UoB Investment Portfolios

The University of Birmingham is committed to maintaining high environmental, social and governance (ESG) standards across its investment portfolios. The University’s investments and cash holdings totalled £390m as at 31 July 2022, a combined total of the University Investment Fund and cash holdings £268m and the Long Term Endowment Fund £122m.

Responsible Investment

The University and its external investment managers are signatories to the United Nations Principles for Responsible Investment which defines responsible investment as a strategy and practice to incorporate ESG factors in investment decisions and active ownership.

Since May 2019, the University has transitioned the University’s absolute return fund investments to an ethical absolute return fund that has specific responsible investment criteria. The ethical absolute return fund heavily restricts or excludes investments in companies deriving revenue from the following areas: carbon and fossil fuels, defence and weapons, alcohol, tobacco, gambling, adult entertainment and high-interest lending. The University has also transitioned a proportion of its Equities investments into a Sustainable Multi-Factor Equities Fund and a proportion of its Bonds investments into a Sustainable Bonds Fund. Investment in fossil fuel related companies represents only 0.22% of the University’s Investment Assets as at 31.10.2022. The current investment in fossil fuel related companies values £443k. The reduction is mainly due to the Artemis UK Equities Fund implementing a fossil fuel exclusions policy. 

The University’s property fund investment through the Charities Property Fund rates positively in terms of ethical considerations and keeps indirect fossil fuel exposure to a minimum. The University’s Infrastructure Fund investment through JP Morgan also rates positively regarding Responsible Investment and holds investments in solar and wind renewable energy companies. 

The University has further agreed to proactively pursue ethical fund options, where suitable investment vehicles are available, and where investment returns would be consistent with the University’s charitable objectives.

The University has also published an updated Responsible Investment Policy on the University’s website.

The Policy defines the commitment of the University to responsible investment. Its purpose is to detail the approach that the University aims to follow in integrating environmental, social and governance (‘ESG’) issues in its investments and the Policy applies to the full scope of the investments held by the University. The Policy is also intended to be entirely consistent with the University’s duty to yield the best financial return within the level of risk considered to be acceptable by the University.

The Responsible Investment Policy details three sets of principles which accord with the University’s values as a socially responsible institution. Firstly, the stewardship of the operations of its external fund managers, secondly environmental, social and governance (ESG) integration into its investment operations and governance practices and thirdly setting appropriate standards for all its investments through exclusions criteria that the University’s external investment managers are required to take into consideration when investing the University’s funds.

The Responsible Investment Policy is reviewed annually in collaboration with the University Sustainability Steering Group, which includes representatives from across the University, including student representation. The Group provides strategic advice to the University Executive Board to develop and deliver a sustainability plan covering education and research locally, nationally and internationally as well as for a green campus. The University’s Strategic Planning & Resources Committee (SPRC) is responsible for final approval of the Responsible Investment Policy.

Portfolios

The University is cash generative and while funds are earmarked for specific investments we can find we are holding large sums of cash for anything up to five years mainly because capital projects extend over several years and timings have to be balanced against other building work on the campus. The University has therefore established a University Investment Fund alongside its existing Long Term Endowment Fund.

The University’s Long Term Endowment Fund is separate from the University Investment Fund, as it invests the following types of endowments:

  1. Unrestricted permanent endowments – the donor has specified that the fund is to be permanently invested and generate an income stream for the general benefit of the University;
  2. Restricted expendable endowments – the donor has specified a particular objective other than fixed assets and the University has the power to use capital over the medium term;
  3. Restricted permanent endowments – the donor has specified that the fund is to be permanently invested to generate an income stream to be applied to a particular objective.

University of Birmingham Investment Funds’ Asset Allocation as at 31 July 2022

 A number of external investment managers oversee the investment funds of the University, working to agreed investment mandates. In developing these mandates the University sets a fundamental guiding principle that managers must apply investment criteria based on environmental, social and governance (ESG) standards. As part of our selection process, we require fund managers to confirm that they have robust ESG policies in place. During our regular performance review of our fund managers, we consider their application of ESG policies in making investment decisions.

 Endowment FundEndowment fund chart- A donut chart showing the University's Endowment Fund totalling £122m, which is separated into the following segments: 58% Equities, 12% Bonds, 8% Infrastructure, 16% Property, and 6% Private Credit.

University Investment Fund and Cash Holdings

University investment fund and cash holdings chart- a donut chart showing from £268million pounds, 10% Equities, 11% Bonds, 12% Absolute Return Funds, and 67% Cash and Cash Equivalents, with ticks next the following: Investment in ethical Absolute Return Funds, Environmental, Social and Governance (ESG) factors incorporated into investment decisions, and investment in liquidity funds with ethical restrictions.

 

A number of external investment managers oversee the investment funds of the University, working to agreed investment mandates. In developing these mandates the University sets a fundamental guiding principle that managers must apply investment criteria based on environmental, social and governance (ESG) standards. As part of our selection process, we require fund managers to confirm that they have robust ESG policies in place. During our regular performance review of our fund managers, we consider their application of ESG policies in making investment decisions.

 Endowment FundEndowment fund bar chart - A stacked graph that breaks down how much of the University's £122m Endowment Fund is overseen by external investment managers. The graph depicts the following amounts/companies (top to bottom): £23m Artemis - Active UK Equities, £36m Sarasin & Partners - Active Global Equities, £12m Schroders Sustainable Multi-Factor Equities Fund, £15m Royal London - Bond Funds, £19m Charities Property Fund, £10m JP Morgan Global Infrastructure Fund, and £7m Barings Private Credit Fund.

 

Investment Fund and Cash HoldingsInvestment funds and cash holdings bar chart - A stacked graph that breaks down how much of the University's £268m Investment Fund and Cash Holdings is overseen by external investment managers. The graph depicts the following amounts/companies: £12m Sarasin & Partners - Active Global Equities, £10m Legal & General – Active Global Equities, £6m Artemis - Active UK Equities, £31m Troy Asset Management Ltd – Trojan Ethical Fund, £29m Royal London - Bond Funds, £180m Cash and Cash Equivalents.

 

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