Who manages the invested funds?

The Université de Moncton Board of Governors is responsible for managing the Endowment Fund assets with the support of its Investment Committee. This Committee oversees the implementation of and adherence to the Endowment Fund Investment Policy (the Policy) and provides annual reports to the Board. The Policy, developed by a specialized firm, was ratified by the Board of Governors on October 1, 1999. The Policy is amended as deemed necessary. As part of the mandate assigned to them by the Investment Committee, the external portfolio managers must maximize rates of return while considering risks, liquidity, as well as the diversification and quality of investments. A third party, recommended by the Investment Committee and approved by the Board of Governors, assumes the role of custodian of the assets. The Université de Moncton Endowment Fund Investment Policy is available on the website at: www.umoncton.ca/gouvernance/politiques

What is the invested fund’s target rate of return?

The Policy has set a clear rate of return goal: an average annual return that exceeds the long term (i.e., a 10-year period) increase in the cost-of-living rate by at least 4.5 per cent. This investment strategy is comparable to that of similar institutions.

How is the spending rate for each endowment fund determined?

The disbursements (spending) from the endowment funds are managed in accordance with the Policy, the goal of which is to produce a consistent and predictable influx of income while preserving the real value of the endowment’s capital. In choosing prudent spending rates, the Université de Moncton ensures that it has the necessary resources to weather good and bad years with regard to financial returns. The objective of the Fund Disbursement Policy, integrated in the Policy, is to set a spending or disbursement rate that reflects the actual expected rate of return on assets. Consequently, the target spending rate has been set at 4.5 per cent of the Endowment Fund’s average market value on December 31 of the three years preceding the current year.

How is the value of the capital preserved while ensuring the growth of the Endowment Fund?

The concept of capital preservation is central to the management of an endowment. In order to ensure continued growth and to retain the initial capital’s purchasing power, a portion of the income earned is preserved in order to protect the capital’s real long-term value. This ensures that each fund’s capital maintains a consistent value as it relates to inflation.

Table 1: Projected growth of capital over 30 years for an initial fund of $25,000

Table 1 shows that a $25,000 donation, given to support a Université de Moncton activity or program, should grow to approximately $45,000 in 30 years based on long-term expected earnings of 6.5 per cent and a spending rate of 4.5 per cent.

Is the Endowment Fund subject to any costs?

Yes, there are costs associated with managing the Université de Moncton Endowment Fund. Portfolio management and custodial expenses equal 0.67 per cent of the average market value of the fund on December 31st of each of the three years preceding the current year. Costs associated with philanthropic development activities represent 0.91 per cent of this same average market value.