Annual Report Embark

A roadmap to investing
for the next 100 years.

When you boil it down, our job at UC Investments is fairly straightforward: manage the university’s money to make more money.

However, straightforward doesn’t necessarily mean simple. That’s why many institutions — ours included — have tended to emulate proven investment strategies like the Swensen, or Yale, model.

But bolstered by the doubling of our assets under management over the last five years and managing close to $100 billion across our products, we’re now in a position to create our own unique model, one that is laser-focused on producing results for our university using a long-term investing framework.

In this section, we share the 10 foundational principles of our vision. These principles are not just the “flavors of the day.” They are principles we believe in and that will guide us as we embark on the next generation of investing at the University of California.

Q&A with Jagdeep
Singh Bachher
Chief Investment Officer,
and Vice President of Investments
Jagdeep Singh Bachher

When people think of your office, they often associate it with the Endowment. Can you talk about what else your office does?

We have 1.7 million alumni who are giving generously to the UC and our 10 campuses, and we do everything we can to maximize returns so their donations have the greatest impact. And though at $9 billion, the UC Endowment is sizeable, our office also manages another $90 billion in our Pension, Retirement Savings and Working Capital programs. This is a huge differentiator and gives us a significant competitive advantage.When we find a good long-term opportunity for the Endowment, we’re able to take advantage of our size and scale to capitalize on it.

How does the work of UC Investments affect the daily lives of UC students, faculty and staff?

Our staff and our faculty are saving money for their retirement, and one of our main jobs is to manage those contributions and invest their savings. Five years ago, we had $37 billion in savings across both our Pension and Retirement Savings programs, and between more money saved and the growth in the markets, this now stands at $75 billion today. By making sound investments, we’re ensuring that in the future, we can provide them with the lasting income they need to enjoy their retirement.

Another area where we have a visible impact is our Working Capital. This funds the day-to-day operations of our 10 campuses, five medical centers and three national laboratories, paying for both short-term needs as well as longer-term projects and academic programs.

You’ve said you’re not asset managers, you’re risk managers. What does that mean?

Every decision we make is about risk: We assess the risks we are taking and figure out the payout for taking those risks. Whether we are looking at a product, a portfolio or an asset, we can have a range of outcomes in terms of returns, depending on how the risks play out. That’s why everyone in our organization — from operations to the investment team — has to be a risk manager.

You’re just over a year into your job as chief investment officer. What’s one challenge you’ve encountered, and how did you handle it?

Because we’re the largest public university in the U.S., our office — and my position in particular — is in a fishbowl atmosphere. We’ve got a lot of stakeholders, and they’re incredibly diverse: from 18-year-old undergrads to Nobel-prize winning faculty to the Board of Regents. When you compare what we do to what a typical asset management firm in the private sector does, it’s quite different. And because we have accountability for $100 billion, it’s critical that our organization has a very transparent, disciplined and understandable decision-making process that’s not controlled by one person, but is the result of smart and talented professionals working together to the very highest standard. That’s why I’ve concentrated on building a culture of collaboration and trust, which means keeping people outside our organization informed about what we’re doing by communicating in the simplest way possible. Changing a culture is never easy, but it’s an exciting journey one that we hope is visible through our actions and that can be measured over time.

Where do you go from here?

While we’ve improved our record of returns over the last five years, we’re now of a size and scale where we can ask ourselves: “What do we want to do? What do we want our model to be?” This report is designed to give people a flavor of how we’ll be managing our assets going forward and what the key principles are that will guide us in creating the “UC way” of investing our assets.

In building the UC way, we recognize that in just the last decade, the supply of capital has gone up and the competition for assets has risen even more. Although 10 years ago, U.S. endowments were leaders in investing, some of them are now having to rethink their approach. Today, we at UC have an edge and are poised to become the leader of the next generation of asset managers. Our strategy is to take lessons from the best-of-the-best models and figure out what our unique advantages are to build something new — and better — that works for the University of California.

We do not have to respond to every bump in the road in a quest for month-by-month, quarterly or annual returns. Instead, we can adopt a long-run perspective and do what’s needed to brace ourselves for the radical uncertainty that inevitably comes with the future. We think of this as investing centennially — for the next 100 years.

The 10 pillars of
centennial investing.

Though our portfolios have been the beneficiaries of a three-decade decline in interest rates, looking to the future, we see a far more modest outlook for market returns.

