William and Mary


As of June 30, 2013, the consolidated endowment for the College totaled $697.7 million — another new high-water mark! Compared to the previous year’s total of $644.2 million, the endowment increased by $53.5 million, or 8.3 percent. Strong gift flow and investment performance were the main drivers of asset growth. With improving conditions in the global markets, the William & Mary Investment Trust (“WAMIT”), the largest of the investment portfolios, earned a 10.7 percent rate of return for the fiscal year ending June 30, 2013. WAMIT’s Blended Policy Benchmark returned 9.9 percent.

The Blended Policy Benchmark is comprised of a 56 percent weighting to the MSCI All Country World Index, a 24 percent weighting to the Barclays Capital U.S. Aggregate Bond Index, a 2 percent weighting to the Barclays Capital U.S. Credit Index, an 8 percent weighting to the Barclays Capital U.S. High Yield Index, and a 10 percent weighting to the Dow Jones-UBS Commodity Index. The composition of WAMIT’s Policy Benchmark reflects the broad diversification in WAMIT’s investment allocation.

Investment results.

Domestic stocks, representing all cap sizes, returned 22.2 percent, outperforming the benchmark of the broad Russell 3000 Index that returned 21.5 percent and the S&P 500 Index that returned 20.6 percent. An increased weighting to domestic equity, particularly in high-quality blue chips, proved to be a successful catalyst for overall portfolio appreciation in 2013. Improved buoyancy in the U.S. economy and confidence in domestic stocks contributed significantly in the raised exposure level to domestic equity, going from 18.4 percent at the end of June 2011, to 19.9 percent at the end of June 2012, to its current 22.9 percent weighting.

Foreign equity invested in developed regions of Europe, Asia, and the Far East had a portfolio representation of approximately 12.9 percent on June 30, up slightly from last year’s weighting at 10.3 percent. Investment performance of 18 percent slightly trailed the asset class benchmark of the MSCI EAFE Index of 18.6 percent. Emerging markets continued to be difficult for investments during the past year. WAMIT’s performance in this asset class was a disappointing -2.1 percent return, trailing the MSCI Emerging Markets Index return of 3.2 percent by 530 basis points. WAMIT dealt with the under-performing managers either by termination or reducing their account size. Some new managers are already in place and others are still being evaluated.

WAMIT’s exposure to Marketable Alternatives comes in two component asset classes: Absolute Return and Special Situations. Generally, investments in Absolute Return are those designed to consistently produce a positive return that would, at a minimum, equate to the yield of inflation plus spending (typically high single digits). Investments in Special Situations are opportunistic in nature and consequently reflect strategies that seek to maximize returns from situations perceived to be temporary aberrations in market pricing or where specific financing can measurably improve asset quality and a company’s balance sheet. Together, Absolute Return and Special Situations comprised approximately 26.5 percent of the WAMIT portfolio as of June 30, 2013, down measurably from 33.1 percent in 2012 and 36.2 percent in 2011. Reduced exposure levels to credit strategies and multi-strategy type hedge funds account for the gradual decline in weighting. Combined, these marketable alternatives produced a 10.7 percent return in 2013. Individually, managers in the Absolute Return category returned 7.4 percent, the same as the benchmark HFR Fund of Funds Composite. Managers in Special Situations collectively produced a 16.9 percent return, exceeding the HFR Distressed Securities benchmark that returned 14.9 percent.

Asset allocation of investment portfolio.

Private equity constituted approximately 10.6 percent of total assets on June 30, 2013, up from 9.3 percent in 2012 and 6.6 percent in 2011. With WAMIT’s targeted policy allocation at 12 percent, the private equity portion of the portfolio remains beneath the preferred exposure level. However some newer commitments are beginning to call capital more frequently and other opportunities continue to be examined with careful due diligence. WAMIT’s private equity returned 11.1 percent in 2013. Its benchmark, the Russell 3000 Index, reflecting the opportunity cost in deviating from the broad public market, returned 21.5 percent. While the expectation is that, over the long term, a successful private equity portfolio will outperform public market investments, individual years such as 2013 are the exception where strong U.S. stock market performance dominated all asset classes.

The fixed income portion of the portfolio returned 1.6 percent for the fiscal year. This compares to the -0.7 percent return of the Barclays Capital U.S. Aggregate Bond Index. In Real Assets, an asset class comprised of investments in commodities, natural resources (oil, gas, and timber) and equity real estate, WAMIT’s blended exposures had a combined return of 2.6 percent, outperforming the Dow Jones-UBS Commodity Index of -8.0 percent by 1,062 basis points. On June 30, 2013, fixed income carried a 7.7 percent weight in the portfolio; real assets a 7.9 percent weight; and cash, a 4.1 percent weight with a corresponding amount of slightly more than $19 million.

As of June 30, 2013, the Investments Committee had oversight responsibility of approximately $472 million in investable assets contained within WAMIT. At that time, 86.9 percent of representative ownership in WAMIT belonged to The College of William & Mary Foundation, 6.4 percent belonged to the Marshall- Wythe School of Law Foundation, 4.7 percent belonged to the William & Mary School of Business Foundation, and 2 percent belonged to the VIMS Foundation. Collectively, WAMIT investments represent approximately 68 percent of the $697.7 million in total endowment resources that benefit the College.