Introduction

The long-term, sustainable value that has accrued over the past decade to our stakeholders—the students, faculty, staff, and retirees of the University of California—is what makes my 10-year anniversary at our great institution especially meaningful to me. I firmly believe the not-so-secret sauce behind UC’s positive investment performance is our culture, the UC Investments Way. In this year’s annual report, we’re doing a bit of a deeper dive into those 10 pillars that underpin not only the strategy behind our investment numbers but the UC Investments Way as a whole.

When I joined UC from Canada 10 years ago, I hadn’t worked in the United States before, which gave me the advantage of seeing an exciting new environment with fresh eyes. Nothing seemed ho-hum. Curiosity led me to question most everything, including how the UC investments team operated and why the returns had been rather lackluster as compared to the overall market performance at the time. I pored over data, insistently asked questions, and connected dots.

What I saw in UC’s investment office were teams that barely communicated with each other. The fixed income and operations groups were separately housed behind locked doors. In the investment portfolios of different asset classes, too much diversification created redundancies that amplified hidden risks. With an overabundance of external investment managers, fees were excessively high. Overall transparency suffered. And the office culture? There really wasn’t one, it seemed to me.

And, so, the hard work began.

I gathered a cross-section of team members to build an intentional, mission-driven culture virtually from scratch. We wrote down actions we could take to improve performance, defined what we viewed as success, and charted a path to get us there. This iterative exercise took more than a year. At the same time, team members and I dug into painstaking analysis of each asset class strategy. This, too, took time—and lots of sweat. Some team members left and others were hired, but the overall number of people remained about the same. The UC Investments Way was coming to life.

Today at UC Investments, our first pillar, “Less Is More,” is not merely a time-tested phrase. It is concrete action to strip away unneeded complications and busyness that detract from earning the best returns possible for UC. That doesn’t include “sophisticated” investment strategies we barely understand that are usually laden with fees.

With the UC Investments Way, our aim is to do simple better. That impetus has been behind our steady move away from active management in the public markets to passively managed index funds. In 2014, for example, we held about $30 billion in index funds. Today that number is $130 billion. The $65 billion that was actively managed in 2014 is down to $50 billion in 2024. At the same time, our key partnerships—which speaks to our “Perfect Alignment” pillar—fell by about 90 percent, from 280 in 2014 to 28 today.

The UC Investments Way is, of course, intrinsically linked to the University of California itself. UC’s unparalleled ecosystem of innovation, research, and discovery gives us the competitive advantage of mining potentially lucrative investment opportunities close to home—in technology, life sciences, climate change solutions, energy transition, and real estate near our campuses, to name a few. Already, we’ve invested more than $2 billion there and helped UC’s entrepreneurs grow their businesses. And, yes, we have a pillar for that, too. It’s “What Makes UC, UC.”

The
not-so-secret
sauce
behind UC’s
positive
investment
performance
is our
culture

Beyond its excellence, what also defines our great university is its longevity. UC Berkeley was founded more than 156 years ago, and UC Merced joined the system as our tenth campus in 2005. Our office has been managing the UC endowment for 92 years and in a short eight years, we’ll cross the 100-year threshold. That’s why our last pillar reminds us that we are “centennial” investors who must help ensure our system dedicated to world class education, research, and public service continues to thrive for at least the next century.

While my team and I will not be around to manage the university’s investments in the year 2124, it is nonetheless incumbent on us to continue to fortify the investment and cultural foundations on which others will build. We do that by paying it forward and going big. We think creatively (our fourth pillar) as exemplified by the UC Investments Academy, which we created in answer to the common refrain within the financial industry that diverse young talent is almost impossible to find. In other words, it’s a pipeline problem. Alas.

To that refrain we counter with this: More than 2,500 diverse UC students have taken us up on our offer of free financial training, mentorship, and even job placements, 150 so far. And we’re planning on reaching 10,000 students through the UC Investments Academy within the next three years. Looking ahead to what the next decade at UC Investments might hold, I venture to say the principal theme will be growth. And while I used to say the United States was the “least worst” place to invest, I’ve changed my tune. The United States is clearly the best place in the world to grow talent and wealth. That’s where we’ve invested 72% of our assets.

In my first decade at UC, our investment assets have doubled and compound interest alone will likely bring the overall number to $200 billion soon. We’ve shown over the past 10 years how the UC Investments Way overperforms. And it is this dynamic 10-pillar strategy that, I strongly believe, will drive UC’s investment assets to $500 billion in the decade ahead. We are building knowledge, thinking creatively, and focusing on the university’s future. Doing this work remains a great privilege for my team and me, and speaking personally, it’s as exciting as it was on my Day One. Nothing is ho-hum.

