Asset Transactions

Asset Custody

  • The Board has determined that all Endowment assets will be held by third-party custodians, and that all securities purchased by, and all collateral obtained by, the Endowment shall be properly designated as Endowment assets.
  • New custody accounts for the Endowment, when requested by the Consultant, can only be opened by the Board.
  • Each newly opened custody account will be added to the current list of Endowment Designated Accounts in Appendix A.

Asset Movement

  • The Consultant is authorized to direct the movement of assets (transfers) between the Board's current list of Endowment Designated Accounts for the purpose of fulfilling their discretionary management of the Endowment's portfolio.
  • Since the Consultant is not authorized to conduct wire transfers, the Consultant will request the Board to initiate (execute) wire transfers when necessary.

Asset Withdrawals

  • The Consultant is not authorized to direct the withdrawal (distribution) of assets from the Board's list of Endowment Designated Accounts. No withdrawal of assets, in whole or in part, shall be made from third-party custodians except by the Board.

Financial and Investment Objectives

The following financial and investment objectives have been established for the KSU Endowment:

  • To preserve the long-term purchasing power of the Endowment assets and the related annual spending distributions over time to evenly allocate support between current and future beneficiaries (intergenerational equity).
  • To earn an average annual total return, after expenses, of at least 7.5% per year over full economic market cycles.

Kentucky Uniform Prudent Management of Institutional Funds Act (KRS 273.600 to 273.645)

Endowment assets will be managed by the Board of Regents or its designated Committee in accordance with the provisions of the Kentucky Uniform Prudent Management of Institutional Funds Act (KRS 273.600 to 273.645).

Annual Spending Distribution Policy

A spending distribution policy has been established that is based on a rolling average of market values in order to reduce adverse budgetary impact due to market volatility of the Endowment assets. The annual spending distribution will be calculated by a smoothing formula based on a rolling three-year average of the quarterly market values. Ending market values for the last 12 quarters are averaged, and the result is then multiplied by the 4% spending distribution rate (1% per quarter) to determine the total amount to be distributed from the