Investment Office

Colgate has an obligation to manage its endowed funds in a prudent manner such that they may be deployed in furtherance of the University’s educational mission while retaining the ability to benefit future generations of Colgate students.

For more than three decades the endowment has been managed with the following principles:

• The overriding principle for endowment management (investment and spending decisions) is intergenerational equity. The current generation of students will not be advantaged or disadvantaged relative to future generations. As a result, the endowment will maintain or enhance its real value (adjusted for inflation) over the long-term.
• The endowment is a portfolio of assets established to provide a source of operating revenue into the future.  Accordingly, its performance will be measured over rolling long-term periods and compared to an equivalent benchmark appropriately weighted in accordance with the asset allocation policy.
• Spending from endowment is not predicated on income but instead is principally based on the underlying value of the portfolio.  Therefore, the endowment portfolio will be invested for total return.
• The asset allocation policy is constructed to maximize total risk-adjusted return.  The pursuit of maximizing total return will be tempered by the university’s need to preserve capital and minimize the volatility of returns. As such, the endowment will seek broad diversification among assets having different characteristics and is willing to endure lower relative performance when compared to benchmarks in strong markets in exchange for greater downside protection in weak markets.
• Various asset classes or strategies serve distinctly different roles and will be included only if they add value to the overall portfolio.  For that reason, the asset allocation policy will define the role of each asset class or strategy in achieving the principles set forth above.
• Management and investment decisions about individual assets will not be made in isolation but must instead be made in the context of the endowment’s portfolio of investments as a whole and as part of the overall investment strategy described above.

All endowment decisions are made under robust governance:

• The Investment Committee, comprising individuals with deep and diverse investment experience, manages the portfolio.
• The Finance Committee provides oversight to the Investment Committee with investment policy and risk. This Committee also makes the annual spending recommendation.
• The Board of Trustees serves as fiduciary over both of the above committees.
• The Audit, Legal Affairs, and Risk Management Committee reviews our financial statements which are produced by independent auditors. This committee also reviews and enforces our conflict- of- interest policies.

Colgate’s endowment exists to support the University’s academic mission in perpetuity. The dual goals of intergenerational equity and consistent and growing annual support are central to every investment decision we make. Each year, approximately 5 percent of the endowment directly supports the University’s operating budget, providing resources for scholarships, faculty support, academic initiatives, athletics, and facilities.

This spending level reflects a long-term discipline designed to balance current needs with future obligations. While some more simplistic index investment approaches may deliver higher short-term performance, they also expose the portfolio to considerable downside risk. For instance, had Colgate pursued a more passive, public-equities-only strategy during periods like 2000–2002 or 2008, the university would have experienced 40–50% declines in value, potentially causing irreversible financial damage since we would have to make distributions to the operating budget as the portfolio was losing value. Our approach is designed precisely to protect against these permanent impairments.