Where we can, we focus on investments over 10 years and beyond. This offers many more opportunities than those available to short- and intermediate-term investors. We aim to make the most of our scale and ability to be patient.
The University of California’s role in transforming the state of California into an economic and innovation powerhouse cannot be overstated. UC is a magnet for talented, passionate people, and their discoveries and inventions touch lives around the world every day. What few realize, however, is that behind UC's renowned teaching, research, and public service mission is an investment portfolio that is critical to our success. The university portfolio is roughly $91 billion comprised of the endowment, pension, retirement savings and working capital assets. These funds do not include any state appropriations or tuition dollars.
Together with newly-appointed Chief Investment Officer Jagdeep Singh Bachher, we are ensuring that UC's investments are working harder than ever to secure the long-term financial health of the university and its employees. We are also continuously assessing how best to grow our portfolios. This year, for example, we have developed new investment strategies to more fully capture the commercial value of UC's pioneering research and innovation.
We also took some important steps this year to ensure that our investments align with our values. In September, UC became the first public university to become a signatory to the United Nations-supported Principles for Responsible Investment, reflecting our commitment to incorporate sustainability into investment decisions.
In sum, the Office of the Chief Investment Officer is much like the university itself: innovative, values-driven, and always looking ahead.
Jagdeep Singh Bachher
As chief investment officer for the University of California, I see myself as responsible for meeting the objectives of four different clients: the stakeholders of the Endowment, Pension, Retirement Savings and Working Capital portfolios. Each group has its own specific needs, and one of my most important roles is to ensure that each is managed in the optimum way.
Building an effective investment organization means being ready to change as economies and markets change. At the Office of the Chief Investment Officer, we do this through collaboration and cooperation — within our organization, with our professional partners, with peers and with the broader University of California community — to foster an environment that is both efficient and innovative.
We live in uncertain times. It’s challenging to withstand the short-term pressures that come from the daily movements in financial markets. But as long-term investors, we can’t allow ourselves to be overwhelmed by them. With humility and careful consideration, we work hard as a team to keep our bearings and are constantly focused on achieving our long-term objectives.
Over the next year, we will review our long-term asset allocation, aiming to optimally invest each portfolio according to our clients objectives: endowment, pension, retirement savings and working capital.
We’re anticipating and preparing for a low-return environment in the next cycle. And we are looking to manage costs more closely. Every million we can save adds a million in value, which can compound in the years to come.
We’ll also be increasing our focus on active management to achieve the returns we need. While asset allocation remains the main driver of performance, active and skilled investment management is going to play a greater role in delivering results.
As we identify the strategies and positioning to meet long-term investment objectives, our size, scale and patience will be advantageous. Collaboration remains vital, and we will continue developing partnerships across the university and the world that support our work.