UC system looks to overseas investment in face of potential economic decline

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University of California assets are up $5 billion over the past quarter, the UC Board of Regents heard at the Tuesday meeting of its investments subcommittee.

At the meeting, held at UCSF Mission Bay, the subcommittee updated its members and the public on performance of the university’s assets, as well as changes made in investments over the past three months. While assets have grown over the past quarter, the committee hopes to diversify its holdings to decrease long-term risk associated with potential economic downturn.

The university ended the quarter Sept. 30 with assets totaling $114.9 billion, which is up from $109.8 billion June 30, the start of the quarter. These numbers include the university endowment of $11 billion, as well as pensions and retirement savings.

More than half of the university’s total assets lie in public equity, a state of investment that the board aims to change. Public equity concerns stocks traded on the public market, such as the New York Stock Exchange. According to Edmond Fong, UC senior managing director of absolute return investments, these holdings were the ones that generated good returns over the past quarter.

The subcommittee has decided, as one of its long-term strategies, to look overseas for investment opportunities.

“We continue to remain invested in diversifying our assets outside of the United States and increasing our exposure to other parts of the world, particularly in Asia and developed Europe,” said UC Chief Investment Officer Jagdeep Singh Bachher.

Similar concerns around risk, as well as discussion around benchmark goals, were brought up at the meeting in regard to the UC pension fund, which currently covers roughly 233,000 individuals. The board set a 7.25 percent returns goal, one that Bachher called “a high hurdle to beat.”

The meeting adjourned after decisions on investment and internal policy were tabled for the next subcommittee meeting. Reasons for the postponement included concerns about clarity in the language of revisions to the conflict of interest policy on investments.

Contact Sophia Brown-Heidenreich at [email protected] and follow her on Twitter at @sophiabrownh.