Board approves asset allocation changes impacting endowment and pension funds

The University of California's Investments Committee convened on July 13, 2025, to discuss significant changes to its asset allocation and to review investment performance for the fiscal year 2024-2025. The meeting primarily focused on approving updates to the asset allocation strategy that began five years ago, alongside a review of the university's financial products.

The committee's first order of business was to approve changes to the general endowment pool, which includes the general endowment and the blue and gold pool. Key proposals included reallocating 10% previously invested in hedge funds into public equities, effectively reducing hedge fund exposure to zero. This decision reflects a long-term strategy initiated in 2020 to move away from hedge funds, which have not performed as expected during market downturns. The endowment's new allocation will consist of 40% public equities, 8% fixed income, 50% private assets, and 2% cash.

In addition to the endowment changes, the committee also discussed adjustments to the pension fund, which will see a similar reduction in hedge fund investments, reallocating those funds into public equities. The pension's new allocation will include 57% in public equities, 3% in private credit, and a new 1% allocation for cash to ensure liquidity.

The meeting also highlighted the university's impressive growth in assets, which have increased significantly over the past decade. The total assets are projected to reach $200 billion by September 2025, marking a substantial increase from $130 billion during the pandemic's low in 2020. The committee attributed this growth to strategic decisions made regarding asset allocation, particularly the increased focus on equities.

The committee concluded with a unanimous vote to approve the proposed changes to asset allocations and payout policies for both the endowment and pension funds. The meeting underscored the university's commitment to adapting its investment strategies in response to market conditions while aiming for sustainable growth in its financial assets.