UCLA Endowment

What is the current UCLA Endowment?  Inquiry, discovery, and educational possibilities are all available to students at the University of California, Los Angeles (UCLA), which at the same time is a tight-knit community that fosters a sense of belonging.

There are more than two dozen academic programs on campus that are recognized among the top 20 in their respective fields, and the university’s campus is home to world-renowned faculty members who teach 230 undergraduate and graduate majors. More than 5,000 different classes are offered each year by the teaching staff, with the majority of undergraduate courses having less than 30 students enrolled.

The first year of college starts off with a year-long course called a Cluster Course, which is an investigation of a difficult issue that cuts across multiple disciplines and is taught by a team of professors.

More than half of the students who graduate from UCLA have conducted research in the humanities, social sciences, or STEM (science, technology, engineering, and mathematics) fields of study during their time at the university. Undergraduate research projects are available beginning in the first year of study.

Additionally, the University of California, Los Angeles (UCLA) encourages its students to participate in study abroad programs, of which there are over 275 available in a total of 39 countries.

In addition, students at UCLA are required to participate in community service as part of their undergraduate education. Students have the opportunity to participate through a variety of programs offered at the Volunteer Center, including Volunteer Day, which brings together over 8,000 volunteers from the UCLA community on an annual basis. There are also more than 220 student groups that are actively engaged in community service.

Students at UCLA have access to over a thousand different student organizations, giving them enough chance to pursue interests and collaborate on projects with other students. UCLA is home to some of the most prestigious research centers and institutes in the world, as well as some of the most prestigious performing arts programs, top-tier Division I athletics teams, and the most prestigious hospital in the Western United States.

Both the maintenance of the endowment’s worth in real terms (after accounting for inflation) and the production of a reliable flow of revenue that may be spent are goals of the policies governing the distribution of income from the endowment at the University. The investments in the UCLA endowment are managed in order to achieve the highest possible total return over the long term.

It is possible for there to be a large amount of variation from one year to the next in the proportion of the yearly income distribution that is generated by dividend and interest income as well as by capital gains as a result of the focus placed on total return.

After the annual distribution of UCLA endowment income has been completed, the University will, as a matter of policy, keep both the realized and unrealized appreciation associated with the UCLA endowment. The amount of net appreciation available to cover future spending needs at UCLA, which is subject to approval by The Regents, amounted to $2.2 billion as of June 30, 2021, and $1.5 billion as of June 30, 2020, respectively.

How much is the UCLA Endowment?

How much is the UCLA Endowment? The continued steadfastness of the UCLA Foundation’s support for the institution is made possible by the generous contributions of donors totaling $404 million and the 34.34% performance of the UCLA endowment. The Foundation is now sitting on a net worth of $4.6 billion after recent gains. The overall amount of assets rose by 26%, or $1.1 billion, to reach $5.1 billion, while the total amount of liabilities rose by 21%, or $71.3 million, to reach $417.7 million.

Gifts totaling $296 million ($93 million from endowment investments and $203 million from current funds) and gifts totaling $283 million ($85 million from endowment investments and $198 million from current funds), respectively, were transferred to UCLA from the foundations during the fiscal years that ended on June 30, 2021, and 2020. Both fiscal years ended on June 30.

The endowment of The Foundation aims to support the educational mission of UCLA by providing a stable source of funding for both immediate and long-term use of the endowment’s principal.

The donor stipulates in the donation instrument that the revenue and payout from each individual endowment fund will be put toward supporting the objective for which the fund was founded. However, for the purposes of investing, endowment funds are commingled in The Foundation Endowment Pool. This is done in order to optimize returns while simultaneously minimizing investment and administrative costs.

What is an Endowment?

What is an Endowment? A collection of assets that have been invested by a college or university to provide ongoing financial support for the institution’s educational and research endeavors is known as an endowment.

It is a binding agreement between a donor and an institution that connects generations of the past, the present, and the future. These gifts also make it possible for an organization to make commitments that extend very far into the future, secure in the knowledge that the resources necessary to fulfill those commitments will continue to be accessible.

