Oxford and Cambridge money race

Oxford and Cambridge universities, taking the lead from their US counterparts, have decided to take the plunge into the world of financial investment. Three Oxford University colleges, Balliol, Christ Church and St Catherine’s, have committed £100m to Oxford Investment Management (OXIM), a new company set up to invest the endowments of British university colleges and charities in a range of asset classes, including private equity.

OXIM is headed by Karl Sternberg and Paul Berriman, formerly global investment head and UK chief executive, respectively, at Deutsche Asset Management. Gavyn Davies, former chief economist at Goldman Sachs and ex-chairman of the BBC, is on board as an adviser. The colleges will own 60% of OXIM, and the management team 40%.

The investment committee is currently in the process of identifying those fund managers it believes can deliver on its target of achieving returns of more than 5% a year over rolling five-year periods. Its initial investment strategy will see 7.5% of the fund allocated to property, 7.5% to private equity and 85% to around 20 fund managers. OXIM is currently seeking further investment from other colleges, charities and private individuals.

Meanwhile, across at Cambridge University, an investment board has been established to advise on the £3.1bn it has in endowments and other assets. The board is headed by David Swensen, who was chief investment officer at Yale for 20 years.

Both plans have taken their inspiration from the Harvard and Yale models, which have successfully played the financial markets for decades. Currently Oxford and Cambridge lack the spending power of the US universities, and see a revamped investment strategy as crucial to maintaining their position among the top 10 universities in the world.