TCD moving from bonds to investments in property and infrastructure

University seeks independent advisers as it restructures €190 million endowment fund

TCD’s endowment fund has grown from €47 million in 1996 to more than €190 million last year.

TCD’s endowment fund has grown from €47 million in 1996 to more than €190 million last year.

 

Trinity College Dublin is looking to restructure its €190 million endowment fund, shifting its focus away from low-yield bonds towards investments in property, infrastructure and other types of assets.

The college has issued a request for tender, seeking independent investment advisers to carry out a review of the fund’s portfolio with a view to revamping the structure that would see it disposing of its holdings in bonds.

The tender notice says the college envisages the fund would invest €10 million in international infrastructure vehicles, €8 million into international property, and a further €9 million into other types of assets.

The fund, which is made up of donations to Trinity College, comprises more than 400 individual endowments that are invested through units in a common investment scheme. The portfolio, which in recent years has been managed by Irish Life Investment Manager, is used to provide financial support to university activities, including capital projects.

The move to restructure the fund, which dates back more than 200 years, comes following a decision to divest away from companies whose primary business is the extraction of fossil fuels. That came after a 15-month campaign run by students. The move was announced in late 2016 and came into effect last year.

Low-yield environment

“We’ve been looking at this for a long time, particularly and in the context of the low-yield environment that there is, and we’ve taken the view that we could create a new asset allocation and sell all our holdings in bonds,” said TCD’s chief financial officer, Ian Mathews.

Mr Mathews said that the fund had moved to a higher allocation of funds into equities in recent years and that they now represented about 65 per cent of all investments.

It was now time, he said, to “consider taking a little bit more risk and getting a better return in what is a low-yield environment”.

“The value in bonds is no longer there and can’t be viewed as a steady income stream,” said Mr Mathews.

The fund, which lost about 25 per cent of its market value during the economic crash, has grown from €47 million in 1996 to more than €190 million last year. It has distributed more than €27 million over the last five years.

In 2016, it delivered a total return of 10 per cent despite the low-yield environment.

Mr Mathews said the fund envisaged upping its investment allocation in property assets from about 10 to 14 per cent in the medium term.

“We currently hold Iput units and would like to diversify and maybe hold something international as we are very concentrated in Ireland and, in particular, in Dublin 2 and Dublin 4,” Mr Mathews said.

The fund, which now also excludes tobacco-related investments, has hit the headlines a number of times in recent years. Last year, it was revealed it had invested close to €800,000 in defence companies such as Lockheed Martin and BAE Systems.

Mr Mathews said the fund had to be pragmatic about the investments it made and did not envisage consulting with students on future decisions.