The overall investment objective of the UUCEF is to increase the asset value in order to maintain the real purchasing power of the endowment while allowing for regular distributions. The Fund seeks to achieve consistent returns within a moderate risk tolerance over the long term, sufficient to allow Congregations take regular distributions and maintain the value of principal after adjustment for inflation and after all expenses (“Target Return Objective”). The UUCEF attempts to achieve this goal by ensuring that the Investment Managers adhere to the parameters set forth in the Investment Policies and Guidelines. These objectives are consistent with the needs of many UU Congregations, which typically draw 4.5% to 5% of their investment balance each year to support their activities.
One of the most important responsibilities of those overseeing an endowment fund is to preserve and grow the purchasing power of the fund’s assets. “Real Asset Growth” of an investment is achieved only when the total investment return exceeds the annual loss of purchasing power (measured by inflation) and redemptions.
Real Asset Growth = Total Investment Return – (less) Inflation and Redemptions
Those with investment responsibilities at UU Congregations may not have the resources to achieve Real Asset Growth over the long term on their own – through market cycles and changing economic conditions. At UU Congregations, the future of your endowment fund will depend on it.
The Investment Committee has also established the following long term objective for the Fund: “The UUA seeks to achieve the highest possible professional standards in the way it manages and operates the UU Common Endowment Fund, and by so doing, provide stable investment performance at a reasonable level of risk, while having a positive impact on social and environmental issues.” In order to have a reasonable expectation of meeting this objective, the Investment Committee adopted the Investment Policies and Guidelines.