Our purpose is to maintain and grow the real value of endowments, while providing a stable stream of income, to help our investors achieve their long term aims.
Investing perpetuity capital allows us to be both opportunistic and patient, enabling us to see through short term volatile markets.
Our investment philosophy consists of four pillars that shape our decision making. It enables us to refine the investment universe and identify world class investment opportunities whilst maintaining capital in order to generate significant real returns.
Managing perpetuity capital enables us to engage in research and investments that groups focused on short term benchmarking simply cannot. We pursue fundamental investment research across asset groups where we believe tensions, changes or inefficiencies in economies and markets provide investment opportunities. We then find the most appropriate way to pursue these in specific investments in the portfolio.
We believe that, in most circumstances, active management with the right investment group leads to superior returns. We build constructive relationships and interact regularly with managers, partnering for the long term and across market cycles. We look for those who have their own capital at risk on the same terms as us, seek capital gains and not growth in assets under management, and constrain their focus to areas where they have world class expertise. We expect our investment groups to behave like business owners, with deep fundamental research and understanding of a business and industry giving them credibility with the senior management teams of those companies.
We believe that owning equity in productive businesses is the best way for us to achieve our investment objective. However, we recognise the cyclical nature of markets and we also invest in assets where returns are not dependent on the broader equity market cycle, such as property and credit. Alongside this, we diversify the Fund across strategy, geography and sector. This means that there are several independent routes to meeting our return target.
Effective risk management is a mindset, ingrained in our company culture and investment philosophy. As part of this, we constantly evaluate a range of metrics and exposures to ensure that our fundamental views produce an optimal portfolio positioning. We question where we might be wrong, and how the portfolio might behave in a range of different circumstances through scenario modelling. This prevents us from carrying inadvertent risks in the portfolio and ensures we are ready to adapt to change.
Our team has the freedom to make investments today that may not come to fruition during their lifetime. We pursue long term themes across asset groups, where we believe tensions, changes or inefficiencies in economies and markets provide investment opportunities.
We build constructive relationships, partnering for the long term and across market cycles. The stability of the Fund’s long term capital helps us secure allocations in the most sought after investment groups.
Buy and sell decisions are fuelled by the fundamental research of the investment team, constant evaluation of the Fund’s investments, and by ensuring the portfolio has the appropriate overall exposures from a risk perspective.
As an endowment with a dedicated investment team, we often invest in areas that require complex research prior to investment. This includes looking at emergent or contrarian strategies where standard data is unavailable. Overall, we focus our analysis on constructing an investment thesis: an investment’s ability to contribute to the long term performance of the Oxford Endowment Fund, what this is driven by, and what risks it exposes the Fund to. Before any investment is made, we complete thorough quantitative and qualitative work across investment, operational, ESG (environmental, social and governance) and legal analysis, to ensure an opportunity is appropriate. Finally, we spend considerable time understanding the teams and individuals who will steward the assets.
Our evaluation is designed to objectively review investments’ progress against their original investment thesis. We predominantly invest in groups whose investment style is to hold a concentrated number of companies and who engage with their underlying management teams regularly. Ongoing evaluation includes analysis of underlying companies, return objectives, evolving risks, organisational health, and ESG or reputational concerns.
Managing long term capital enables us to identify long term investment themes, inefficient markets and other opportunities to make investment returns over longer durations that are not available to many other investors. Ideas are primarily generated from our own fundamental research projects, investigating geographies, sectors, themes and companies. They also come from our bespoke networks: existing managers, specialist intermediaries and like-minded investors.
To be an effective long term investor, risk analysis is an integral part of our investment decision making and portfolio management. We constantly evaluate a range of metrics and exposures to ensure that our fundamental views produce an optimal portfolio positioning. This includes analysis of environmental, social and governance risks.