Trustees voice concern over university investments
J. Breen Mitchell, News Editor
Issue date: 6/19/08 Section: News
Youngstown State University's board of trustees is concerned that their investments may be too risky. If the university was to lose a substantial amount of money on these investments, they would have to make up for it in other ways, possibly including higher tuition.
A question was raised by trustee Scott Schulick, a vice president with Butler Wick and Trust, about the amount of BBB rated investments in the portfolio. Investments with this rating are still considered to be safe investments by investment ratings provider Standard and Poor, said Shebak, and they only represent a little under five percent of the total portfolio.
At a meeting of the investment subcommittee of the board June 13, several trustees voiced their concerns about the safety of the investments of university money they hold.
"I don't have a crystal ball. If I did, I wouldn't be practicing medicine," said trustee Dr. Sudershan K. Garg of how he expects the university's investments to perform in the future.
The meeting was held to go over the investment portfolio and to discuss potential concerns with Michael Shebak of Heartland Investments.
Sheback told the committee that all of their fixed income investments were rated single A or better, with AAA being the best possible rating. This is the rating of well established companies, such as General Electric, he said.
Sheback said that Allegiant, the investment manager employed by YSU, has strict rules to minimize investment risk, mainly through diversification, so that no one area of investment holds the bulk of the money invested.
This concern was discussed at the previous meeting, and Schulick said that it appears that there is too much money in these types of investments. Given the state of the economy, Schulick said, it may be a little too risky to have so large a portion of the portfolio dependent on people making their house and car payments.
Shebak said that companies have had trouble in the past when they were heavily invested in subprime mortgages, and that zero percent of YSU's investments were in these. Schulick said that while this explanation answered his question, it does not alleviate his concern.
A question was raised by trustee Scott Schulick, a vice president with Butler Wick and Trust, about the amount of BBB rated investments in the portfolio. Investments with this rating are still considered to be safe investments by investment ratings provider Standard and Poor, said Shebak, and they only represent a little under five percent of the total portfolio.
At a meeting of the investment subcommittee of the board June 13, several trustees voiced their concerns about the safety of the investments of university money they hold.
"I don't have a crystal ball. If I did, I wouldn't be practicing medicine," said trustee Dr. Sudershan K. Garg of how he expects the university's investments to perform in the future.
The meeting was held to go over the investment portfolio and to discuss potential concerns with Michael Shebak of Heartland Investments.
Sheback told the committee that all of their fixed income investments were rated single A or better, with AAA being the best possible rating. This is the rating of well established companies, such as General Electric, he said.
Sheback said that Allegiant, the investment manager employed by YSU, has strict rules to minimize investment risk, mainly through diversification, so that no one area of investment holds the bulk of the money invested.
This concern was discussed at the previous meeting, and Schulick said that it appears that there is too much money in these types of investments. Given the state of the economy, Schulick said, it may be a little too risky to have so large a portion of the portfolio dependent on people making their house and car payments.
Shebak said that companies have had trouble in the past when they were heavily invested in subprime mortgages, and that zero percent of YSU's investments were in these. Schulick said that while this explanation answered his question, it does not alleviate his concern.
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