Tuesday, June 2, 2015

Listen to the Regents' Committee on Investments: May 27, 2015

We’re happy to announce that the Regents’ Committee on Investments meeting recording finally became available. (Of course, our little ribbing on the days when it was unavailable couldn’t have had anything to do with getting things working.) In any event, the meeting began with the usual overview of developments in the UC portfolio. Much of the discussion, as the various components of the portfolio were discussed, was that there may be overvaluation in the stock market and in the value of the dollar in exchange markets. As a result, future performance of the portfolio was characterized by terms such as “challenging.” There was much reference to “risk management” and “volatility.” In particular, there was a request that the Committee approve changes in the guidelines for the TRIP fund (Total Return Investment Pool), a kind of longer-term cousin to the more liquid STIP. The requested changes were approved.

The retirement part of the investments consists of about $55 billion in the traditional defined benefit (DB) plan. But there is also about $20 billion in the defined contribution (DC) component which consists of what is formally the defined contribution plan plus the voluntary 403b and 457b programs. There was reference to the “streamlining” currently underway to reduce the number of basic options for participant options. (Complaints by faculty that have recently come to campus and the systemwide faculty welfare committees about fees for investment options in the DC-403b-457b programs were not reflected in the Committee’s discussion. Does the Committee have knowledge of such complaints?) Some changes in official language to accommodate the “streamlining” were approved.

There was then discussion of the “Sustainable” investing initiative with much reference to “stakeholder engagement” and the ESG buzzword. (Buzz-acronym?) ESG = Environment, Social, Governance. UC CIO Jagdeep Singh Bachler has hired a former Berkeley student to do something in the office involved in this program – not clear exactly what – and he made a presentation. (Old time lefties will remember with nostalgia when "CIO" meant something different from what it does now, but time marches on.)

Discussion went on to the planned UC Ventures fund which is intended to be a kind of venture capital fund that will focus on UC-developed technology. It appears that to prevent internal conflicts of interest, the new fund will insist on having outside investors come into any investments and will not be the “first dollar” investor. It was noted in the discussion that the folks who run private venture capital funds make big bucks and that even if UC Ventures is created as a quasi-independent entity, there could be political issues when such salaries are paid by it, even if the recipients are not technically UC employees. It wasn’t clear from the discussion how that problem would be handled. But there were assurances that things would be worked out.

The Committee then went into closed session.

A link to the audio of the open part of the meeting is below:

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