00:00Seven years ago, the Head of Investments at the University of California System
00:05made a bet so simple that it's almost unexpected for the manager.
00:10of $200 billion, while elite schools over time
00:15have poured billions of dollars into private equity, venture capital, hedge funds.
00:20The opaque, high-fee stuff.
00:22UC's Chief Investment Officer, Jagdeep
00:25Singh Boettcher did something quietly revolutionary with a small piece.
00:30of the fund.
00:31He skipped the fancy strategies, invested in simple...
00:35index funds, old-school stocks and bonds, almost no fees.
00:40Fully liquid and transparent.
00:42Thatcher started with just a few hundred million in...
00:45seed capital.
00:46During the pandemic, the money was fully liquidated to help schools...
00:50pay for unexpected expenses.
00:52Over time, the system of ten campuses...
00:55including UCLA and Berkeley, added more money, committing...
01:00$5 billion.
01:01And the payoff?
01:02It worked extremely well.
01:05UC's Plain Vanilla Golden Blue Fund, named after the university...
01:10colors, has ballooned to about $8 billion.
01:15making it one of the largest stand-alone endowments in U.S. higher education.
01:20And in the last three years, it crushed the returns of some of the...
01:25Ivy League giants, particularly Yale.
01:28Yale's Investment Office pioneered...
01:30the model that dominated endowment strategy for decades and brought...
01:35billions to schools that enable them to create ambitious programs.
01:40Yale still leads the Ivy League in 20-year annualized performance.
01:45Yale model, locking up cash for years in private funds once...
01:50Yale generated huge returns.
01:52But today, it's under pressure because...
01:55of fewer exits of public companies.
01:57Some of the universities that had the most success...
02:00with the model, suddenly have short-term meat.
02:03Hundreds of millions of...
02:05dollars owed annually in new endowment taxes...
02:08and political fights in...
02:10Washington, threatening federal research funding.
02:13So now, even the big names...
02:15governments, including Yale, have sold stakes in private equity.
02:19Meanwhile...
02:20schools that kept it simple, even those with endowments under 50 million...
02:24are out...
02:25performing the wealthy elites in the short-term.
Comments