the fund did last year, especially in the context of the welfare of other investments.

“It’s basically doing exactly what it’s set up to do,” she said. “We look for a higher return per unit of risk.”

She said the median return for universities similar in size to UNC was 1.2 percent.

Shuping-Russell added the board still has complete confidence in the management team to make tough choices in these uncertain economic conditions.

“I don’t know what the next six months will bring but the first six have looked very good,” she said.

King said the group was able to meet its long-term investment — which is what the board is mainly concerned with.

“We usually think in terms of 10-year time horizons,” he said.

According to the fund’s 2012 annual report Annual Reports_UNCIF_FINAL.PDF, the fund had an 8.3 percent return on its 10-year period, which ended in June.

King added that compared to most universities, the University’s endowment is performing well.

“The median return for all college and universities for fiscal 2012 was -0.5 percent,” he said.

“We’ve ranked in the top quartile both in the last year and in the long run.”

But King said he could make no predictions for the fund’s future.

“We’re going to have a much better year this year, but there’s five months left to go so you have to hold your breath — financial markets can be very volatile.”

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