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Investment Program Overview
Humboldt State University Advancement Foundation
Agenda
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About RVK
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Investment Portfolio Update
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Green Funds Research
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Spending Policy Impact
About RVK
Consulting Team
Nick Woodward, CFA
Consultant
Nick joined RVK in 2007 as an Investment Analyst and serves as a Consultant in our Portland, Oregon office. His
role includes consulting to a variety of the firm's pension plan, defined contribution plan and
endowment/foundation clients. In addition to his consulting relationships, he is involved in the firm's capital market
assumptions process and assists with general research efforts. Prior to joining RVK, Nick was an analyst with
Bates Private Capital. Nick earned a Bachelor of Arts degree in Finance from the University of Portland, where he
was an Entrepreneur Scholar, and holds the Chartered Financial Analyst designation. He is a member of the CFA
Institute and the CFA Society of Portland.
Kyle Plitt, CFA
Consultant
Kyle is a Consultant based in RVK’s Portland office, having joined the firm in 2006. He advises a number of client
relationships including endowments and foundations, retirement plans, and insurance portfolios. Kyle works
directly with clients in developing portfolio asset allocation, investment manager due diligence, and general
market research and education. He is a graduate of the University of Oregon with a Bachelor of Science degree in
Business Administration – Finance. Kyle holds the Chartered Financial Analyst designation and is a member of
the CFA Society of Portland.
Maritza Martinez
Associate Consultant
Maritza joined RVK in 2013 and serves as an Associate Consultant in the Chicago office. Prior to joining RVK,
Maritza was a hedge fund researcher focused on commodity and inflation hedging manager research at Hewitt
EnnisKnupp. She also assisted lead consultants with managing several institutional clients’ portfolios including
public pension plans, endowments, and foundations. Maritza earned a Bachelor of Science degree in
Economics and Statistics from the University of Chicago.
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Firm Overview
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RVK is independent, proactive and has no conflicts of interest; 100% of our revenue
comes from cash payments by our clients, and our Code of Ethics has been in place
since the inception of the firm
– No soft dollars
– No proprietary asset management products
– No services provided to investment managers
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RVK is one of the top ten largest consultants as determined by Pensions &
Investments
National Firm
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Ownership Structure
Portland, OR – Central Operations
New York, NY
Chicago, IL
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100% Employee Owned
18 Employee Principals
Seven-Member Board of Directors
109 Employees
Diverse Client Base
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400+ client plans nationally
Various account sizes and client types
Over $1 trillion in assets under
advisement
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RVK Client Base
Accounts by Client Type
Accounts by Plan
Type
Corporation
8%
Endowment
Education
7%
17%
Health & Welfare
19%
High Net Worth
2% 5%
25%
Foundation
29%
5%
22%
24%
Government
18%
Accounts by Asset Size
Defined
Contribution
20%
33%
Defined Benefit
$51 - $250M
7% 6%
$251M-$1B
19%
Insurance
Other Non Profit
<$50M
>$1B
34%
Operating
Reserve/Assets
Taft Hartley
Personal/Family
Trust
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RVK serves a diverse client base by client type, plan type and asset size enabling us
to share the best ideas regardless of source.
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RVK has significant experience working with clients of all sizes.
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Consulting Services Overview
RVK Offers Comprehensive Investment Consulting Services
Specialty Consulting
General Consulting
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Trustee Education
Investment Policy Review and Development
Asset Allocation Analysis
Manager Search and Evaluation
Manager Monitoring and Due Diligence
Performance Reporting – Total Fund
Performance Reporting – Alternative Asset Classes
Manager Structure Studies
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Investment Operations Solutions Group
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Real Estate Investment Program Development
Targeted Due Diligence on Direct Alternative
Investments
Alternative Asset Due Diligence and Pacing
Stochastic Risk Analysis and Modeling
Liability Driven Investing Studies
Asset Liability Modeling
Legislative Issues Support
Strategic Planning and Organization Analysis
OCIO Search and Monitoring
Defined Contribution Solutions Group
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Securities Lending Program Development
Trade Execution Analysis
Organizational and Compensation Analysis
Trust/Custody Searches and Evaluation
Prime Brokerage Due Diligence and Selection
Cash Management Program Development
Transition Management
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Plan Structure
Industry Trend Analysis
Third Party Administrator Evaluation
Investment Selection and Monitoring
Plan Operations and Platform Analysis
Fiduciary Policy Development and Implementation
Participant Education
RVK Culture
Key Elements of Our Culture
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Collaborative, Team-Based Work Ethic
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Dedication to Excellent Client Service
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We challenge our associates each and every day by going above and beyond client
expectations – this level of service permeates the organization from top to bottom.