You became our 21st president in August 2020. What are some of the things you’re most proud of over these past four years?

When I got here in 2020, the university was in an amazing place: A world-class faculty and staff devoted to inspiring the future generation. Remarkably bright students eager to learn and grow. Cutting-edge research and technologies being developed in every corner of our university. And despite taking the helm at what turned out to be just the beginning of an unprecedented pandemic, I am very proud of how we’ve pushed the University forward to even greater heights since I got here.

A key accomplishment is related to access. The university is on track to enroll 20,000 more students by 2030, making a UC education within reach for even more students. And we’re increasing our enrollment on the 10 campuses, so we’re not incurring the additional costs or challenges that come from a large infrastructure project.

I’m also proud that we’ve done a great job of demonstrating our value to the state legislature and to the governor, whose support is so critical to our mission. They now see us as like-minded partners with aligned goals, and our intentional efforts in this area have reaped huge rewards. The past two years were the best ever for the level of state support for the UC system, with significant increases in permanent funding and also more than $1 billion in one-time funding. Although our state is currently facing a budget deficit, we know Governor Newsom’s commitment to education in general and the University of California system in particular will ensure we stay solidly on course.

The third thing that comes to mind is securing leadership for two of our biggest, most complex campuses. In the past year, we’ve selected two fantastic chancellors after rigorous searches: Richard K. Lyons, former dean of the UC Berkeley Haas School of Business, was named UC Berkeley chancellor in April 2024. Julio Frenk, former president of the University of Miami and a renowned public health leader, was named chancellor of UCLA in June 2024. Both of our new chancellors are visionary leaders and will lead their respective campuses with boldness and strength.

How has your close partnership with UC Investments benefited the university?

I’m very proud of the work that UC Investments has done to secure the future of our institution. Even with record high inflation, rising interest rates, and the ongoing threat of recession, UC Investments successfully navigated these investment risks, making smart, well-timed decisions in uncertain economic environments while always staying true to the mission of being a long-term investor. I was chatting with a colleague recently about our investment portfolios and how much they’ve grown since I became president. We realized the math came out to about 1 billion a month. That’s remarkable.

I know that the chancellors also deeply value UC Investments’ work. The investments in working capital and endowment pools generate additional resources to do what they need to do to serve their students. For example, the Blue and Gold Endowment Pool gives the campuses spending flexibility without having to commit long-term dollars to the General Endowment Pool, giving them more equity exposure and better liquidity at a very low cost. No other external investment manager can offer this.

Can you talk a bit about the value of the UC Investments Academy to our students?

I’ve always believed there’s a need for our students to get education and training around not just financial literacy, but how to invest and grow their money. Jagdeep and his team created The UC Investments Academy in 2022 as a free program that gives our students this valuable education while also helping students who want to pursue careers in finance, investing, and entrepreneurship. One of my priorities is helping ensure the Academy is able to continue growing to serve more students across all UC campuses.

There’s so much talk about AI, the possibilities and perils. How do you see AI changing how we operate at UC?

AI is going to affect us in every aspect of what we do. It’s going to help us educate our students more effectively and efficiently. And it’s going to help us dramatically in our healthcare enterprise, because a large portion of what happens in our healthcare system is going to be augmented and facilitated by AI. Also in the health realm, AI will have a significant impact on the drug discovery that happens here at UC. I don’t think the power and opportunity for AI to positively affect our university can be overstated.

As a final question, what message would you like to give to students—new or returning—coming to the university in the fall?

I learned early in my career that if I wanted something to happen, I had to develop the discipline to help people understand how doing something I wanted was in their best interest. How might I phrase something so that the person listening would understand that? I would stand back and ask myself, “What do I want to happen and how can that be in the interest of the person I’m asking?” So my advice to students would be to be thoughtful and intentional about your life. Use a values-based approach for every decision, big and small, asking yourself: What kind of outcomes do I want and what do I need to do to get there? It’s simple, but it’s not easy. That said, almost 50 years later, I can tell you it works.

You’ve done a lot of giving back to the University of California and now you’re starting your third year as a UC Regent and your second as chair of the Investments Committee. What has stood out to you from the vantage point of this past year?

What has stood out to me this year, and the past couple of years, is the immense size and scope of the university and the complexity of the issues that its governing body, in doing its job as public steward, must learn about and opine on. It’s really an impressive amount of information one has to digest. It’s like going back to school.

So would you say that serving as a Regent is like participating in a master class?

