Smith College’s investments are overseen by the college’s investment committee and managed by Investure LLC. The portfolio is allocated across a variety of investment vehicles to optimize performance and manage risk.
The Smith College Endowment
The Smith College endowment, which comprises approximately 2,000 individual funds, finances a portion of the operating and capital needs of the institution. In addition, it includes a number of restricted endowments that fund specific areas, including professorships, scholarships and departmental support.
Individual endowment funds may be established by the board of trustees or through a restricted gift, and the funds are invested and maintained in perpetuity.
The board of trustees sets Smith’s annual level of endowment spending from the budget development process.
In 2015–16, approximately 35 percent of the college’s operating budget was funded from investment return. This support enables the college to provide a premier educational experience, financial aid for students with need and high-quality facilities.
The college’s endowment spending rate sets a responsible annual contribution to operations while providing a measure of protection against periods of declining returns. The spending policy provides that the income distributed per share from the endowment will typically increase by 4 percent annually as long as the resulting amount is more than 4 percent and less than 6 percent of endowment market value. For 2015–16, the college’s spending rate, as of the beginning of the fiscal year, was 4.8 percent. The spending rate has averaged 4.9 percent over the past decade.
Facts and Figures
Market Value of Investment Pool ($ millions)
Total Return on Investment Pool
|FYTD as of 3/31/2017||Period Ended 12/31/2016 (%)|
|1 year||3 year||5 year||10 year|
|Spending + Inflation||6.0||8.5||7.2||7.4||8.0|
|Peer Group Mean||(1.9)||6.0||6.1||5.7|
|MSCI All Country World||14.3||8.5||3.7||10.0||4.1|
|BofA Merrill Lynch US Treasury 7–10 Year||(5.1)||1.0||3.7||1.8||5.3|
The college’s bylaws delegate investment responsibility to the Investment Committee of the Board of Trustees. “The Investment Committee shall have full power and authority to make decisions related to investments of the College. The committee may select and authorize the engagement of such agents, advisers, brokers, and attorneys, as it deems necessary to aid it in the proper discharge of its duties.” (Trustees By-laws, 4.7: Investment Committee.)
The responsibilities of the Investment Committee are to:
- review and recommend to the Board the investment policy and asset allocation of the endowment;
- determine risk and return objectives;
- approve new asset classes and benchmarks;
- monitor the attainment of the investment and financial objectives;
- engage in strategic thinking and long-term planning in regard to the endowment.