Unwavering Commitment to Ethics
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Simply put, everything we do is centered around serving our clients beyond their highest
expectation.
Innovation
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We have fostered a culture that rewards individuals who work well together as a team with
shared goals and shared values. We are meticulous in our recruiting efforts to ensure that
new hires fit with this culture.
Our service and our firm is designed to reinforce our dedication to the highest ethical
standards. This has been, and will always be, a non-negotiable aspect of RVK.
Employee Ownership
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RVK is 100% employee owned and all RVK owners must be practicing consulting
professionals.
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Investment Manager Research
Depth of Resources Contribute to Client Service
Jim Voytko
Director of Research
Sean Ealy, CFA
Director of Investment Manager Research
Equity
Matt Sturdivan
Manager Research
Consultant
Britt Vriesman
Manager
Research Analyst
Joe Ledgerwood,
CFA
Domestic – Long
Only
Kasey Kuenzli, CFA
Senior Manager
Research Analyst
Fixed Income
Alternative Strategies
Amy Hsiang,
CFA
Traditional Fixed Income,
Alternative Credit
Steve Hahn,
CFA
Private Equity/Real
Asset
Sonia Ruiz
Manager
Research Analyst
Real Estate
Todd Shupp,
CFA
Multi-Strat/
FoHF/GTAA/DIS
Reed Harmon, CFA
Senior Manager
Research Analyst
Alexander Leiken
Manager
Research Analyst
Robin Norgren
Data Analyst
Dan Krivinskas
Director of Real
Estate Consulting
Scott Krouse
Consultant
Kirby Francis
Manager
Research Analyst
Joseph Jehl,
CFA
Consultant
Mark Bartmann
Associate
Consultant
Giuseppe Infusino
Investment Associate
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Zach Straebel
Investment
Analyst
Investment Manager Research
Relationship with Client & Consulting Team
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Conduct manager oversight
Perform detailed due diligence in the course of manager searches on behalf of our
clients
Identify suitable managers for client objectives
Conduct review of a client’s existing set of managers
Work directly with clients on searches as situations dictate
Conduct ad-hoc projects and requests (e.g. asset class reviews)
Client
Consultant
Team
Investment
Managers
Manager
Research
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Investment Portfolio Update
Investment Program Cornerstones
Diversification
Investment Tools
• Periodic asset allocation studies
• Ongoing performance monitoring
and due diligence
• Appropriate mix by asset class
(traditional and alternative)
• Periodic Investment Policy
Statement review
• Appropriate mix by investment
manager (institutional quality)
• Institutional custody of assets
through US Bank
Risk/Return Expectations
Fees
• Maximizing return for a given
level of risk
• Investment manager costs
competitive with peers
• Minimizing risk for a given level
of return
• Best (i.e. cheapest) available
share class
• Consistency with spending policy
• Leverage of RVK relationships
throughout the industry
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Investment Portfolio Update – Historical Growth
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Investment Portfolio Update – Risk Metrics
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Fiscal Year 2014 Review
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15.5% return, net of fees
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– Significantly exceeding Higher Education Price Index¹ (3.0%)
– In line with custom target allocation benchmark (15.7%)
In line with peers² (55th percentile)
• Excluding University Annex: 43rd percentile
– Third best fiscal year, in absolute terms, since 2005
Fiscal Year
2006
2007
2008
2009
2010
2011
2012
2013
2014
Total Fund
10.2%
17.2%
-2.4%
-15.3%
10.9%
19.5%
-0.1%
11.1%
15.5%
Target Allocation Benchmark
9.6%
17.2%
-3.6%
-15.1%
10.3%
19.7%
2.6%
9.8%
15.7%
35
41
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68
56
32
53
55
Peer Group Rank
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5 years after the financial crisis, U.S. economy continues to improve
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Unemployment has fallen to 6.1%
Inflation remains low (2.1%)
The Federal Reserve has reduced their Quantitative Easing program
Stocks posted double-digit returns during the fiscal year, outperforming non-U.S. equities
Interest rates remain near historic lows
The real estate market continues to recover
¹ The Higher Education Price Index is a measure of the inflation rate applicable to higher education in the U.S., specifically it measures the costs
in a set basket of goods and services purchased by institutions of higher education.
