UWC ENDOWMENT FUND
The year 2024 was an important one for UWC. The UWC Endowment Fund (‘the Fund’) was launched in January following more than one year of preparation
The Fund performed well in its first year, returning 12.5% in USD, 14.3% in GBP and 18.9% in EUR It outperformed the relevant benchmark indices by around 2%.
The Fund will make its first annual distribution for scholarships. It will provide USD 1.1m to the participating UWC schools and colleges to finance more than 50 fully-funded scholarships
While we are pleased with the Fund’s good performance in its first year, we need to maintain a longterm mindset for the benefit of current as well as future generations of students. Our objective is to build a portfolio that is capable of delivering strong positive returns on a long-term perspective. As there is generally no reward without risk, we recognise that to achieve this objective we may at times need to accept performance volatility.
We worked hard to find compelling investment opportunities during this first year At year end, the Fund was approximately 50% invested in active positions. These comprise a group of carefully selected external investment managers as well as some direct equity investments, all of which we believe to be capable of performing strongly over the long term. The other half of the portfolio was invested in passive ETFs We elaborate more on asset allocation later in this report.
Our purpose is to cater exclusively to UWC entities. Six of these entities entrusted us with their assets in 2024, namely UWC Adriatic, UWC Atlantic, UWC Costa Rica, UWC Mostar, UWC South East Asia and UWC International. One further UWC entity, UWC Deutschland, joined the Fund at the start of 2025 and we are in active discussions with others. We are pleased to have seen interest not only from UWC schools and colleges, but also from several national committees. The Fund’s year-end assets under management stood at USD 52.4m. We see much potential within the UWC network and hope to grow the Fund significantly during the coming years.
The UWC Endowment Management investment team grew in the second halfof 2024 with the addition of two new investment analysts, namely Piyari Paienjton (AD ‘12) and Naomi Tang (PC ‘19) With these new hires in place, we feel that the team is well-positioned to manage the Fund in the coming years. We are also pleased to have added two new members to our Advisory Investment Committee of investment and endowment professionals: Tim Dolezal, the CIO of University of Notre Dame Endowment, and Jun Sung Kim, the CIO of National University of Singapore Endowment. We are grateful to have their support and expertise
We want to take this opportunity to thank our service providers State Street, Dechert and PwC in Ireland for making the launch of the Fund possible, and the Boards of UWC Endowment Management and UWC Endowment Fund for supervising and monitoring our progress. We also want to thank old and new members of the Advisory Investment Committee for all their advice and support. Above all, we want to thank the UWC schools and colleges and national committees who have entrusted their capital with us. We hope to reciprocate their trust by being excellent stewards of capital.
Thank you
UWC Endowment Management team
Performance
The Fund launched on 15 January 2024 and produced a USD return of 12.5% in 2024, compared with a benchmark index return of 10.7% over the same period. The EUR and GBP class returns were somewhat higher, as shown in the table below. The SGD class launched only at the start of October and therefore has a much shorter performance history.
This is a solid start for the Fund. However, we acknowledge that as managers of long-term capital, short-term performance may vary Our long-term target is to deliver annual returns of 3% more than the distribution rate of 3–5% (with the exact percentage determined by the Fund’s Directors each year)
At year end, the Fund’s net asset value (NAV) stood at USD 52.4m.
Net asset value USD 52.4m
as at 31 December 2024
Fund performance (USD) since inception
Fund performance vs. benchmark, as at 31 December 2024
1Benchmark: composite of MSCI World Index (60%) and Bloomberg Global Aggregate Index (40%) 2 Inception October 2024
Assets under management
The Fund launched with three shareholders and USD 40.9m in assets under management. Two further UWC entities joined in July and one in October, with combined subscriptions of USD 6.8m These, together with a USD 4.7m rise in assets due to positive performance, brought the Fund’s NAV to USD 52.4m at year end There were no redemptions in 2024.
After the end of the reporting period, on 1 January 2025, one new UWC entity joined the Fund to bring the total number of shareholders to seven and the NAV to USD 55.4m.
Number of shareholders 6 7
As at 31 December 2024 As at 1 January 2025
Net asset value, since inception
Asset allocation
Asset allocation strategy: The Fund is being constructed from the bottom up. This means that we look for excellent external investment managers that fulfil our strict investment criteria rather than creating a top-down portfolio with pre-determined exposures to specific geographic regions or asset classes We seek managers who have, among other things, clear investment philosophies, cost-effective investment strategies and distinctive and repeatable investment processes. We insist on strong governance and an alignment of interests, and look for evidence of creativity, curiosity and a humble attitude. The managers we invest with also need to demonstrate well-integrated ESG policies, robust operations and a long-term focus that prioritises performance over asset gathering. In constructing the portfolio, we acknowledge the critical importance of portfolio diversification and will use passive and low-cost exchange traded funds (ETFs) in certain markets when we cannot find suitable active managers
Active vs. passive investments: At the end of December, the portfolio had a nearly 50% exposure to active investments, comprising eight active investment managers, three directly held equity investments, one private equity investor and one venture capital investor. The other half of the portfolio was spread across six passive equity and five passive fixed income funds (ETFs), reflecting the fact that the Fund remains in a build-up phase. The total number of positions was 24, geographically balanced across Asia, Europe and the US Some 2 7% of the portfolio was held in cash.