It is for this reason that we have decided to reconsider, revise and, where necessary, restructure the way we approach investing. In particular, we believe that the “U.S. endowment model,” which has served UC Investments as a strategic guide for over a decade, will not reliably work in the years ahead.

In fact, we don’t believe there is a “one size fits all” model of institutional investment. Today, becoming an effective investor demands as much self-knowledge as it does knowledge about the models of finance or economics. That’s why we’ve devoted a lot of time to answering the question: How can our products fulfill their mandate? In the following pages, we outline the 10 “pillars of success” that emerged from our leadership team working together, our review of the literature and case studies of like-minded peers.

We recognize that the pillars are aspirational and often ambitious. But when combined with our core investment beliefs, we believe they will serve the University of California well for many decades to come.

Less is


“You have to work hard to get your thinking clean to make it simple. But it’s worth it in the end because once you get there, you can move mountains.”
Steve Jobs

In recent years, many institutional investors have grown their own organizations so they’re better able to access markets and assets directly and reduce their reliance on the for-profit financial industry.

While this strategy offers a more-aligned access point to financial markets, we are part of an emerging new generation of institutional investors taking a different approach. We believe in high-performance teams working collaboratively to manage a concentrated portfolio of high-quality assets. And we believe in using technology to streamline processes and rapidly convert data and information into actionable knowledge.

That’s why we are working actively to reduce the number of decisions we have to make, the number of relationships we have to manage, the number of line items in our portfolio and the number of external managers we use. The result is an agile, world-class team with a laser focus on the areas where we can outperform the market.

Risk rules.


“In investing, what is comfortable is rarely profitable.”
Robert Arnott

Today’s risk tools are crucial in helping us understand increasingly complex and nuanced institutional investment portfolios. But they won’t guide us through the next market crash.

We are working to shift the culture of UC Investments so that everyone on our team — from investments to risk management to operations — becomes a risk manager. By allocating assets according to the risk factors that drive returns, we expect to create more diversity compared to our benchmarks and generate more return per unit of risk. Part of this shift in strategy includes working creatively with data and analytics providers to develop new, forward-looking risk tools that, for example, crowd-source position details and help predict how a liquidity event will move through tangential markets.

By making these changes to formalize our expectations around risk, we will be able to operate as a unified team, one that can assess a single portfolio while also respecting the changing nature of each of our product lines’ risks.



“Wide diversification is only required when investors do not understand what they are doing.”
Warren Buffet

The goal of portfolio construction is to maximize the amount of return we generate per unit of risk and per dollar of expense at the level of each product.

Our approach is to diversify our assets as much as is required, but no more. That’s why we are working to construct portfolios from a concentrated set of assets that we understand deeply, as opposed to holding many assets that we barely understand, that cost us more money to manage and that we could replicate passively. By reducing the number of investments in our portfolios, we believe we can reduce unwanted risks and increase desired returns.

In order to construct portfolios in this manner, we are focusing on building a single team that is capable of assessing deals across the portfolio, balancing the need to move fast and be proactive with the diligence requirements of our organization.



“The person who goes farthest is generally the one who is willing to do and dare. The sure-thing boat never gets far from shore.”
Dale Carnegie

Innovation isn’t a word that often gets associated with an institutional investment organization, but we want to change that. We believe that being a successful investor requires a persistent focus on both what’s new and what’s possible.

Because financial markets are constantly changing, there are rewards for spotting new opportunities early and acting in an entrepreneurial manner. So we are focused on developing competitive portfolios, even if, at times that means taking an unconventional or uncomfortable stance.

One way we are building a culture of innovation is by developing a dedicated innovation team in our organization — a rarity in the world of institutional investment. This group will incubate, validate and develop fresh ideas, enabling us to launch more creative vehicles that leverage our competitive advantages (e.g., the UC Ventures program) and reduce the fees and costs associated with investment execution.



“An investment in knowledge pays the best interest.”
Benjamin Franklin

Superior knowledge drives superior returns, and we believe that a proactive approach to the creation, maintenance and exploitation of knowledge will be critical to our success.

We are developing strategies to manage and mobilize superior knowledge in the context of our investing. We are putting an emphasis on building a culture of collaboration, encouraging internal teams to break down silos and be proactive about sharing information across the organization. We are also looking at incentive programs to encourage knowledge management, as well as investing in high-quality data infrastructure to track portfolios, risks and networks.

