U.Va. investment company shifts toward riskier private equity options

Private capital, real estate yield highest returns in 2015

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Larry Kochard, chief executive and investment officer for UVIMCO, acts as the group's primary representative.

The University of Virginia Investment Management Corporation, or UVIMCO, provides investment management services to the University’s rector and visitors.

The University is increasingly investmenting in private equity, a move that is carefully studied but carries greater risk.

UVIMCO manages investments in both long-term and short-term pools, but focuses on long-term investments based on an assortment of core principles.

This includes partnering with exceptional investment managers, focusing on price, retaining experienced and dedicated staff and diversifying investments.

All investments UVIMCO makes stem from these five core foci, said UVIMCO Chief Operating Officer Kristina Alimard.

“We are a value investor. The first thing we do is look for investments that fall under that framework,” Alimard said.

Many schools have investment organizations that work with a similar philosophy using the Yale Endowment Model of investing, Alimard said. This model involves a shift to investing in alternative investments, such as real estate and private equity.

“We will differ from them in what we find compelling,” Alimard said.

In this fiscal year, private capital and real estate provided the highest returns at 12 and 3 percent, respectively, according to UVIMCO’s 2015 Annual Report released June 30.

In the long-term pool, endowment return was 7.7 percent for the year. The predicted average return is 7.5 percent, Alimard said.

“It is coincidental that the endowment return is what we think the average is. We are very grateful for that return because of the difficult market right now,” Alimard said.

Both UVIMCO and other universities have started to invest more in private equity and alternative investments, said Doug Chan, president of the Alternative Investment Fund at McIntire.

“Institutions are increasing their exposure to private equity,” Chan said. “It remains to be seen if this macroeconomic move makes sense.”

Moving toward private equity generally increases returns but could be risky in the long run, Chan said.

“They typically have higher returns, but it is a little risky with the uncertainty of the market,” Chan said.

Chan said overall he felt confident in the abilities of UVIMCO’s investors.

“They are one of the best managing endowments around,” Chan said. “The team at U.Va.’s endowment does really well.”

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