Euro crisis threatens future asset growth for YSU
The Youngstown State University Board of Trustees is responding to instability in the world market with a heightened sense of awareness concerning the university’s investments.
Investment consultants from Hartland & Co. updated the board on YSU’s assets, which experienced healthy gains during the third quarter of 2011.
Lenient repercussions for excessive debt across the Eurozone accelerated over the past few years. This culminated in Greece, Italy, Portugal and Ireland, when debt surpassed or matched each country’s GDP.
Austerity measures were discussed in parliaments across Europe, only to be met by stiff opposition by the public.
Greece and Italy have since seen their prime ministers George Papandreou and Silvio Berlusconi, respectively, step down, only to be replaced by technocrats.
Just as markets were beginning to show signs of improvement due to the U.S. Treasury’s amplified role in the Eurocrisis coupled with French President Nicolas Sarkozy and German Chancellor Angela Merkel’s plan to enact stricter financial regulations in hopes of solving the current problem and proactively attacking future crises.
But Standard & Poor, a credit ratings agency, has threatened to downgrade all 17 nations on the Euro, which sent Asian stocks plummeting. U.S. stocks have remained stable, though. Ambitions are high that European leaders will find a viable solution soon.
“The U.S. really needs Europe to succeed,” said Michael Shebak, a senior managing director at Hartland. “[Future performance] depends on what happens in the Eurozone over the next several weeks and months. We’re hoping for a good resolution in 2012.”
The decision to move assets from JP Morgan Prime Money Market to the JP Morgan Treasury Money Market, which the board approved in its set of summer meetings, resulted in total university asset growth of 1.6 percent.
The transfer was to “avoid holding of any kind of a non-U.S. bank,” said Sarah Parker, an institutional associate with Hartland.
“Investors flew to treasuries [over the past few quarters],” Parker said.
Of YSU’s $77,120 in non-endowment assets, 45 percent are cash investments, 43 percent are in fixed incomes and the remaining 12 percent are equities.
Long-term outlooks for the university’s portfolio are keeping pace with benchmarks.
Shebak and Parker recommended that the board readjust to improve future performance. The board approved the reallocation of $5,209 from one Vanguard fund to another, essentially a lower, less expensive share class. Hartland claims this will lead to $3,000 in annual savings.
“We have a diverse portfolio, so we can improve without any major damage,” said John Jakubek, trustee and chairman of the investment subcommittee.