Annual Report Highlights

Growing portfolios.
Building partnerships.

office of the chief investment
officer of the regents


Less Division,
More Multiplication.

Big organizations have a way of becoming collections of smaller organizations. All too frequently, offices or departments end up working in isolation. (No wonder we often call them “divisions.”)

“The Office of the Chief Investment Officer of the Regents” is a pretty grand-sounding title, and you might imagine it’s just the sort of division that ends up doing its own thing, largely cut off from the wider institution.

Not a chance.

It’s our job to manage the endowment, pension, retirement savings and working capital assets for the university. Each of the underlying investment portfolios has its own unique requirements and measures, and we handle each differently. But whatever the investment, we make the most of our size and scale, our ability to take a long-term view and the competitive advantage that comes with being the University of California.

This is not the responsibility of an isolated organization. We’re passionate about working closely with everyone across the University of California, ensuring we give them the support they require. That’s why we have so little time for division. Instead, we’re focused on multiplication, which means identifying how we all benefit from one another’s work.

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.

Janet Napolitano
UC President

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.

Jagdeep Singh Bachher
Chief Investment Officer

How we work

Creating opportunities
through collaboration.

In the constantly shifting ecosystem of financial markets, institutional investors strive for ingenuity, adaptability and innovation. Collaboration is central to all those qualities. We look at collaboration in four ways.


We manage investment portfolios across the endowment, pension, retirement savings, and working capital assets. Each portfolio represents the needs and objectives of distinct stakeholders, and we balance risk and returns differently based on those needs. At the same time, the Office of the Chief Investment Officer works as a single team, aiming for a coherent portfolio that achieves all our objectives. We always look to cut across silos or simple asset-class designations and generate the best risk-adjusted returns in new ways.

Professors and scholars

We aim to leverage the unique resources of the university by collaborating with the wider academic community. This might be through informal discussions or by finding investment opportunities within the University of California ecosystem.

Peers and platforms

We’re always looking to collaborate and, where possible, invest with like-minded peers. Peer networks can be invaluable for investment innovation, a s peers can pool capital, scale costs and share risks across a range of opportunities. Peer-to-peer platforms can also help connect investors around particular opportunities or themes.

Professionals and partners

We manage our money both internally and externally, drawing on the skills of professionals and partners. Where we use external managers, we seek relationships that are truly collaborative. To the extent possible, we want to add value to these relationships beyond just the capital we provide, and we expect our partners to be an extension of our team and to share their knowledge.

Our investment beliefs

Delivering value
through values.

We have developed a set of 10 core “investment beliefs” that guide everything we do. They help keep us grounded as we attempt to evolve and respond to dynamic market conditions. These are our beacons as we aim to secure the best results for the university and its many stakeholders.


Invest for the long term.

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.


Invest in people.

The contributions of talented people are among the most important drivers of success for any investment organization. So we’ve made the recruitment and retention of exceptional staff a cornerstone of our strategy.


Build a high-performance culture.

Every organization needs a clearly defined culture to make sure everyone is working towards the same ends and speaking the same language. Our culture is one of responsibility, accountability and high performance. We are proud of our achievements but try to be humble, as markets sometimes surge and fall without warning.


We are all risk managers.

Our aim is simple: to earn the best risk-adjusted return that meets the objectives of our various portfolios. But achieving that aim is complex. An effective risk-management function is critical, enabling the leadership to delegate authority to the investment team. Everyone on the team is in the risk-management business.


Allocate wisely.

The key to investing, and the most important driver of performance, is asset allocation. To make effective investment decisions and achieve the appropriate combination of risk and return, we have to maintain a clear and balanced understanding of stakeholders’ unique objectives, time horizon, risk tolerances, liquidity and other constraints. As a globally significant investor, we also aim to make the most of our scale and patience when we allocate assets.


Costs matter.

High-quality advice comes at a cost. We get that. But we also believe fees and costs for external managers must be fully transparent and straightforward. Anything else creates potential problems — opaque fees can mask risk. Plus, cost savings can be considered a risk-free return. If we can save money through efficient, well-executed strategies, then we must. We intend to capture every dollar of this risk-free return that we can.


Diversify with care. Act with clarity.

Diversification is invaluable, but it’s not a cure-all. It allows us to spread risk and reduce the impact of any individual loss. But diversifying too broadly can draw investors into assets and products they don’t fully understand. We prefer a more focused portfolio of assets and risks that we know extremely well. We also need to be keenly aware of our own strengths and weaknesses in the global context in order to act decisively when we believe markets are behaving irrationally or when we have a skill or knowledge advantage. That means keeping a constant, clear-eyed check on our evolving capabilities. It’s not always an easy or painless process, but it’s an essential one.


Sustainability impacts investing.

Sustainability is not a “check box,” but rather, a fundamental concern that we incorporate into decision making. We focus particularly on how sustainability can improve investment performance. Sustainable businesses are often more rooted in communities and resilient to future crises, which means investing in them makes good business sense. They are bound to affect portfolios in the future, and we need to consider them in our broader lens of investment decision making.