In reality, an institution’s endowment is made up of the combined contributions of hundreds or even thousands of individuals. Donors are able to move their personal funds to public causes through the use of endowments, with the knowledge that their gifts will continue to contribute to those causes for the duration of the institution’s existence.

The goal of the endowment is to achieve the highest possible total returns over the long term while maintaining a manageable level of risk. The returns on investments are anticipated to either maintain or increase the endowment’s real worth, with the goal of ensuring that sufficient money is available to adequately support the activities that have been authorized by the institution.

The assets of the endowment have a time horizon that is unknowable and will continue to do so concurrently with the existence of the institution all of the time. As a consequence of this, the investment portfolio presumes a time horizon that may stretch beyond a regular market cycle. As a consequence of this, the investment portfolio may assume an appropriate amount of risk, which is assessed by the standard deviation of annual returns.

It is anticipated that the use of professional management and diversity within the portfolio would reduce volatility and ensure a return that is consistent within a fair range. It is anticipated that the endowment’s portfolio will generate a total annualized rate of return, net of fees and spending, that is higher than the rate of inflation over a rolling five-year period as measured by the National Consumer Price Index.

This expectation is based on the fact that the endowment’s portfolio will outperform inflation. The Foundation is successful in achieving these goals because it employs a variety of professional managers who are tasked with carrying out specific investment mandates in the areas of stocks, fixed income, and alternative investments.

The Foundation’s spending policy determines the pace at which monies are distributed to fund holders for use in meeting current expenditure obligations. The Foundation has adopted a spending policy that is governed by a target rate that is calculated as a percentage of an ongoing market value. For the upcoming financial year 2022-23, the currently stated payout rate is 4.25 percent. Each year, the Board of Directors of The Foundation considers and votes on whether or not to approve this rate.

The portion of investment returns that is earned that is in excess of the expenditure rate that has been permitted is kept in the endowment principal. This is done to shield the endowment from the impacts of inflation and to make room for growth. Endowment payouts for newer funds may, if necessary, reduce the fund value during periods of investment market fall to ensure that reliable income is available for specific endowed fund program activities and objectives.

What Investment Firm handles UCLA Endowment?

What Investment Firm handles UCLA Endowment? The UCLA Investment Company, which is a wholly-owned subsidiary of The Foundation, is in charge of managing the assets owned by the UCLA Foundation. The UCLA Investment Company is responsible for providing The UCLA Foundation with professional management of the investment funds that have been entrusted to it for the advancement of UCLA and other charitable purposes associated with UCLA.

In order to fulfill its fiduciary responsibility and monitor expanding assets in an investing environment that is becoming increasingly complex, the Board of Directors of the UCLA Foundation established a subsidiary nonprofit corporation in order to manage investments.

On October 1, 2011, the UCLA Investment Company took over responsibility for the monitoring of the UCLA endowment and other assets that were formerly managed by The UCLA Foundation. This decision came after considerable consideration by the board.

The UCLA Foundation Board of Directors is responsible for appointing volunteers who have extensive knowledge of the investment industry, finance, and business to serve on The UCLA Investment Company’s nine-member board of directors. The president and chief investment officer of The UCLA Investment Company serve as the company’s leader. As a result of the positions that they hold, three individuals are allowed to sit on the board of directors of the company.

These individuals are the chief financial officer of the campus, the chair of the board of directors for The UCLA Foundation, and the president and chief investment officer of the company. The company adheres to investment standards that have been ratified by The UCLA Foundation and which are in line with the interests of the school. The UCLA Foundation Board of Directors acts as the company’s overarching governing body.

The endowment was established to serve as a dependable source of finances for both immediate and long-term expenditures, with the intention of bolstering UCLA’s commitment to its educational mission.

In order to achieve the university’s purpose of teaching, research, and public service, the UCLA Foundation encourages philanthropy and manages the resources that are donated. Donors have the opportunity to take part in constructing, maintaining, and growing the university through The Foundation.