Portfolio holdings, as at 31 December 2024
Equities vs. fixed income: Equities represented over 80% of the Fund’s portfolio at year-end This is a deliberate strategy given the Fund’s long-term investment horizon and the tendency of equity markets to outperform bonds over the long run As seen on the next page, active equity managers represented 30% of the portfolio, versus passive equity ETFs which represented 40% The share of passive equities is likely to decline over time as we find compelling new managers to partner with for the long term.
Direct equity: The Fund’s direct equity investments represent around 10% of the portfolio. These are predominantly holding companies that are themselves long-term investors in companies The ones that make it to the portfolio tend to be family-led, with excellent capital allocation teams and proven track records of compounding value. They also benefit from low operating costs and transparent portfolios We expect these holding companies to outperform the market over time, whilst also providing liquidity.
Asset allocation by asset class, as at 31 December 2024
Asset allocation by currency, as at 31 December 2024
Active equity (external funds)
Passive equity (ETFs)
Direct equity
Private equity and venture capital
Fixed income (ETFs)
Cash
NB. Due to rounding the chart above adds to less than 100%
Private equity and venture capital investments: The Fund’s current allocations to private equity (2.5% of the portfolio) and venture capital (2.5% of the portfolio) reflect the nature of two directly held publicly-quoted companies that invest predominantly in world-leading private equity and venture capital funds, respectively.
Asset allocation by currency: As shown above, the portfolio has a relatively large allocation to USDdenominated assets despite its balanced geographic exposure. This reflects the fact that many external funds are USD denominated despite investing in other currencies.
Look-through exposures: We aim to report on the Fund’s underlying (look-through) exposures by country, currency and sector in our forthcoming reports.
Performance attribution
During 2024, the biggest contributors to the Fund’s 12.5% gain (in USD) were two active managers focused on the Asia region and one active manager investing in Europe On the other hand, one European and one global active manager, as well as one direct equity investment, were a drag on returns. We continue to see good long-term potential in all three.
In terms of the Fund’s performance relative to the benchmark index, which is a composite of MSCI World Index (60%) and Bloomberg Global Aggregate Index (40%), the portfolio allocation to equities was a positive contributor given the outperformance of equities over fixed income in 2024 By contrast, the Fund’s underweight exposure to the US market compared with the MSCI World Index detracted from relative performance.
Impact
The Fund’s first income distribution to schools and colleges will total USD 1.1m, equivalent to 3% of the Fund’s average NAV over the four quarters since launch. The distribution will be paid in two instalments in 2025 and 2026.
This distribution will finance at least 50 fully-funded scholarships, enabling talented but financiallyconstrained students to attend UWC
Portfolio liquidity
One of our key parameters is to maintain a relatively liquid portfolio in the first three years of the Fund’s operation. To that end, 70% of the Fund’s portfolio can be liquidated in less than a day. This percentage comprises direct equity holdings, ETFs and cash The remaining 30% comprises actively managed funds that have certain redemption restrictions. As seen in the chart below, a further 9% of the portfolio is redeemable either daily or monthly and 6% quarterly or semi-annually, while two positions that represent about 15% of the portfolio are redeemable on an annual basis
Overall, we believe that, if necessary, the Fund is able to redeem its positions in an orderly and timely manner without impacting the price of the assets
Days to liquidate
Organisation
UWCEM and governance: UWC Endowment Management (UWCEM) added two new investment analysts to the team in the second half of 2024, bringing the total size of the investment team to four. The UWCEM team also comprises a compliance and operations officer and an external relations officer. With the latest additions, the team is complete for the time being.
The Fund’s management is overseen by a Fund Board as well as a separate management company Board. There were no changes to the composition of these Boards during 2024. The investment team is additionally advised by an Advisory Investment Committee (AIC) that comprises 14 experienced endowment and investment professionals, the majority of whom are also UWC alumni.
