The $23 Billion Question
Thursday, April 27, 2023
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Throughout this academic year, I produce got been arguing that spell the nation may produce got cutting the UC’s total $20 billion budget yesteryear $600 i G m inward the final 2 years, the academy lost over $23 billion inward its investment portfolio during the same fourth dimension period. In fact, at that topographic point has been a huge outcry over the reduction of nation funds, only no i has questioned UC’s investment losses. It appears that people assume that since everyone lost coin during the global financial meltdown, nosotros cannot concur the academy responsible for its investment decisions. However, a new study concerning the pension losses at half dozen New England universities should brand us re-open the query of how the UC lost together with thence much money.
According to a novel study yesteryear the Tellus Institute, Harvard, Dartmouth, MIT, Boston College, Boston University together with Brandeis University all embarked on a high run a jeopardy investment strategy that has at in i lawsuit resulted inward reduced endowments, budget cuts, delayed structure projects, together with task eliminations. Like the UC, these universities all followed Yale University's investment chief, David Swensen’s endowment model of relying on choice assets such equally commodities, existent estate together with private equity.
While this study solely looks at the half dozen New England schools, its findings tin hand the sack likewise hold upwardly applied to many universities, including the University of California. As I produce got written, the UC likewise copied Swensen’s strategy of moving coin from stable securities to high provide areas. In fact, the UC is notwithstanding next this advice, which is evident inward the next tilt from Moody’s regarding the university’s investments: ““The long-term targets for the endowment puddle would convey choice assets (including hedge funds, existent estate together with private equity) to 35% of the total, alongside domestic together with international equity accounting for or together with thence other 45% of total assets.” Instead of shying away from the high-risk Yale investment model, the UC is increasing its exposure to these volatile assets.
Like the UC, i of the driving forces behind these risky investments is the operate of trustees or regents alongside conflicting trace of piece of occupation organization interests. According to a Bloomberg Businessweek article ,“The investment commission at Dartmouth, inward Hanover, New Hampshire, included to a greater extent than than half dozen trustees whose firms oversaw to a greater extent than than $100 i G m inward investments for its fund over the final 5 years, the study said. Stephen Mandel, who is relinquishing his post service equally chairman of the school’s investment commission to Pb the board after this year, originally managed $10 i G m for the schoolhouse at his trace of piece of occupation solid Lone Pine Capital LLC. . . . Other trustees who produce out coin for Dartmouth include Leon Black, alongside at to the lowest degree $40 i G m inward his private-equity trace of piece of occupation solid Apollo Global Management LLC, together with William Helman, a partner at venture working capital missive of the alphabet fellowship Greylock Partners, the study said. Helman, who volition accept over the committee’s helm from Mandel, has received $10 i G m from the endowment.” These types of conflict of involvement are evident inward the UC arrangement since many of the regents produce got major holdings inward private equity, existent estate, together with construction.
As the UC spousal human relationship coalition told nation senator Darrell Steinberg during Charlene Zettel’s conformation to hold upwardly the adjacent UC regent, nosotros demand to produce got employees on the pension board to brand certain that the university’s investment decisions are non guided yesteryear the personal trace of piece of occupation organization interests of private regents. Moreover, nosotros demand a total investigation into how the UC lost $23 billion during the global financial meltdown.
According to a novel study yesteryear the Tellus Institute, Harvard, Dartmouth, MIT, Boston College, Boston University together with Brandeis University all embarked on a high run a jeopardy investment strategy that has at in i lawsuit resulted inward reduced endowments, budget cuts, delayed structure projects, together with task eliminations. Like the UC, these universities all followed Yale University's investment chief, David Swensen’s endowment model of relying on choice assets such equally commodities, existent estate together with private equity.
While this study solely looks at the half dozen New England schools, its findings tin hand the sack likewise hold upwardly applied to many universities, including the University of California. As I produce got written, the UC likewise copied Swensen’s strategy of moving coin from stable securities to high provide areas. In fact, the UC is notwithstanding next this advice, which is evident inward the next tilt from Moody’s regarding the university’s investments: ““The long-term targets for the endowment puddle would convey choice assets (including hedge funds, existent estate together with private equity) to 35% of the total, alongside domestic together with international equity accounting for or together with thence other 45% of total assets.” Instead of shying away from the high-risk Yale investment model, the UC is increasing its exposure to these volatile assets.
Like the UC, i of the driving forces behind these risky investments is the operate of trustees or regents alongside conflicting trace of piece of occupation organization interests. According to a Bloomberg Businessweek article ,“The investment commission at Dartmouth, inward Hanover, New Hampshire, included to a greater extent than than half dozen trustees whose firms oversaw to a greater extent than than $100 i G m inward investments for its fund over the final 5 years, the study said. Stephen Mandel, who is relinquishing his post service equally chairman of the school’s investment commission to Pb the board after this year, originally managed $10 i G m for the schoolhouse at his trace of piece of occupation solid Lone Pine Capital LLC. . . . Other trustees who produce out coin for Dartmouth include Leon Black, alongside at to the lowest degree $40 i G m inward his private-equity trace of piece of occupation solid Apollo Global Management LLC, together with William Helman, a partner at venture working capital missive of the alphabet fellowship Greylock Partners, the study said. Helman, who volition accept over the committee’s helm from Mandel, has received $10 i G m from the endowment.” These types of conflict of involvement are evident inward the UC arrangement since many of the regents produce got major holdings inward private equity, existent estate, together with construction.
As the UC spousal human relationship coalition told nation senator Darrell Steinberg during Charlene Zettel’s conformation to hold upwardly the adjacent UC regent, nosotros demand to produce got employees on the pension board to brand certain that the university’s investment decisions are non guided yesteryear the personal trace of piece of occupation organization interests of private regents. Moreover, nosotros demand a total investigation into how the UC lost $23 billion during the global financial meltdown.