Stocks and real estate power UC’s investments to $180 billion at fiscal year end

The University of California's Office of the Chief Investment Officer (UC Investments) announced today (August 1) that the UC endowment returned 12.8% at the end of the 2023-2024 fiscal year, while its pension was up 12.2% and working capital, 9.7%. The latest gains bring the total investment portfolio to $180 billion, a $16 billion increase over the previous year. The value of the University's investment assets has doubled over the past 10 years.

UC Investments manages the University's endowment, retirement, and working capital portfolios. Its six financial products support UC's 295,573 students, 73,000 faculty members and other academics, 173,300 staff, more than 77,000 retirees, and the 10 campuses and five medical centers.

"Our Chief Investment Officer Jagdeep Singh Bachher and his team are always innovating and, critically, keeping the current and future needs of the University front and center in their investing strategy," said UC Regent Mark Robinson, chair of the Investments Committee. "Thanks to them, UC has the most well-funded pension of the three state plans in California. Since Jagdeep joined 10 years ago, our pension assets have doubled and the endowment assets more than tripled thanks in large part to the team's strong performance record."

"This past fiscal year was about investing only in what we fully understand and taking full advantage of low-fee index funds guided by what we call the UC Investments Way," Bachher said. "It's about simplicity and leveraging our scale to concentrate on areas where we have strong conviction. We continue to believe the United States, with its resilient economy and thriving innovation ecosystem, is the best place to invest; that's where three-quarters of our investments are.

"Our biggest single gain in 2023-2024 came from our investment in the S&P 500 index without tobacco or fossil fuels, which made the University $1.3 billion," he said. "Our second-biggest gain came from real estate and data centers, which earned UC $1.2 billion. We also started investing in India eight years ago, when the rest of the world was focused on China, and this past fiscal year, those assets shot up as high as 42%."

The 2023-2024 fiscal year was also noteworthy for the significant step UC took toward "democratizing" investing for the more than 352,000 people who voluntarily contribute $1.2 billion annually to UC Retirement Savings, which at $39 billion, is the nation's second largest public defined contribution plan. As of July 1, 2024, these savers can invest directly in UC's Blue and Gold Endowment Pool, which returned 15.7% in 2023-2024, the best performing of UC Investments' financial products for the second year in a row.

"When I returned to UC as president in 2020, despite taking the helm at what turned out to be just the beginning of a global pandemic, we've pushed the university forward to even greater heights than when I got here," said UC President Michael V. Drake, M.D. "We're on track to enroll 20,000 more students by 2030, and our partnership with the Board of Regents and the governor and state legislature couldn't be better.

"I'm also extremely grateful for the financial stability that UC Investments has provided. That's allowed us to expand and deepen our educational, research and public service mission and gives our 10 chancellors the flexibility to fund new opportunities on their campuses and beyond."

"In my tenth year at UC Investments, I'm as excited as I was on Day One to be part of the world's best public research university," Bachher added. "It's an honor and a huge competitive advantage. Soon our long-term investments in UC research and in real estate around our campuses will begin showing results. We've invested nearly $2 billion in the UC ecosystem, and we're always looking for the next world-changing breakthrough in our own backyard.

"We look forward to the year ahead, which is sure to be exciting on many fronts. We're growing UC talent through our UC Investments Academy, which offers free financial training, mentorship and job placements to UC students. Some 2,500 students at all nine of our undergraduate campuses have already joined and we're on track to enroll 10,000 students within the next three years."

The UC Endowment, which comprises the General Endowment Pool and the Blue and Gold Endowment Pool, stood at a combined $29.5 billion as of June 30, 2024, up from $23.4 billion the year before.

UC's investment office has been investing the General Endowment Pool for 92 years. Since 2014, it has grown by 188%. The pool was at $22.6 billion as of June 30, 2024, up from $20.7 billion the year before. The 30-year annualized net return was 9.3%, the 20-year return was 7.9%, the 10-year return was 8.1%, the five-year return was 9.4%, and the one-year net return was 11.7%.

The Blue and Gold Endowment Pool, which was launched on March 31, 2019 with $250 million, stood at $6.9 billion as of June 30, 2024, up from $2.7 billion the year before. The increase included campuses investments in the higher performing Blue and Gold. The pool's three-year return was 3.6%, and the one-year net return was 15.7%. To increase campuses' liquidity during the pandemic, all assets of the Blue and Gold pool were withdrawn in April 2020. The pool, which is 100% passive and extremely low cost to manage, was re-launched on March 31, 2021 with $200 million.

The UC pension stood at $98.6 billion as of June 30, 2024, up from $88.3 billion the year before. The 30-year annualized net return was 8.6%, the 20-year return was 6.9%, the 10-year return was 6.9%, the five-year return was 7.9%, and the one-year net return was 12.2%. UC's investment office has been investing the pension for 64 years. It is currently funded on an actuarial basis at 83%. The pension has 280,000 members, 151,200 of them currently active.

The UC Retirement Savings Program, the nation's second largest public defined contribution plan behind the federal government, stood at $39 billion as of June 30, 2024, up from $33.7 billion the year before and $19.8 billion in 2014. As of June 30, 2024, the program counted with 352,000 UC participants, up from 301,000 in 2014. In keeping with the ethos of Less is More, over that same period, the number of investment funds in the program went from 75 to 14, and the management fee to participants fell by 64% to 0.05%, the lowest in the nation. Three years ago, Retirement Income for Life launched, allowing participants to buy a deferred lifetime income plan to ensure they don't outlive their savings.

UC Working Capital, which comprises the Total Return Investment Pool and the Short-Term Investment Pool, stood at a combined $12.8 billion as of June 30, 2024, down from $18.7 billion the year before. The lower balances in these pools reflect the fact that campuses have moved assets to other UC financial products, such as the Blue and Gold Endowment Pool, that consistently earn higher returns.

The Total Return Investment Pool stood at $9.8 billion as of June 30, 2024, down from $13.5 billion the year before. The 15-year annualized net return was 7%, the 10-year return was 5.1%, the five-year return was 5.9%, and the one-year net return was 12.1%.

The Short-Term Investment Pool stood at $3 billion as of June 30, 2024, down from $5.2 billion the year before. The 30-year annualized net return was 3.6%, the 25-year return was 3.1%, the 20-year return was 2.6%, the 10-year return was 2% the five-year return was 2.4% and the one-year net return was 5.4%.

Members of the UC Board of Regents will discuss UC Investments' 2023-2024 fiscal year performance during the September 19, 2024, Investments Committee meeting, which will be held at UCLA and open to the public. It will also be livestreamed from the UC Regents website.

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