For more information about the composition of the team, the Boards and members of the AIC, please see the About section of our website www.uwcendowment.com
Internships and UWCEM investment club: We continue to run two specific programmes to find future talent and raise awareness about the endowment among our current and future alumni: an internship programme and the UWCEM investment club During the summer of 2024, we employed six UWC alumni to work on various investment-related projects. We have selected a further five alumni to join us in the summer of 2025. Not only does the internship programme allow us to complete many worthwhile projects, but it also enables us to build relationships with some highly accomplished university students that may contribute to the management of the Fund on a longer-term basis
Furthermore, the UWCEM investment club ran a successful pilot at four UWC schools and colleges in the last academic year. Following this pilot, we offered all 18 UWC schools and colleges a chance to participate in the programme Eleven colleges are now taking part in weekly sessions run by the UWCEM team which also features guest speakers The club is improving students’ financial literacy, while at the same time helping us to identify future talent and instilling in them the concept of an endowment.
ESG report
In 2021, all 18 UWC schools and colleges committed to take climate action and put sustainability at the centre of their social ethos. Their goal is to achieve carbon neutrality. As a manager of funds endowed to the UWC movement, we at UWCEM are similarly committed to achieving carbon neutrality both in our own operations and within our portfolio. We have set our target date for reaching net zero to 2050 at the latest.
Responsible operations: We seek to contain and reduce our own carbon emissions by being careful consumers and travelling as responsibly as possible. Our key challenge in this respect is business travel, especially flights, but we aim to minimise our impact by travelling economy class to all destinations and by resorting to virtual meetings whenever possible.
Responsible investing: Our investment decision-making has a long-term focus, which means that we consider all risks that could detract from our long-term performance and all opportunities that might add to our future returns, making ESG considerations integral to our investment decision-making and risk management processes.
Our policy is to avoid investing directly in fossil fuels or weapons manufacturing, or in companies with poor human or labour practice records. The majority of our portfolio is invested through external managers The managers we select undergo thorough scrutiny with respect to their ESG policies and performance, both before and after we make the investment. The kinds of long-term managers we look for have sustainability at the core of their investment processes While we cannot rule out some indirect exposure to restricted areas such as fossil fuels, we expect such exposures to be significantly below the market average and to diminish over time
Reporting: Due to a lack of industry standard in carbon measurement and different practices employed by companies and managers to estimate emissions, we are not able to provide aggregate emission metrics for the portfolio for the time being. In the meantime, we will provide estimates of our own carbon footprint We aspire to report look-through statistics of our underlying exposures in future reports
UWCEM’s ESG performance: In terms of “E” (representing environment), we estimate that UWCEM’s carbon emissions were 36.6 tonnes in 2024. This equates to 9.3 tonnes per employee With shared office space and minimal consumables, 98.9% of that figure relates to business travel (economy class flights). We will continue to report on our carbon emissions in future reports and aim to reduce them over time.
We are also focused on the “S” in ESG (representing social) and believe that diversity enhances performance. The UWCEM team has a balanced mix of genders, nationalities and ages, as shown below.
UWCEM carbon footprint in 2024
UWCEM team diversity, as at 31 December 2024
With respect to the “G” in ESG (representing governance), we take our fiduciary responsibilities seriously. We conduct frequent meetings with our external managers and vote at AGMs when required. During 2024, we attended two AGMs in person to exercise our right to vote and voted remotely at the other AGMs
Meetings held with portfolio managers and companies in 2024
Lastly, we recognise that our greatest impact in terms of ESG is likely to come from our ability to engage with our underlying managers ESG is on the agenda during our regular meetings, to ensure that we understand managers’ESG targets and policies and to find evidence of credible plans to meet those targets We plan to provide details of the key topics of our regular ESG discussions with managers in our forthcoming reports.
Disclaimer All data as of 31 December 2024 unless otherwise specified
UWC Endowment Management Limited (“UWCEM”) is authorised and regulated by the Financial Conduct Authority in the UK with reference number 984693. UWCEM is a private limited company incorporated in England and Wales with company number 14298175. Its registered address is 3rd Floor, 55 New Oxford Street, London, WC1A 1BS, United Kingdom.
The content of this report is for information only and is not intended to be independent investment research. It is not an invitation to buy or sell an investment and is not advice on investments, taxation or on any other matter. This information is not intended to be used by or distributed to any person or entity in a jurisdiction or country where this would be contrary to local law or regulation. Within the EEA, the fund is only available to Professional Investors as defined by local Member State law and regulation. Outside the EEA, the fund is only available to Professional Clients or Eligible Counterparties as defined by the FCA, and in compliance with local law.
This content is not intended for distribution in the United States (“US”) or for the account of US persons, as defined in the Securities Act of 1933, as amended except to persons who are “Accredited Investors”, as defined in that Act and “Qualified Purchasers” as defined in the Investment Company Act of 1940, as amended. It is not intended for distribution to retail clients.
Past performance does not necessarily predict future results and the capital value of investments, and the income generated can fluctuate. Where investments are exposed to currencies other than the base currency of the fund, they may be subject to foreign exchange rate fluctuations.