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NewsmakersNovember 25, 2013

New York Public Library Endowment Reaches $1B Milestone

The venue for aiCIO’s Industry Innovation Awards caps off a successful year by exceeding $1 billion in assets for the first time.

(November 25, 2013)— A year of strong investment returns has helped the New York Public Library’s (NYPL) endowment reach $1 billion in assets for the first time in its history.

The fund was recorded as having $1.01 billion as of October 31, coming off the back of a 15.3% investment return for the year ended in June.

Despite the achievement, Edgar Wachenheim III, chairman of the investment committee, told the Wall Street Journal that the fund was still “not nearly enough” to supply the various projects in the pipeline for next year, including a $300 million renovation and a real-estate consolidation.

Income from the endowment supports the system’s research libraries, including the flagship building on Fifth Avenue, the Schomburg Center for Research in Black Culture in Harlem, and the Library for the Performing Arts at the Lincoln Center.

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The research library budget was $112 million in 2002, which adjusted for inflation would be $145 million in today’s money, library officials told the newspaper. But the research library budget today is $120 million—leaving a $25 million gap.

Much of this deficit comes from the hits the library system, like other New York cultural organizations, has suffered in budget cuts over the past few years.

The NYPL funds are managed between 15 and 20 different firms, and are exposed more to equities than many other endowments, Wachenheim said.

According to its 2013 annual report, published in June 2013, the fund had $185.1 million in domestic equities, $297.6 million in global equities, $96million in long/short equity funds, and $69.9 million in private equity.

Its investments are split between managed accounts (18.5% of the portfolio), commingled investment accounts (47%), hedge funds (24.6%), and private market funds (9.9%). More information on its investments can be found here.

NYPL like other public libraries depends heavily on city funding, but it has been able to diversify its funding source with only 57% of its overall budget coming from New York City funding, according to research from the Wilmington Trust.

This is low compared with neighbouring Queens Borough Public Library and Brooklyn Public Library, which both have city funding making up 82% of their overall budget.

Other funding sources include state and federal contributions, along with the funds’ investment returns. Here too, NYPL outperformed its neighbours with a 16% investment return in 2012, compared to 0.5% at Queens Borough Public Library and a loss of 0.6% at Brooklyn Public Library.

aiCIO will be hosting this year’s Innovation Awards Dinner at the NYPL on December 9. At the dinner Britt Harris, CIO of the Teacher Retirement System of Texas, will be presented with the Lifetime Achievement Award, and the members of the class of 2013 will be revealed. Click here for more information.

Home > News > Asset Allocation > Utilities and Transport are Top Infrastructure Picks for 2014/5

Asset Allocation November 25, 2013

Utilities and Transport are Top Infrastructure Picks for 2014/5

Investors have flooded towards regulated utilities and transport assets in safe haven markets, according to research from Deloitte.

(November 25, 2013) — Core assets, such as regulated utilities and transport, in developed markets are set to dominate investors’ infrastructure portfolios for the next two years, according to Deloitte.

The business advisory firm interviewed 22 funds and direct investors representing 50% of London’s infrastructure investor community, and found energy and water distribution plants will continue to be popular over the next 24 months.

The survey also showed investors preferred to put their money into “safe haven” countries, such as the UK, Germany, and Scandinavia, and are now shying away from infrastructure assets in emerging markets such as China and India.

European pension funds have led the way in this space. PensionDenmark agreed an historic deal earlier this month with an Abu Dhabi-based energy company to acquire 40% of a Dutch gas pipeline system for $240 million.

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Elsewhere in Denmark, ATP and PFA Pension partnered with investment bank Goldman Sachs to boost share capital in local energy giant DONG.

Deloitte’s report found returns for the assets remained strong in 2013 with 70% of infrastructure investors are achieving or exceeding targeted internal rates of return.

David Scott, partner in Deloitte’s infrastructure M&A team, said: “The key to funds’ strong performance in recent years has been a significant investment of resource in dedicated asset management teams as they look to improve their performance through value enhancement.”

Indeed, 41% of infrastructure funds told Deloitte they had recruited dedicated asset management teams, typically comprising more than a third of their total workforce, showing a trend towards boosting internal expertise.

There were some concerns on the horizon however. Jason Clatworthy, partner in Deloitte’s infrastructure M&A team, warned that while Western Europe, North American, and Australasian assets were likely to prove popular for the short term, there was a growing problem around the lack of new assets coming to market.

And Scott noted the regulatory and political risks surrounding these investments continued to worry investors.

“These have become harder to navigate in the past few years and the expectation is for regulatory regimes, especially in Europe, to become more challenging to predict in the coming years,” he said.

“Infrastructure as an asset class has performed strongly and has stood up to its name, providing stable, secure returns. How investors can innovate and differentiate themselves in an increasingly competitive market will be crucial in the coming years.”

Deloitte’s 2013 infrastructure report can be found here. You can also read Deloitte’s two previous surveys, completed in 2007 and 2010, here and here respectively.

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