Oxford Uni's endowment boosted by private equity

LONDON, July 12 Thu Jul 12, 2012 9:12pm IST

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LONDON, July 12 (Reuters) - Oxford University's endowment fund avoided the big losses that left other investors reeling from the euro-zone debt crisis last year, after the centuries-old seat of learning put more money into private equity.

The Oxford University Endowment Fund still suffered a loss of 1.6 percent, however, because of weak returns on its equity and commodity investments, its annual report showed.

The fund is one of two run by Oxford University Endowment Management, an investment office launched in 2007 to manage assets for the university and some of its colleges. OUEM helps to finance staff salaries, building projects and research.

Unlike Ivy League schools in the United States, whose endowments are regarded as big, sophisticated investors, Cambridge and Oxford colleges have tended to run assets individually - often with a focus on British farmland they have owned for hundreds of years.

But both have been trying to boost the size and expertise of their central endowments in recent years.

Cambridge hired Nick Cavalla, who spent 10 years at a unit of London hedge fund firm Man Group, as its first chief investment officer in 2007, while Oxford set up OUEM under Sandra Robertson - reportedly the best-paid person in higher education in Britain.

Robertson said in the annual report that combined assets at the two funds run by OUEM, including inflows of new money, rose 9 percent last year to 1.42 billion pounds ($2.2 billion).

"The Endowment Fund is now in its fourth year and is starting to mature, particularly in areas such as private investments which can take several years to build," she said.

"While not immune to the difficult global backdrop, both funds are positioned well for what is expected to be another challenging year."

TOTAL ASSETS

The endowment fund benefited from a 10.7 percent rise in its private equity portfolio, which Robertson increased to 13 percent of total fund assets from 8 percent during the year.

As of Dec. 31, the portfolio held almost half its assets in global equities, 17 percent in real assets following the purchase of a new UK agricultural estate, and 16 percent in Non- Directional strategies, which include hedge fund managers.

The fund is also significantly boosting its exposure to Brazil. A series of investigative trips to the country by its team last year resulted in two new investments.

Meanwhile, the Oxford Capital Fund, which manages assets set aside for spending on new projects, and which holds bonds but no private-equity exposure, finished the year down 0.7 percent. The MSCI World GDP Index fell almost 8 percent over the same period.

Several high-profile finance figures sit on OUEM's investment committee, including Richard Oldfield, CEO of Oldfield Partners, Ronald Cohen, chairman of The Portland Trust, and George Robinson, who co-founded hedge fund Sloane Robinson.

Rival university Cambridge's endowment fund remains the biggest in Britain, managing 1.53 billion pounds in the middle of last year - still far behind U.S. universities such as Yale's $19.4 billion and Harvard's $32 billion.

OUEM was established after pressure from donors such as venture capitalist Michael Moritz. Earlier this week, Oxford said it was setting up a 300 million pound scholarship fund to help students from poorer families, with a commitment of 75 million from Moritz and his wife Harriet Heyman.

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