Regents dismiss UH fund manager
By Beverly Creamer
Advertiser Education Writer
Because of losses to the University of Hawai'i Endowment Fund amounting to $7.9 million over the past 12 months, the Board of Regents yesterday voted to terminate Jurika & Voyles as one of its fund managers, and place on probation Pacific Century/Bank of Hawai'i, one of its investment managers.
The value of the independent UH Endowment Fund — from the sale of the old stadium many years ago — now totals $46.7 million, down from $63.3 million two years ago because of the losses, as well as about $5 million paid out in scholarships.
The independent fund provides about $2.5 million annually for UH scholarships, primarily for athletes. The fund is separate from the autonomous UH Foundation, which handles investment of the larger chunk of the university endowment which comes from fund-raising campaigns or gifts to the university.
In taking action, the board was responding to recommendations from Tom Sakai of Wachovia Securities, its Third Party Monitor, regarding losses over the past year. In the third quarter alone the portfolio dropped by 10.9 percent of total value, more than the board felt was acceptable. In the last 12 months it dropped 14.2 percent in value.
The decisions to make changes in fund management were also based on the loss of key personnel in both firms.
Pacific Century/Bank of Hawaii lost people involved in portfolio management and market strategy, according to a report by the regents' Committee on Finance and Facilities.
Jurika & Voyles also suffered setbacks, losing personnel, including the firm's founder, and 121 accounts since 2000, while gaining 45 accounts, according to the committee report.
Under the terms of probation the investment manager has six months to reach certain goals before its performance is re-evaluated.
At the same time the board voted to retain NWQ Investment Management Company based in Los Angeles as a replacement fund manager. Part of NWQ's draw was its focus on investments in large, financially strong companies over companies with a mid-level capitalization.
The regents also expanded Sakai's role, asking him to take a more active advisory position as the board's investment consultant "in light of the fluctuating marketplace" that's expected to continue over the next five to 10 years, said the committee report.
"The committee felt that the board needed more expert assistance in overseeing the fund's portfolio and investment activities," said the report, in explaining the expansion of Sakai's role.
James "Wick" Sloane, UH chief financial officer, said these changes in board policies smooth the process so the board "can respond more quickly" to trouble in the market.
Reach Beverly Creamer at bcreamer@honoluluadvertiser.com or 525-8013.
