Hedge Funds, Stocks Cause 5.4% Endowment Loss

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Trinity’s endowment fell 5.4 percent over the 2016 fiscal year declining from $546.3 million to $502.8 million. Vice President of Finance and Chief Financial Officer Dan J. Hitchell explained that this loss is largely the result of withdrawals and “portfolio losses in market value.”
Trinity’s endowment is managed by Investure LLC, based in Charlottesville, VA. According to its website, the firm is “a recognized leader in the endowment and foundation investment management industry.” The Trinity Investment Committee, partially composed of trustees, also assists in endowment management, providing some oversight.
According to Hitchell, during the five-year period that ended on June 30, Trinity’s portfolio had a 6.4 percent net gain, which outperformed the benchmark +6.0. However, Hitchell noted that the past three years have been particularly challenging.
Much of the long-term positive performance of Trinity’s endowment has been the result of what Hitchell calls “active management selection,” or the process by which an individual determines which investments to make, rather than the selections being made at random or by a machine. This system is kept in check by a strict limit on the number of active managers. This ensures that those who seem most likely to be successful have the greatest possible impact on the college’s endowment.
Hitchell says that this process ensures that “manager performance can have a good deal of differential compared to the indices in any one year.” He notes that the strategy has seen success thus far.
He explains that the loss over the course of the last fiscal year resulted from poor performance on the part of “individual positions within certain manager’s portfolios.” Hitchell specifies that it was “health care, energy, financials, and telecom positions” that precipitated the loss, coupled with the declining interest rates.
Aside from the four failing positions listed above, Hitchell declined to state exactly which businesses Trinity’s endowment is invested in.
Trinity’s half-billion dollar endowment may seem gargantuan compared to Bates College’s $261.5 million, or paltry compared to Tufts University’s $1.593 billion. Vassar College has a $983 million endowment, nearly twice that of Trinity’s and four times that of Bates College. The 2015 Amherst College endowment dwarfed Trinity’s with an enormous $2.194 billion.

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