Endowment managers “are always monitoring the political winds,” said Jim Dunn, chief investment officer of Verger Capital Management, whose clients include Wake Forest University’s fund. “They are blowing pretty hard, but with no real impact yet.”
China Campaign
Tuesday’s warning is part of a larger campaign by U.S. officials to slow the money that has flowed from investment funds into Chinese companies. Secretary of State Michael Pompeo told state governors in February that some pension funds are playing into China’s hands.
The flow of U.S. pension and endowment cash into Chinese equities has boosted the success of global giants such as online retailer Alibaba Group Holding Ltd., as well as rising stars like artificial-intelligence company SenseTime Group Ltd., which is now on a list of tech companies banned from doing business in the U.S.
In addition to venture capital, endowments have directed growing portions of their passive investments into Chinese companies that U.S. politicians say are linked to human rights abuses and national security threats. Global index provider MSCI Inc. has added Chinese stocks to its benchmark emerging markets index.
U.S. regulators recently urged American stock exchanges to set new rules that could trigger the delisting of Chinese companies, following mounting concerns that investors are being exposed to frauds.
Foreign equities made up 13.9% of college endowments with more than $1 billion, according to the most recent data compiled by the National Association of College and University Business Officers for the year ended June 2019.
The State Department letter also warns universities of China’s growing influence on campuses and said the U.S. is accelerating investigations of what it called “illicit PRC funding of research, intellectual property theft and the recruitment of talent.”
--With assistance from Janet Lorin, Michael McDonald, Colum Murphy and Karen Leigh.
This article was provided by Bloomberg News.