Board Risk Survey

McCoy Foundation Investment Risk Assessment

Dear Fellow McCoy College of Business Foundation Board Member:

Thank you for taking the time to complete this Investment Risk Assessment. As members of the McCoy Foundation, we have a fiduciary duty to the Foundation, which includes stewardship of the investment portfolio. This anonymous survey, provided by Mercer, is designed to evaluate each Board member’s unique risk perspective. Understanding the risk preference of individual Board members will assist the Investment Committee in its mission of managing our portfolio of assets and communicating with the full Board. Please know that your time and effort in completing this survey are very much appreciated by myself and the Investment Committee. Should you have any questions, please don’t hesitate to reach out to me via phone/text (281-414-0576) or e-mail (medgar@edgarinvestment.com).

Thank you,

Matt Edgar, Vice-President and Investment Committee Chair

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General Questions

On a scale of 1 to 5 with 5 being the "highest", how would you rank your understanding of investments?

1. I know very little about investments.

2. I understand the difference between a stock and a bond.

3. I understand how markets are influenced by outside factors.

4. I consider myself an expert in regards to investments.

5. I am an active or retired professional in the investment industry.

On a scale of 1 to 5 with 5 being the most aggressive, how would you rate your willingness to accept risk in your personal investment portfolio?

1. I am not willing to take risk.

2. I am willing to take some risk if it enhances return.

3. I consider myself a "normal" investor.

4. I am willing to push risk to achieve returns.

5. I am willing to take high risk to earn high returns over the long term.

In your role as a Board Member, how would you rate your willingness to accept risk in the Foundation's investment portfolio?

1. I am not willing to take risk.

2. I am willing to bear some risk if it enhances return.

3. I consider myself a "normal" investor.

4. I am willing to push risk to achieve returns

5. I am willing to take high risk to earn high returns over the long term.

When deciding how to structure an investment portfolio, you are:

1. Most concerned about the possibility of the portfolio losing value.

2. Equally concerned about the possibility of the portfolio gaining or losing value.

3. Most concerned about the possibility of the portfolio gaining value.

Regarding the size of the Foundation portfolio, given the college's overall size and scale, do you believe:

1. The portfolio is too small to meet the college's strategic needs.

2. The portfolio is approximately the right size for the college.

3. The portfolio is very large for the college's overall size.

How do you rate your understanding of how the investment portfolio should be used to benefit the college?

I do not understand how investments can benefit the college

I have a general idea of how investments can benefit the college

I understand specifics about how investments can benefit the college

Based on your understanding of the college's current financial position, the overall global macroeconomic environment, and the other factors directly impacting the college, do you feel the investment portfolio:

1. Is taking on an appropriate level of risk.

2. Has the ability to take on more risk to earn a higher long-term return.

3. Taking on too much risk.

4. Unsure if we are taking the right amount of risk with investments.

To what degree should ESG (environmental, social, governance) factors be incorporated into the Foundation investment portfolio?

1. Not incorporated at all.

2. Moderately incorporated (monitoring ESG ratings, considered when evaluating new strategies).

3. Actively incorporated (seeking out a dedicated ESG manager).

To what degree should DEI (diversity, equity, and inclusion) factors be incorporated into the Foundation investment portfolio?

1. Not incorporated at all.

2. Moderately incorporated (monitoring DEI ownership/decision-maker percentages, considered when evaluating new strategies).

3. Actively incorporated (seeking out minority and/or women-owned strategies for the investment portfolio).

To what degree should impact investing be incorporated into the Foundation investment portfolio?

1. Not incorporated at all.

2. Moderately incorporated (considered when evaluating new strategies).

3. Actively incorporated (seeking out impact investment opportunities for the investment portfolio).

Please provide any general concerns about the overall portfolio (optional):

Email Matt Edgar at Medgar@EdgarInvestment.com if you have any questions

Goals and Objectives for the Foundation Portfolio

Prioritize the following return objectives for the Foundation. Drag to reorder them from top being the most important and bottom being the least important.

Minimize the volatility of the value of the Foundation
Earn a minimum absolute return (for instance, 4% or 5%) per year
Earn at least the return of a blend of the broad stock and bond market
Earn at least the return of a portfolio managed by other similar institutions

What period of time do you believe is best to evaluate the overall investment success of the Foundation portfolio?

1-2 Years

3-4 Years

5 or more

Over a full market cycle

Indicate the relative importance of the following long-term Foundation objectives. 1 being less important and 5 being more important.

	1	2	3	4	5
Low/limited volatility
Liquidity
Inflation protection
Portfolio growth

What do you believe should be the long-term investment return objective of the Foundation?