We consider ourselves remarkably lucky to be sitting at the heart of such a knowledge-rich university environment, and we are working to get the right systems, policies and processes in place to capitalize on it.

Team up.


“Talent wins games, but teamwork and intelligence wins championships.”
Michael Jordan

Human capital is one of the most valuable assets to an investment organization — outstanding people produce outstanding returns. We realize that to be successful, we must attract the highest-caliber investors and leaders — professionals who are talented, yes, but also team players who are in alignment with our culture and our long-term approach to investing. We target our recruiting where we are most likely to be successful:

The gray: Individuals who have had successful careers in the private sector (15 to 25 years of experience) and are now interested in giving back or, depending on the circumstances, escaping the rat race.

The green: Bright young recruits who will give up some current income to accelerate their career prospects and opportunities.

The grounded: The many talented and loyal UC alums and others who want to live in lovely California.

Over the past year, we’ve been quite successful in using the green, gray and grounded attributes to bring world-class people on board.

What makes


“If you don’t have a competitive advantage, don’t compete.”
Jack Welch

If an investment opportunity fits in a box or a silo, it’s likely overbid and over-valued. The best investors know this, so they leverage their own unique characteristics to move into markets with minimal competition to maximize their returns.

We are the investment organization for one of the premier public research institutions in the world, one where new ideas and groundbreaking technologies are commonplace. It’s clear we have an abundance of characteristics that, if cultivated appropriately, should be a persistent source of high-quality investment opportunities.

Our innovation ecosystem is unparalleled on a global scale, and because we sit at the center of it, we believe we can leverage our unique characteristics in ways that drive investment returns.



“Control your expenses better than your competition. This is where you can always find the competitive advantage.”
Sam Walton

The financial innovations of the last decades have substantially increased the complexity of our industry’s instruments and services. And with all of this new complexity, the costs of financial intermediation are increasingly difficult to identify, rationalize and minimize.

In our view, fees and costs are nothing more than incentives for our external managers, and now more than ever, we need to fully understand what we’re paying for. If a third-party manager isn’t willing to provide a detailed breakdown of how they make their money from managing our money, then we should be willing to pull our capital and walk away.

By having complete transparency and a better understanding of our investment risks, we will reduce misalignment of interests and capture risk-free returns, which is what you get when you reduce expenses on a portfolio without changing anything else about it. We believe that paying high fees to intermediaries today is a recipe for paying even higher fees to unaligned intermediaries tomorrow, and that’s why we are focusing considerable attention on fees and costs now — and plan to do so in the decades to come.

Man meets


“You are cruising along, and then technology changes. You have to adapt.”
Marc Andreessen

The increasing complexity of finance technologies has, until recently, served to empower and reinforce the dominance of intermediaries, such as hedge funds. However, sitting on our perch here in Silicon Valley, we can see finance technology evolving to the point where it may actually challenge the power of certain intermediaries, not reinforce it.

We believe we can use technology to help us streamline and strengthen operations to level the playing field between us and the private financial-services industry. We will be better able to both understand and manage our portfolios, and we will gain greater access to unique markets that had previously been too expensive for us to enter.

In the years ahead, we’ll be working with innovative startups to ensure we are a model investment organization in the domain of technology adoption. We recognize the growing pains that come with new technologies, and we are ready to embrace them in order to change the nature of how we invest.



“We should all be concerned about the future because we have to spend the rest of our lives there.”
Charles Franklin Kettering

With UC’s deep history and bright future, we think of ourselves as an organization that invests for the next 100 years. This centennial orientation drives us to assess our portfolio with a lens that includes the long-term, fundamental challenges facing society.

We will continue to play an active role in developing tools and metrics for long-term risk measurement. For example, we helped create the university’s first sustainable investing framework, which places a priority on the incorporation of environmental, social and governance issues (ESG) into our investment selection process.

Our centennial focus also means that we incorporate a broader set of risks into our decision-making than those organizations with shorter time horizons. We do this because we believe that long-term risks like climate change, human rights or corporate governance inevitably affect investment performance over the long run.


As we face a more modest outlook for returns in the coming years, it’s clear to us that we must take an innovative approach to investing. Creating a culture where everyone embraces the role of risk manager. Breaking down silos so we can seize unique opportunities. Harnessing technology to move into markets with minimal competition. Leveraging the power of the UC brand wherever possible.

As we navigate the investing landscape of the future, the 10 pillars will help us better serve the university. This is UC Investments’ sole mission — today and for the coming century.