Investments at VMI
Thanks to the exceptional generosity and vision of thousands of VMI alumni and friends, the Institute is supported by endowments that, every year, produce millions of dollars, the majority of which are earmarked for specific purposes, such as merit-based scholarships.
The importance of this money to the success of VMI over the long-term cannot be overstated. Therefore, below, the VMI Foundation provides information about how these critical funds are invested and managed.
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First, it is important to understand that, although the VMI Foundation annually reports figures related to the endowments that support VMI, what could be called the VMI Endowment consists of funds donated to the VMI Alumni Agencies, the Institute itself, and the George C. Marshall Foundation. In 2009, after enduring a decade and a half in which two major “bubbles” grew then burst, the VMI Alumni Agencies, VMI, and the George C. Marshall Foundation decided that a new approach was needed to managing the VMI Endowment. That year, VMI Investment Holdings LLC was established and charged with finding a management firm that would actively manage the Endowment. After a lengthy and intensive search process, VMI Investment Holdings LLC contracted with the nationally recognized investment-management firm Cliffwater LLC for the task.
With an eye toward long-term protection of the Endowment against possible future market volatility, VMI Investment Holdings LLC directed a change in asset allocation within the VMI Endowment. Previously weighted heavily toward equities and bonds, the new allocation entailed more fixed income and fixed income associated investments as well as what are termed “defensive alternative investments”. Recently, an allocation to private-equity investments was made in the full knowledge that they might not generate the returns currently being experienced in funds weighted toward, say, the S&P, but in accordance with the overall policy of protecting against major downturns.
Like the portfolios of most institutional and individuals, that of VMI Investment Holdings still is recovering from the major declines of 2008-2009. At the end of Fiscal Year 2009, the market value of the VMI Endowment was $234.7 million. At the end of the last four fiscal years, its value has been:
Year Value (In millions of $)
FY 2010 $266.1
FY 2011 $315.8
FY 2012 $300.4
FY 2013 $328.6
Thus, the value of the VMI Endowment from FY 2009 to FY 2013 has increased by $93.9 million or 40%.
Since 2004, the VMI Endowment has provided more than $100 million in support to the Institute. The level of support has been kept relatively high (the distribution rate has been 4.8%) because of the need of the Institute for increased private support at a time when state support was decreasing. In the future, however, it is hoped that a sound, long-term investment strategy will generate more support for VMI as well as add greater value to the VMI Endowment.
Prudent management is one way to ensure that the value of VMI Endowment enjoys steady growth. Another is by adding to its overall corpus through successful fundraising. In this regard, the trend in fundraising is positive. In Fiscal Year 2013, the VMI Family made more than $100 million in gifts and commitments in support of the Institute, and many of these gifts and commitments were directed toward new and existing endowments.
Finally, the members of VMI Investment Holdings LLC as well as the leaders of the Institute and the VMI Alumni Agencies are mindful that the long-term health of the VMI Endowment is essential to the long-term success of the Institute. Therefore, they are committed to ensuring a growing pool of private money is available to VMI—and to executing their responsibilities as stewards of these vital funds with care and diligence.
For more information, please contact Scott E. Belliveau ’83, Director of Communications, VMI Foundation, 540.464.7287, ext. 242.