That’s exactly how I describe it to people. I’m often asked what it’s like. People ask how much time it takes. And I answer that it takes as much time as you’re willing to give it, because the learning could be endless. It does require discipline to get up to speed on things, to learn enough to exercise good judgment. You do become more of an expert in certain areas than in others. As chair of the Investments Committee, for example, I rely on my 30 years of being in the securities industry to help provide guidance to Jagdeep and the team.

As a successful investment banker in life sciences, you certainly have a finger on the pulse of scientific innovation and discovery. What’s most exciting to you about the future of healthcare innovation?

I’ve seen an immense amount of change in the healthcare industry generally and in the biotechnology industry specifically. The pace of innovation and scientific breakthroughs keeps accelerating. When I first started, I thought I was late to the game. I’ve come to learn that, no, I was actually quite early. There were people before me, the real pioneers in financing the biotechnology industry who helped prop up companies that have gone on to be industry leaders, companies such as Amgen and Genentech. I was in the second generation of financial advisors to those companies. Today the industry has really grown; there are more than 150 companies valued in excess of $1 billion.

The velocity of innovation has accelerated every single year of the 30 that I’ve been part of the industry. I’m excited about the younger professionals I’m mentoring. I think of myself as a player-coach about the industry they’re likely going to be part of for the next 30 years. These younger professionals are going to be part of even more miraculous discoveries and breakthroughs that will help us all.

That phrase you used, “player-coach.” I think that’s particularly apt when I think about what you and your wife, Stephanie, founded at UC Berkeley, the Robinson Program in Life Science, Business and Entrepreneurship. You’re both Berkeley alums. Why did you think that supporting undergraduates in this way was so important?

I think philanthropic support should have a multiplier effect. When I was in a position to give back, I was looking for an opportunity that could potentially have multiples of impact over time. I wanted to find students who were at the right inflection point in their lives and in their journeys to make an impact across time. For our particular program, 25 or 30 students enter every year. At any one time that’s 100 or so individuals you are basically lifting up, 100 individuals on their way to becoming experts at the intersection of life science and business—to run a hospital, be entrepreneurial and do a startup, or be part of a larger company and manage clinical trials, or become a CEO. The program was set up to create leaders, folks who are going to be the next generation of talent in the industry. There are a lot of great programs at the graduate level and— this is my own bias—I wanted to reach students before that. I didn’t really start my career until after graduate school, when I got my MBA. That’s why starting at the undergraduate level was important to me.

Your BA from Berkeley is in history and political science. Why did you end up focusing on healthcare? Did your mother want you to be a doctor?

I had a father who was a doctor and a father-in-law who was a doctor. And when I entered the industry, one had to choose a path forward. Broadly speaking, there were three buckets of emerging growth companies and investment banking that I could focus on in San Francisco: technology companies, healthcare companies, and consumer companies. Healthcare seemed to be the one that was most intuitively natural for me to pursue.

You’ve mentioned your long career in the healthcare industry. How do you keep that excitement you felt when you were just starting out, building something new? What’s thrilling to you these days?

What’s thrilling today is meeting a new entrepreneur/ CEO who has a vision of what he or she wants to accomplish and helping them think about how to succeed. That’s what gets you up in the morning. I think Jagdeep feels the same way when he’s meeting somebody who’s building an exciting new company or igniting new initiatives in existing companies. It’s the same thing when you’re in the room with those types of individuals. It’s intoxicating. It feels very rewarding to meet people who are the real change agents, doing big things. That’s why I think that Jagdeep and I have a lot in common with our jobs.

What advice do you give to recent college graduates about to step out into the “real world,” maybe to become change agents themselves?

That sounds like a topic for a commencement speech. I’m a big fan of commencement speeches. I think the generation graduating from college these days would be well served by appreciating that life is long and that they will likely have multiple careers. They should develop basic, fundamental competence in certain skill sets. You can’t shortchange fundamental learnings because you’re in a hurry to grab the gold ring. I think this applies across industries. Because of the success of role models that society has amplified, recent graduates often think life is easy. A career in business is a long journey and having the fundamental skills that one typically learns in the post-college years is important. When people take shortcuts, they shortchange themselves. Not everyone can invent an app and be a billionaire by the time they’re 28. If you don’t learn a few things, have some basic skill sets, you’re not going to have a long or successful career. That’s what I tell my three sons.

That’s a pretty good start on a commencement speech. It reminds me a little of another commencement speech, which really wasn’t a speech at all. It was a column in The Chicago Tribune by Mary Schmich. You’ve probably heard of it—it went viral. It’s commonly known as “Wear Sunscreen.”

That’s a great speech and everyone in college should read it. And I absolutely agree that we all should wear sunscreen.