² Endowments and Foundations with less than $500 Million in total assets included in Mellon Analytical Solutions Trust Universe along with the Investment
Metrics Plan Sponsor Universe.
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Recent & Future Objectives
Recent Objectives
• January 2013:
Global Tactical Asset Allocation strategy added
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December 2013:
Global Small Cap Equity added
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April 2014:
Social and Environmentally Responsible Offset and Mitigation
Policy adopted
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Summer 2014:
Green Fund investment manager due diligence
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Ongoing:
Educational topic presentations to Finance Committee and staff;
investment manager due diligence; investment policy review
Future Objectives
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Green Fund investment
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Asset allocation review
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Green Funds Research
Investment Program Cornerstones: Green Funds
Diversification
Investment Tools
• Eliminating sectors and
industries potentially reduces
diversification
• Limited product availability and
historical experience may require
extensive due diligence
• Challenge in performance
benchmarking
Risk/Return Expectations
Fees
• Exclusion of sectors and
industries can potentially reduce
return and increase risk
• Increase in Fees
• Green Fund ~1.00%
• Current US Eq. Portfolio: ~0.38%
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Green Funds Research
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RVK has spent considerable time conducting due diligence on “Green Fund” strategies
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Due Diligence Calls
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Establish Criteria
DFA – 6/23
Calvert – 6/26
Vanguard – 6/27
Trillium – 6/27
Walden – 6/30
Parnassus – 6/30
Parametric – 7/2
Portfolio Design Goals
Quantitative Analysis
Performance Consistency
Risk/Return Profile
Peer Rankings
Qualitative Analysis
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On-Site Visits
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Investment Philosophy
Team Stability
Risk Controls
Resource Depth
Parnassus – 8/28
Walden – TBD
Trillium – TBD
Interviews
Adherence to Style
Source of Returns
Incentive Structures
Manager Selection
Best Fit w/
Existing Options
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Green Fund Example
Parnassus Endeavor (PARWX)
Management Style
ESG Focus
Active Large Cap
Fossil Fuel Free as of May 2014. Portfolio excludes
extraction, exploration, production, manufacturing, and
refining companies as well as integrated oil companies
and utilities with majority of assets in natural gas.
Domestic Equity with a Growth Tilt
This strategy also overweight’s companies that are good
work places, with the philosophy that it will be easy to
recruit and retain better employees and perform at
higher level than competitors in terms of innovation,
productivity and customer loyalty, and profitability.
5-Year Returns
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Concerning Sectors: Holdings Screen
% of Market Value in Screened Stocks (1)
Aerospace/
Alcoholic
Casinos &
The Filthy
Parnassus:Endeavor (PARWX)
0.00%
0.00%
0.00%
0.00%
Trillium Fossil Fuel Free Core Composite (SA)
0.00%
0.00%
Walden Fossil Fuel Free Composite (SA)
0.00%
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Concerning Sectors
Total
Excluding
Defense
Tobacco
Total
Energy Utilities
Total
Green Funds significantly reduce
and/or Gaming
fully exclude
exposure
to concerning
sectors and
Defense
Beverages
15*
industries
Green Funds
Calvert Social Index (CISIX)
Vanguard FTSE Social Index (VFTNX)
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
