The University has a fiduciary duty to get the best return from our investments within the level of financial risk agreed by members of the University’s Council (read more about who makes our investment decisions).
We do this by working with a financial services organisation who we ask to manage our long-term and mid-term investment portfolios. This model is called an outsourced chief investment officer (OCIO) model. We also hold a Liquidity Portfolio which is managed by our own Treasury Manager.
Long-term investment portfolio
Cash invested in our long-term investment portfolio is generated from endowments gifted from alumni and donors. We can’t spend the original money given to permanent endowments, which is most of the endowment fund – we can only use the income it generates. That’s why we invest the endowment fund for the long term.
The University is more willing to take risks with long-term investments. This is because assets like stocks and shares in companies, which can change value a lot in the short term, usually give better returns over time compared to less volatile options like money market funds (which invest in low risk, short-term debt).
Mid-term and liquidity portfolios
Cash held in the mid-term and liquidity portfolios comes from things like student fee income and research grants. We do not invest student fee income in stocks and shares of companies.
The mid-term and liquidity portfolios invest in funds or products that let us access the money quickly, in case we need it for operating costs or capital investment.
Appointment of outsourced chief investment officer (OCIO)
In the academic year of 2023/2024, we appointed JP Morgan as our OCIO, with a clear priority to invest on our behalf while implementing our Responsible Investment Policy.
This followed a rigorous governance and procurement process. The first step was to hire a specialist procurement adviser to support with this. After shortlisting a few potential partners, our Chief Financial Officer (CFO) and members of our Strategy Planning and Resources Committee (SPRC) completed the final part of the selection process on behalf of the University’s Council.
How we work with our OCIO
We tell (instruct) our OCIO to act on our behalf and invest our cash that we want to hold for the long-term in various ways through pooled funds, where our money is used alongside funds of other investors to create a good return. This is also known as indirect investment.
We do not hold direct investments; we only invest in pooled funds, such as mutual funds and exchange-traded funds (ETFs), through our OCIO. View our glossary to find out more about mutual funds and ETFs.
Our OCIO diligently follows our responsible investment criteria, ensuring our funds are appropriately managed. They use a screening service, provided by Morgan Stanley Capital International (MSCI), to review the terms and conditions of each pooled fund and make sure that the investments comply with our Responsible Investment Policy.
The OCIO provides regular reports to the University’s Investment Sub-Committee, which make it clear that each pooled fund investment complies with our policy. A positive statement confirming this position is included within the OCIO reporting. These reports allow the Investment Sub-Committee to review and question the OCIO’s performance.
If you are looking to learn more about investing, please take a look at this video where our OCIO covers some of the core concepts and types of investments, including equities, fixed income, and alternative assets. Our OCIO also explores responsible investing and the role of investments in supporting company development and growth.
OCIO – Introduction video on the key fundamentals to investing
Direct and indirect investments
Direct investment is when an investor buys an asset, like a stock or share, bond, or property, and manages it themselves. They take on all the risks.
Indirect investment is when an investor puts money into a fund, like a mutual fund, exchange-traded fund (ETF) or managed portfolio, which is managed by someone else. The investor owns a part of the fund, not the actual assets, and the risks are shared with other investors.