The Foundation accepts contributions provided by alumni, friends, private foundations, and companies; invests and administers the contributions to protect and increase their value; and disburses the funds to a wide variety of professional schools, academic departments, and operating divisions within UCLA.

Where is UCLA Endowment Invested?

Where is UCLA Endowment Invested? The Uniform Prudent Management of Institutional Funds Act of California enables the University of California, Los Angeles (UCLA) to use investment income and a portion of realized and unrealized gains, in addition to investment income, to fulfill the operational requirements of the various programs that the university offers.

A rate that has been approved by The Regents is used to determine how much of the portion of investment returns earned on the UCLA endowment held by the University is distributed at the end of each year to support current operations for the following year. This distribution occurs at the conclusion of each fiscal year.

For the fiscal years that concluded on June 30, 2021, and 2020, respectively, the yearly income distribution delivered to the UCLA endowment owned by the University was $65.2 million and $59.2 million. The part of this yearly income distribution that came from accumulated capital gains was $66.3 million and $62.9 million for the years that concluded on June 30 in 2021 and 2020, respectively.

This amount was in addition to the dividend and interest income produced during the year. Endowment income that had been accumulated and was available for spending in the future was $106.1 million as of June 30, 2021, and $97.8 million as of June 30, 2020, respectively. This figure includes the annual income distribution.

Fair value is used both for measuring and reporting the worth of investments. In most cases, the value of securities is determined by the price at which they were last sold, as quoted on a reputable exchange or determined by making use of a pricing service that conforms to industry standards, on the final business day of the fiscal year.

The quoted offer price of a dealer who frequently deals in the security being evaluated is used to determine the value of any securities for which there has been no documented sale as of the closing of the final business day of the fiscal year.

The inputs used to value investments in non-exchange traded debt and equity are either provided by independent pricing services or by brokers and dealers who are actively trading in these markets. It’s possible to determine the value of certain securities by just the price reported by a single source.

The majority of the university’s holdings in terms of investments are organized into the following four investment pools: the Short Term Investment Pool (STIP), the Total Return Investment Pool (TRIP), the Blue and Gold Pool (BGP), and the General Endowment Pool (GEP).

The company invests cash from operations in the STIP. The University satisfies its operational liquidity needs using funds from STIP. TRIP gives investors the chance to improve their returns on long-term capital by making use of the economies of scale afforded by participating in a big pool that spreads its investments over a wide variety of asset types.

The University makes the most out of its TRIP account while still keeping adequate funds in its STIP account to satisfy its operational and liquidity requirements. BGP was established with the intention of increasing profits on investments made by passively investing funds in the stock and fixed-income markets while simultaneously preserving liquidity.

The investment policy for TRIP maintains a healthy equilibrium between equity and fixed income, whereas the investment policy for BGP has a significantly greater emphasis on equity-based investments. The Global Equities Portfolio, or GEP, is a diversified investment portfolio that serves as the principal investment vehicle for individual endowments as well as funds that operate as endowments.

The Regents of the University of California, also known simply as “The Regents,” implement asset allocation techniques with the goal of maximizing investment returns over the course of time in a manner that is congruent with investment goals and that involves only an acceptable degree of risk. In 2021, GEP had positive returns of 33.7 percent, whereas in 2020 it returned 5.0 percent, and in 2019 it returned 8.2 percent. BGP began its business operations on April 1, 2019, and from the date, it was founded through the end of June 2019, it generated a positive return of 3.5 percent.

From the beginning of July 2019 until the end of April 2020, when the pool was finally liquidated, BGP generated a return that was negative by 5.0 percent. In 2021, TRIP had positive returns of 21.2 percent, 1.7 percent, and 6.3 percent, respectively. In 2019, TRIP had positive returns of 6.3 percent. Positive returns on the STIP were achieved in the years 2021, 2020, and 2019 at rates of 0.8 percent, 2.1 percent, and 2.2 percent, respectively.

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