Investments

Investment and Capital Management (ICM) is charged with managing the University's endowment and trust assets, investment funds and commercial real estate investments. Given the perpetual nature of the University’s donated funds, ICM seeks to generate an optimal risk-adjusted total return through the employment of a structured long-term investment philosophy based around strategic asset allocation targets.

The investment portfolio

Between 1995 and 2007, the University of Sydney’s Investment Portfolio experienced strong growth in market value. However, the deepening of the global financial crisis in 2008, together with substantial capital development expenditures from operating funds, resulted in a reversal of that trend. At the end of 2008, the value of the Investment Portfolio totalled $870 million.

Composition of funds

The Investment Portfolio has three components:

1. Short-term funds represent the operating funds of
the University. Given that these funds may be called at any time, they are invested in debt securities (such as bank bills).

2. Long-term funds generally consist of bequests and endowments and therefore have a much longer investment horizon and need for preservation of real purchasing power. In order to generate the required real return over time, over 70 per cent of long-term funds are allocated to growth investments (see table below) with the balance in debt investments (considered a ‘defensive’ asset class). Growth assets comprise a range of asset classes (including alternative assets).

3. Foundation funds mainly comprise gifts and donations for research, teaching and provision of other integral University resources. They are managed in association with faculties. At the end of 2008, two-thirds of foundation funds were invested in debt funds, and the remaining third in growth assets.