Inflation

Inflation + 3% per year

Inflation + 5% per year

Absolute return of 5% per year

Absolute return of 7% per year

Other

Consider your response to the previous question regarding the return objective. Given the current market environment and asset allocation of the Foundation, do you believe the return objective is likely to be achieved over the next 10 years?

Yes

Unsure

If "No" what do you believe is the appropriate action to take at this time?

Modify the asset allocation to achieve a higher expected return while potentially incurring higher volatility/ risk.

Reduce the distributions from the portfolio.

Increase development efforts (fundraising).

A combination of the first three actions above.

No action is needed.

Please provide any comments regarding the Goals and Objectives section of the survey, or in general, here (optional):

Email Matt Edgar at Medgar@EdgarInvestment.com if you have any questions

Risk Tolerance: Ability and Willingness

How many years do you consider each of the following investment time horizons to be?

Long-Term

Intermediate-Term

Short-Term

What do you think is the appropriate investment time horizon for the foundation?

Long-term: Potentially large fluctuations in value can be tolerated with the expectation of earning higher long-term returns. While large losses are undesirable, they can be made up over time.

Intermediate-term: Some degree of investment risk and volatility can be accepted: however, significant losses cannot be tolerated. This may lead to lower returns.

Short-term: Even moderate declines in value may create problems. The portfolio should not be subject to significant market risk.

If the Foundation fell in value by more than 10% over any 12-month period, how would you think about the impact on the college?

Insignificant: It would have a minimal impact on the college.

Meaningful: Such an outcome is within my expectations for an investment portfolio, and although unfortunate, it would not be a major disruption for the college.

Significant: A decline in value of 10% in a year would result in hardship on the college.

Achieving top-quartile performance among peer Foundations requires accepting the possibility of bottom-quartile performances at times. What should be the perspective with regard to investment performance relative to peer Foundations?

The Foundation should seek to earn a top-quartile return among peers, with the possibility of generating bottom-quartile performance sometimes.

The Foundation should seek to outperform peers only slightly, with the possibility of slightly underperforming peers sometimes.

The Foundation should not be concerned with performance relative to peers, because the investment focus should be on the Foundation's unique investment goal, constraints, and characteristics.

The Foundation should focus primarily on achieving its long-term return objective while remaining competitive with peers over a market cycle.

Investment risk means different things to different people. Please rank your level of concern for the following risks. Drag to reorder them from top being the most important to bottom being least important.

Failure to maintain the purchasing power of the portfolio over time
A significant investment loss (greater than 10%) in any individual year
Total portfolio that is less that that of a relevant blend of market indices
Total portfolio performance that is less than that of the average peer Foundation

Please rank the following "risks" by reordering them with the top being the greatest risk and the bottom being the least risk.

Failing to earn enough to support the college's capital budget
Uncertainty of investment results
Failing to understand investments or strategies
Inaccurate or unrealistic expectations of future investment results
Failing to keep up with inflation
Local headline risk associated with the investment program

Some Foundations invest in less-liquid funds to potentially earn higher returns. What is the maximum percentage of the Foundation that you believe is appropriate to invest in the following liquidity classifications? MUST EQUAL 100% (If you are uncertain put 100% in the last column titled "Uncertain")

Liquid (Daily-Monthly)

Semi-liquid (Quartly-1 year)

Illiquid

Uncertain

Email Matt Edgar at Medgar@EdgarInvestment.com if you have any questions

Asset Allocation

Are you comfortable using the following asset classes within the Portfolio? Answers should be based on long-term, strategic considerations. Choose one response per asset class.

	Yes	No	Require More Information
Domestic Equities
Global Equities
Emerging Market Equities
International Equities
Private Equity- Buyouts Venture Capital
Listed REITs
Listed Natural Resources
Private Real Estate
Private Natural Resources
High Yield Bonds
Emerging Market Bonds
Private Debt
U.S. Fixed Income
International Fixed Income- Cash/Money Market
Hedge Funds

Are there asset classes not listed above that the Foundation should consider?

Do you have any questions, comments, or concerns regarding topics not mentioned in this survey.

McCoy Foundation Investment Risk Assessment

General Questions

Email Matt Edgar at Medgar@EdgarInvestment.com if you have any questions

Goals and Objectives for the Foundation Portfolio

Email Matt Edgar at Medgar@EdgarInvestment.com if you have any questions

Risk Tolerance: Ability and Willingness

Email Matt Edgar at Medgar@EdgarInvestment.com if you have any questions

Asset Allocation

Email Matt Edgar at Medgar@EdgarInvestment.com if you have any questions

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