Investment Strategy2020-09-16T13:11:19-04:00

Investment Strategy

Investment Objective

The Wildermuth Endowment Fund seeks to provide long-term capital appreciation and income to investors by employing investment strategies and asset allocation techniques followed by traditional endowment funds. The Fund is designed to provide investments and asset classes similar to what might be found in an endowment fund. To best facilitate the implementation of the endowment style investments, a closed-end interval structure is used which provides the adviser the flexibility to include diverse investments and asset classes while also providing investors with daily share purchases and a quarterly limited share repurchases*1

Investment Strategy

Regarded by many prestigious colleges, universities and other institutions across the globe as the best approach for managing financial assets, the endowment style investing seeks to increase total portfolio return while maintaining an acceptable level of risk through diversifying into performance-oriented assets. Beyond U.S. stocks and bonds, the endowment style investing targets additional asset classes including global equities, real estate, private equity, natural resources, and absolute return investments (hedge funds and managed futures), among others. Endowments are able to take advantage of these different asset classes because they feature a long-term investment time horizon with low liquidity needs, making endowments a viable strategy for investors with similar goals.

The risk profile of individual investors is often significantly different from that of larger institutions using an endowment model including the following: financial resources, asset size, investment experience, investment time horizon, investment goals and liquidity needs. Investing in the Fund involves a considerable amount of risk as stated in the prospectus.

Endowment portfolios generally share several key similarities:

  • Broad Diversification: Investments are made in numerous investment categories ranging from traditional equities and bonds to alternative investments such as real estate and private equity.
  • Reduced Correlation: Limited or low correlation between investments is targeted to reduce overall portfolio volatility.
  • Alternative Investments: Large percentages of the portfolio are devoted to holdings other than U.S. stocks and bonds.
  • Illiquid Investments: Investments that cannot be quickly sold are targeted because they can offer performance premiums to compensate for their lack of liquidity.
  • Real Assets: Investments in real or hard assets such as real estate are sought because they can offer inflation protection and income as well as capital appreciation potential.
  • Various Investment Structures: Different structures and investment vehicles are used to gain access to more unique opportunities and performance characteristics.

A “Sample” Allocation1

Endowments normally invest significant percentages of their funds into different sectors and limit their exposure to fixed income. The potential allocation shown at right highlights a possible endowment model portfolio.

1Endowments over $1 billion allocation. A high allocation to illiquid investments, as used by larger endowments over $1 billion in assets, is not suitable for individual investors and smaller endowments portfolios with fewer assets in invest. Diversification and asset allocation do not guarantee a profit or protect against a loss.

This sample allocation is for illustrative purposes only and does not represent the current Wildermuth Endowment Fund sector allocation.

Source: https://www.nacubo.org/Research/2020/Historic-Endowment-Study-Data 2018 NACUBO-TIAA Study of Endowments. Data represent asset allocations as of June 30, 2018

*Investors should consider how closely their investment needs match an endowment. The risk profile of individual investors often differs from a large institution using an endowment model in ways such as: financial resources, asset size, investment experience, investment time horizon, investment goals, and liquidity needs.

A limited number of shares are eligible for quarterly repurchase, an investment in the Fund should be considered illiquid. Once each quarter, the Fund will offer to repurchase between 5% and 25% of its outstanding shares at net asset value (NAV), subject to applicable law and Board of Trustees approval. The Fund currently expects to offer to repurchase of 5% of its outstanding shares at NAV.

1 Investors should understand that valuation issues involving the Fund’s investments in early stage and other private companies have led to delays in the completion of the Fund’s annual audit and the quarterly share repurchase program. A recurrence of this issue would further impact the liquidity of an investor’s shares.