University of California Posts 3.4% Investment Loss in Endowment

  • Fiscal 2016 was disappointing for funds, investment chief says
  • Value of endowment rose to $9.1 billion due to cash inflows

The University of California posted a 3.4 percent investment loss on its $9.1 billion endowment in the year ended June 30, the office overseeing investments for the 10-campus system said Friday.

The losses were driven by poor returns from public equity fund managers and hedge funds, Jagdeep Bachher, the chief investment officer, said at an investment committee meeting Friday. The value of the endowment rose to $9.1 billion from $8.9 billion from the year prior because of inflows from shifting cash from short-term funds to the endowment, as well as royalty payments, he said.

“This has been a disappointing year for endowments,” Bachher said.

The office oversees a total of $97.6 billion of assets, including the endowment and pension funds. The university’s pension posted a 2 percent loss for the year. The endowment gained an annualized 6.5 percent over the past 5 years and an annualized 5.9 percent over the past 10 years.

“We are faced with a low-growth and low-return environment going forward and are working closely with our stakeholders to set realistic return expectations for the future,” Bachher said in a statement.

Funds with more than $500 million lost a median 0.73 percent in the fiscal year through June 30, while endowments of all sizes were down 0.74 percent, according to the Wilshire Trust Universe Comparison Service. The data, from fund custodians, excludes fees while schools report returns net of fees.

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