Collaborate widely

We are proud to be a part of the University of California, as well as the broader community of institutional investors. Through active collaboration, we aim to leverage the unique resources of the university. We also want to foster collaborative relationships with our peers to leverage our long-term competitive advantages.


Innovation counts.

The best investors recognize that markets are constantly fluctuating and that no good idea lasts forever. We must always be innovating and identifying new opportunities. Getting in early brings rewards. Just as importantly, some of the best opportunities transcend asset-class silos. There are advantages in thinking differently and partnering with peers that are willing to work with us on innovative projects. Collaboration is one of the most powerful drivers of innovation.

Our Portfolios


On June 30, 2014, our assets under management totaled $90.6 billion, an increase of more than $12 billion. At the same time the previous year, assets were at $78.4 billion. Over the past decade, we added almost $39 billion, with more than $35 billion added over the last five years.

These assets are contained within the following investment portfolios: Endowment, Pension, Retirement Savings Program, Working Capital Short-Term Investment Pool and Working Capital Total-Return Investment Pool.


80 years old.
80 times larger.

The university’s endowment was the first portfolio to be managed by the Office of the Chief Investment Officer of the Regents back in 1933. At that point, it stood at $100 million, and we had just over 2,500 students. Today, the student body has grown to more than 244,000, and the endowment has grown with it: 80-fold over the intervening 80 years.

Our aim is to maximize the endowment’s value while maintaining enough liquidity to support future spending and protect against a potential prolonged market downturn. We always strive to ensure that payouts from the endowment are equal to the needs of the funds and activities that rely on it. Once that’s achieved, we turn our attention to growing the value of the principal.

As a partner to each of the UC campuses, we oversee a portion of the Foundation assets and are here as a resource. We also act as a partner in helping campuses develop a platform for knowledge exchange around collaborative investment opportunities.

Together, the Regent’s General Endowment and Campus Foundation assets total almost $14 billion. So by working together, we’re better able to leverage our alignment of interests, size, scale and patience to pursue our objectives.


An age-old
pension plan.

We have provided for faculty since 1924, and for all our staff since 1937

In 1961, we began managing the pension assets of 3,353 members­ — a total of $100 million. Since then, the pension has grown 50-fold, both in members and assets. Today, the UC Pension Plan has more than 150,000 members, and more than $50 billion in assets under management.

The Pension Plan aims to maximize real, long-term total returns (income plus capital appreciation adjusted for inflation), while assuming appropriate levels of risk. Specifically, we look to maximize the probability of meeting the plan’s liabilities, subject to the UC Board of Regents’ funding policy, and to preserve the real (inflation-adjusted) purchasing power of assets.

Risk can never be eliminated, but we believe it can be managed. Managing risks efficiently means risks are identified, measured, monitored and tied to those responsible. We also take risk into account when defining expectations for return.

Meeting our future objectives depends critically on understanding those of our stakeholders. By working closely with our colleagues in Academic Senate and taking part in the various Faculty Committees related to retirement and investments, we act as a partner, always aiming to build our relationships.

Retirement Savings Program

the future.

Our Retirement Savings Program is a participant-directed program for UC employees and retirees. Participants can choose from a set of core fund options, tailoring their investments to match their own risk and return preferences as well as meet their retirement income needs. We use our size and scale to make these funds available at a reasonable price.

Just over 51% of our employees take part in the program, which had $15.5 billion in assets under management as of June 30, 2014. One of the largest defined contribution plans in the United States, the Retirement Savings Program has 85% of its assets invested in core funds and more than 50% participation.

Working Capital


We have two investment portfolios that serve the university’s ongoing operational needs.

The Working Capital Short-Term Investment Pool was established by the UC Board of Regents in 1976. This is a highly liquid cash pool, available to all university groups for funding day-to-day operations.

The pool allows participants to maximize income on their short-term cash balances. By investing in this larger pool and its broad range of maturities, we can take advantage of the economies of scale granted by our institutional size. We make investments appropriately to control liquidity, interest rate, credit and maturity risk.

The Working Capital Short-Term Investment Pool is supplemented by our Working Capital Total-Return Investment Pool, which was set up in 2008. This allows all campuses, as well as the Office of the President, to maximize the return on their long-term capital, subject to acceptable risk.

Working with the investments, operations and finance teams across the campuses and with the Office of the President, we help shape our capital and liquidity strategy to meet the objectives that make the university work.

In Conclusion

Less Division,
More Multiplication.

As the dedicated investment manager for one of the largest public research universities in the United States, we have multiple stakeholders. Each one demands unique and thoughtful consideration.

But we also operate as a single team, with a single objective: to serve our clients. We’re proud to be a part of this world-class university and the community of institutional investors. We are continuously nurturing collaborative relationships with our peers to leverage our mutual long-term competitive advantages.

In short, we believe in growing together and benefiting one another through collaboration with our internal and external networks. Being one part of a broader whole keeps us grounded and on track to achieve our long-term objectives. Less division. More multiplication.