ACU’s endowment portfolio has seen a 10 percent decline over the past two months, during the COVID-19 pandemic.
Despite the steep drop, Chief Investment Officer Jack Rich said he believes it won’t create too many issues.
“I do not see that our mission has changed because of the pandemic,” Rich said. “We will continue to provide resources to the university students, faculty and operations. If we end the fiscal year, May 31, at the current value, distributions from the endowment to the operations of the university will be about the same as the current year.”
As of April 15, ACU’s endowment was valued at $434 million. Looking back to May 31 of last year, it was valued at $438 million and peaked in February before the sharp decline.
If endowment continues to drop from its current figures, the university could experience distribution reductions. Rich emphasized that endowment is a key contributor towards financial success for the university.
“The endowment is a vehicle to provide current and future support to our students,” Rich said. “This support comes in the form of direct scholarship support or to supplement the effectiveness of our faculty. It is critical in helping make ACU affordable.”
Since taking his position in 1991, Rich has devoted his work to further diversifying the university’s portfolio.
“Our portfolio has changed dramatically,” Rich said. “This transition has been a process over the past 20 years as we grew in assets and capabilities.”
The investment strategy for the endowment has gone through many iterations over the past several decades. In the 1980’s, the endowment consisted mainly of fixed income securities.
Nowadays, the endowment is invested in a plethora of assets ranging from private and global equities, hedge funds, real estate, renewable energy and oil and gas.
To provide context, ACU witnessed a 25 percent endowment drop in the last major downturn in 2008- 09. With the future still unknown, Rich and the rest of his staff will continue to analyze the university’s endowment investments.
“Although the ultimate effects of the pandemic are unknown, the mission is not,” Rich said.