The goals of Aalto University's investment activities are to provide a steady and predictable cash flow to fund university operations as well as to maintain and achieve long-term growth in the real value of the capital. Maintaining the real value of the capital secures equality across generations by enabling the preservation of the same purchasing power of the capital and the funding it provides to the university operations. This means that, in the long term, the value of the capital must increase in an equal proportion to inflation in order to maintain its purchasing power over time and to enable financing the university operations with the return on the capital to an equal extent over time. In the calculation of real value in investment activities, the so-called university index is used, which has historically been approximately 1 percentage point higher than the consumer price index.
Donations the return on capital of which is used to finance the university operations
Fixed capital consisting of capitalised donations has a very long investment horizon, and a long-term real income target of 3% has been set for it. This is intended to cover approximately 5% of the university's annual operating budget in the years to come. In practice, this is estimated to equal a long-term nominal yield of approximately 6%.
Donations the full capital of which can be used to finance university operations
As regards capital consisting of donations entered as income, the goal is to maintain the nominal capital value, since the investment horizon is shorter.
Use of return on capital
An expenditure policy has been prepared for the use of return on capital, and this policy determines the maximum sum of money available for financing the university's operations on an annual basis. The expenditure policy has been created to balance the goals of investment activities. It takes into account both the capital's market value trends and use levels from previous years. The expenditure policy secures the maintenance of the capital's real value in the long term while also protecting the annual use from the short-term fluctuation of investment returns.
Due to the purpose and goals of the university's investment activities, the investment horizon of the university's fixed capital is very long. Therefore, the University's investment activities focus on a long-term approach, diversification and controlled risk-taking. The investment portfolio has been distributed globally and in different asset categories. The investments have been implemented through funds.
Aalto University has also committed itself to complying with the principles for responsible investment. Some 98 % of the investment portfolio is managed by external asset managers, who observe the principles for responsible investment. Aalto University is a member of Finland’s Sustainable Investment Forum (FINSIF).
The University Board decides on the University's investment strategy and the annual use of returns.
Organisation of investment activities
The University Board is in charge of the University's investment activities and approves its investment strategy. The investment team consists of a head of investments and two portfolio managers. The investment team is in charge of planning and implementing investment activities according to the investment strategy. The head of investments makes decisions on investments and is in charge of fund selection. In addition, the university has an advisory investment committee consisting of external members. The chair of the investment committee is Hanna Hiidenpalo (Chief Investment Officer, Elo).
Aalto University communicates the results of its investment activities twice a year. Furthermore, the university's financial statements and annual report, published once a year, explain the university's investment activities and portfolio in more detail.