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Alternative Investment

University of Texas System’s Oil and Gas Participation Fuels Bid to be Biggest Endowment

 

The University of Texas System’s endowment superseded Yale University as the second largest endowment in the nation in 2021.

The $42.9 billion endowment specifically rose in value against peers due to its oil and gas revenues generated from 2.1 million acres of land it owns in the West Texas Permian Basin, an asset co-owned alongside Texas A&M University.

While the placement is not ideological in pursuit, the system benefitted from maintaining its investment in the oil and gas industry, as other universities chose to reduce theirs. The perseverance with the sector

In its 2021 fiscal year financial statements, the Permanent University Fund, a state wealth fund created to fund the endowment and higher education, saw revenues increase to $979.2 million in 2021, up 27% from the year before, on mineral income produced by its land holdings.

Conversely, in April 2021, Yale set investment principles which sought to restrict its investment in fossil fuels due to the emission outputs they produce.

Yale’s investment office   outlining the updated investment philosophy that investment firms must “not undermine, but support sensible government regulation, accurate climate science and public communication about fossil fuel products, climate science, climate change, and industry self-regulation addressing climate change.”

Similarly, earlier this year, Princeton University’s board of trustees voted to dissociate from 90 companies as part of an administrative process that focused on companies involved in the thermal coal and tar sands segments of the fossil fuel industry or that are engaged in climate disinformation campaigns.

Having overtaken most Ivy League institutions, the UT System’s endowment is set to challenge Harvard’s $53.2 billion endowment, as the largest endowment by total net assets in 2022. Though it should be noted that the University of Texas system boasts a student population of more than 244,000 across 13 institutions, meaning the endowment holds $175,820 per student, nowhere near Princeton’s $3.294 million, Yale’s $2.172 million, or Harvard’s $1.745 million per student.

Thus far in 2022, crude oil is up another 20% year-to-date. The upward trend in the oil price should aid the UT System in bridging the 24% gap between its second-place $42.9 billion endowment and Harvard’s $53.2 billion nest-egg.

Related Stories:

Princeton to ‘Dissociate’ Fossil Fuel Investments

Princeton Endowment Loses 1.5% in Fiscal 2022

University of Texas Endowment Oil Money In Jeopardy

Tags: ESG, oil & gas, Princeton, University of Texas Systems, Yale

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