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March 27, 2006
UK university fund firm eyes alternative assets
A new company set up to manage the endowments of British university colleges and charities said on Monday it will invest in assets such as private equity and commodites which have helped U.S. universities to achieve strong returns.
Oxford Investment Management (OXIM) is starting with 100 million pounds of funds committed by three Oxford University colleges, Balliol, Christ Church and St Catherine's.
Later it will seek business too from other colleges, charities and wealthy individuals.
OXIM's approach to asset allocation will be similar to that of some U.S. endowments, which have larger allocations to non-traditional assets such as hedge funds, private equity, timber and energy than their British counterparts have.
"While some ... U.S. (charities and endowments) have enjoyed impressive returns on their investments in recent years through diversified active management, UK institutions have largely pursued ... more traditional strategies," OXIM director Karl Sternberg said in a statement.
The endowments of Harvard and Yale have performed particularly well. Harvard Management Company, which invests Harvard University's $26 billion (15 billion pound) endowment, delivered a return of 19.2 percent for the year ended June 2005.
OXIM plans to invest around one third of assets in stocks. It will also invest in infrastructure, property, private equity and long/short equity funds, which buy stocks seen as cheap and short sell those that look expensive.
The firm is 60 percent owned by Balliol, Christ Church and St Catherine's colleges and 40 percent by the management team, which includes Sternberg and Paul Berriman, respectively former chief investment officer and UK chief executive at Deutsche Asset Managment.
Gavyn Davies, former chief economist at Goldman Sachs and chairman of the British Broadcasting Corporation, will be a special investment adviser to the firm's investment committee.
Sternberg, who managed St Catherine's College's assets for 10 years whilst at Deutsche, and Berriman will aim to generate returns of 5 percent above the rate of inflation per annum over a rolling five-year period, with significantly less volatility than stocks.
They have so far selected 17 external fund managers.
The firm will charge annual management fees of 30 basis points this year, which will rise to 40 basis points for new clients who join next year, the spokesman said.
Separately, in an effort to boost returns, former Treasury economist Sir Alan Budd has been commissioned to prepare a report on how Oxford University manages its investments.
-Reuters-
Posted by su at March 27, 2006 10:12 AM