The University of California’s Office of the Chief Investment Officer (UC Investments) announced today (Sept. 12) that its assets under management grew to $109.8 billion as of June 30, a $12.2 billion increase over a year ago.
UC’s $109.8 billion is managed across six unique products. The endowment ended the year at $10.8 billion, the pension at $61.6 billion, working capital at $14.2 billion (total return at $8.9 billion and short term at $5.3 billion), the retirement savings program at $22.3 billion and captive insurance at $0.9 billion.
“The UC Investments office has been key to moving forward on some of our most important and exciting initiatives,” said UC President Janet Napolitano. “We have worked together to secure the long-term stability of the UC retirement plan and made significant progress in other areas, such as revitalizing UC’s captive insurance program and optimizing the university’s working capital and general endowment assets to increase spending for research and initiatives across the UC system.”
Chief Investment Officer Jagdeep Singh Bachher, who joined UC in April 2014, said he is proud of what his team has achieved. “In the past three years, I’ve worked with stakeholders throughout the university,” said Bachher. “I’ve called upon our alumni to serve this university once more. I’ve sought to utilize the global reputation of our 10 campuses, five hospitals and three national laboratories to develop a unique and thoughtful approach to investing on behalf of the University of California. We have been calling this tailored strategy ‘The UC Investments Way.’”
The UC endowment grew 15.1 percent for the year ending June 30, 2017, outperforming its policy benchmark by 2.6 percent. The endowment has earned 5.6 percent over 3 years, 9.4 percent over 5 years, 5.3 percent over 10 years, and 7.3 percent over 20 years, exceeding its policy benchmark in each of these periods. Over the past three years the endowment has earned $385 million above the market gains of $1.3 billion.
The UC pension gained 14.5 percent for the year ending June 30, 2017, outperforming its policy benchmark by 1.8 percent. The pension has earned 5.4 percent over 3 years, 9.0 percent over 5 years, 5.0 percent over 10 years, and 6.7 percent over 20 years, exceeding its policy benchmark in each of these periods. It gained $1.5 billion over the market gains of $7.6 billion since 2014.
The UC Total Return Investment Pool (TRIP) earned 7.7 percent for the year ending June 30, 2017, outperforming its policy benchmark by 1.1 percent. TRIP has earned 3.5 percent over 3 years, 6.6 percent over 5 years, and 7.0 percent since inception (August 2008), outperforming its benchmark for all these periods. The UC Short Term Investment Pool (STIP) earned 1.3 percent for the year, 1.5 percent over 5 years, 2.4 percent over 10 years, and 3.7 percent over 20 years, exceeding its policy benchmark in each of these periods. Working capital added value of $301 million during the past three years.
“Part of the reason we had a great year can be directly attributed to the implementation of our asset allocation by Jagdeep and his team,” said UC Regent Richard Sherman, chair of the Investments Subcommittee. “I’m impressed with the overall culture of collaboration, transparency and excellence in the office. All the staff are working really hard with a shared focus. It’s an all-for-one and one-for-all approach that makes the office stronger.”
Sherman warned, however, that good returns are not a given. “In general, we’re approaching this as a continued low-growth, low-return environment, and we have to temper our expectations accordingly,” he said. “We’re in uncharted territory and so in a place of extreme caution. We have to stay highly attuned to where our assets are deployed on a broad level and moderate our return expectations for our products.”
Performance results were discussed at today's meeting of the UC Board of Regents’ Investments Subcommittee. Results are available online at: http://regents.universityofcalifornia.edu/regmeet/sept17/i1.pdf