% of Market Value in Screened Stocks (1)
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00% 1.87%
1.87%
Concerning Sectors
0.00% 0.00%
0.00%
0.22%
0.00%
Aerospace/
Alcoholic
Defense
Beverages
0.00%
0.00%
0.00%
0.00% &
Casinos
Gaming
0.00%
0.00%
The
Filthy
15*
0.00%
0.00%
Tobacco
0.00%
0.22%
Total
0.00%
0.00%
Total
0.00%
Excluding
0.00%
Defense
0.00%
2.28% 0.91%
Energy Utilities
4.32% 1.11%
0.00%
3.19%
Total
5.43%
Green Funds
Parnassus:Endeavor (PARWX)
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
Trillium Fossil Fuel Free Core Composite (SA)
Current Humboldt Equity Investments
Walden Fossil Fuel Free Composite (SA)
T Rowe Price I LgCp Val (TILCX)
Calvert Social Index (CISIX)
Vanguard 500 Index;Sig (VIFSX)
Vanguard FTSE Social Index (VFTNX)
INTECH Risk-Mgd LCG (CF)
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
1.87%
1.87%
0.00%
5.22%
0.22%
2.63%
0.00%
7.35%
0.00%
0.00%
0.00%
0.24%
0.00%
0.56%
0.00%
0.00%
0.00%
0.10%
0.00%
0.72%
0.00%
2.87%
0.00%
1.43%
0.00%
0.00%
0.00%
0.49%
0.00%
1.47%
0.00%
0.31%
0.00%
8.58%
0.22%
5.87%
0.00%
8.94%
0.00%
3.36%
0.00%
3.24%
0.00%
1.59%
0.00%
12.98%
2.28%
10.85%
4.32%
2.74%
0.00%
7.49%
0.91%
3.15%
1.11%
0.85%
0.00%
20.47%
3.19%
14.00%
5.43%
3.59%
DFA US Small Cap;I (DFSTX)
2.27%
0.02%
0.55%
0.06%
0.11%
3.01%
0.74%
6.39%
3.55%
9.94%
Screened
Industries Equity
as a %Investments
of Total U.S. Eq Mkt
Current Humboldt
2.25%
0.22%
0.46%
1.06%
1.12%
5.11%
2.85%
11.60%
2.85%
14.45%
T Rowe Price I LgCp Val (TILCX)
Screened Industries as a % of Global Eq Mkt
Vanguard 500 Index;Sig (VIFSX)
5.22%
1.24%
2.63%
0.00%
1.34%
0.24%
0.00%
0.61%
0.10%
2.87%
0.38%
1.43%
0.49%
0.95%
1.47%
8.58%
4.52%
5.87%
3.36%
3.29%
3.24%
12.98%
9.81%
10.85%
7.49%
3.62%
3.15%
20.47%
13.43%
14.00%
INTECH Risk-Mgd LCG (CF)
7.35%
0.56%
0.72%
0.00%
0.31%
8.94%
1.59%
2.74%
0.85%
3.59%
DFA US Small Cap;I (DFSTX)
2.27%
0.02%
0.55%
0.06%
0.11%
3.01%
0.74%
6.39%
3.55%
9.94%
Screened Industries as a % of Total U.S. Eq Mkt
2.25%
0.22%
0.46%
1.06%
1.12%
5.11%
2.85%
11.60%
2.85%
14.45%
Screened
Industries
as are
a % publicly-traded
of Global Eq Mkt securities within
1.24%the appropriate
1.34%
0.61%Industry
0.38%
4.52%
3.29%
9.81% 3.62%
13.43%
(1)
Screened
stocks
GICS
or Sector0.95%
classification.
(2) U.S. Equity and Total Global Equity Markets are represented by the sum of all GICS sectors. Sector and Industry market values are represented by
respective GICS Sectors and Industries from Bloomberg.
* The "Filthy 15" compromise of the following corporations that are deemed to be the largest and dirtiest energy producers; Arch Coal Inc., Ameren Corp,
American Electric Power Company Inc., Alpha Natural Resources Inc., CONSOL Energy Inc., Dominion Resources Inc., Duke Energy Corp, Consolidated
Edison Inc., Edison International, FirstEnergy Corp, NRG Energy Inc., PPL Corp, and the Southern Company.
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Spending Policy Impact
Green Fund Investment & Spending Policy Impact
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It is difficult to determine the performance impact of investing in green fund strategies.
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A conservative estimate suggests that ex Fossil Fuel funds may underperform slightly over
the long-term (~1.0%) versus the current portfolio structure, but with the possibility to
outperform at times.
The total performance impact on the Advancement Foundation’s spending policy will
depend on the total allocation to green funds.
– The below table illustrates our estimated impact:
Portfolio Structure
Green Fund
Allocation
Estimated
Performance Impact
Spending
Policy
Current Policy
0%
N/A
4.0%
Intro to Green Funds
(50% of large cap equity)
11%
-0.11%
3.9%
Green Large Cap Equity
22%
-0.22%
3.8%
Green Traditional Assets
73%
-0.73%
3.3%
Full Implementation
100%
-1.00%
3.0%
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