Endowment to support Aalto University world-class research and education
Since its investment activities started in late spring 2010, Aalto University has become a major Finnish institutional investor. Aalto University Endowment mainly comprises of private donations received during the establishment of the university in 2008-2011 and capital received from the Finnish Government.
Total capital received from these sources is expected to reach EUR 700 million during 2011. An additional EUR 60 million of assets were transferred to Aalto University from the three universities merging into the new university at the start of 2010. At the end of 2010, the market value of Aalto University endowment was about EUR 470 million. The endowment does not include the real estate and housing assets of the Aalto University Group.
According to Tuula Teeri, President of Aalto University, the purpose of the university endowment is to generate additional funding for high-quality research and education.
The additional funding generated by Aalto University endowment supports the financial independency of the university and enables the university to allocate funding to strategic focus areas.
Teeri also points out that there are no restrictions of use of the funds raised by Aalto University, which means that the University Board can use the endowment returns in line with the strategy of the university.
According to Marianna Bom, Aalto University CFO, the university does not intend to spend the endowment returns during its first years of operations: “In the future, the proceeds should cover six to eight percent of the university operating budget of about 400 million euros. Thus, in the coming years, endowment income will provide an important addition to our funding but will not replace existing sources of funding.”
As laid down in the Finnish Foundations Act, Aalto University invests its endowment in a secure and profitable manner. In its investment activities, Aalto University is guided by the endowment strategy approved by the Board of Trustees of the university, which defines the objectives of the investment activities, principles governing the operations and risk management and, on a yearly basis, the division of the investment portfolio into different asset classes. The long-term aim is to invest 50% of the assets in equity and 50% in fixed-income investments.
In accordance with the nature of university activities, Aalto University invests its assets in a long-term manner, emphasizing risk-management and social responsibility. All asset managers used by Aalto University have signed the United Nations Principles for Responsible Investment (UN PRI). Aalto University’s investments are made via mutual funds and exchange-traded funds selected through an extensive bidding process.
During Aalto University’s first year of operations, the aim of its endowment strategy was to secure its assets. At the end of 2010, about 90% of the investments were fixed-income investments, while the remaining 10% were equity investments. The building of the investment portfolio began in stages in April-May and in the period of June-December the value of Aalto University’s endowment grew by 3.1%. This means that during the last seven months of the year, the growth rate exceeded the 3.8% target return set on annual level. . At the same time, return for the whole of 2010 was 2.1%. The return of the special purpose funds of the three universities transferred to Aalto University at the start of 2010 exceeded 15% during 2010.
Aalto University will report on its endowment in greater detail in its annual report in April-May 2011.
For further information please contact: Marianna Bom, CFO, Aalto University,
tel. + 358 50 575 3762