The University of Sydney’s $800 million endowment fund is exploring boosting its investment in so-called alternative investments, such as private equity, in an effort to garner 8 per cent annual returns.

“We’re seeking to diversify into alternatives and trying to ensure we have access to the best managers,” says Gregory Fernance, director of the investment and capital management office at the university.

Currently the university’s endowment has about 80 per cent to 85 per cent of its investments in “traditional asset classes” such as stocks, bonds and cash, says Fernance.

About 20 per cent to 25 per cent of its investments are in selected alternate investments, he says.

“It could be higher,” says Fernance of the endowment’s investments in alternate investments. “I’m feeling my way.”

The hope is that alternate investments will give equity-like returns with less volatility, says Fernance, quoting Yale University’s chief investment officer David Swensen.

Achieving the university’s 8 percent annual return goal in current market conditions is “very challenging,” says Fernance.

Fernance spoke to I&T News at the Fiduciary Investors Symposium on the Mornington Peninsula in Victoria, an event organised by Conexus Financial, publisher of I&T News.

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