Q1: How do university investments and endowments work?

Rhave: Most university endowments are externally managed, but SFU stands out by dedicating a portion to student management. SIAS handles approximately $30 million of SFU's endowment as part of the MSC Finance Program.

The most important thing about university endowments is that these are extremely long-term investments. Any investment we make has to have a minimum investment horizon of at least five years.

Artin: A big part of managing an endowment fund is balancing risk and return. Specifically, the client has a defined risk tolerance they're comfortable with. It's crucial for us, as portfolio managers and analysts, to understand that risk profile and strictly adhere to it.

Q2: What have you learned from managing SIAS?

Artin: What we don't get to see in textbooks or in the classroom is how a fund is actually managed. For example, we have to follow the client's investment policy statement (IPS), which specifies risk levels and allocation across different types of assets.

Rhave adds that the experience has enhanced his leadership skills: Being a portfolio manager has been really good for my leadership skills because it's not just a solo act. You're managing nearly 13 million in global equities spread across 10 sectors, with 37 stocks compared to a 2,500-stock benchmark. This requires teamwork, building trust and ensuring everyone works effectively together.

Q3: How would you define SFU's investment approach?

Artin highlights two key points: the fund focuses on value investing by identifying the difference between a company's price and intrinsic value with a long-term approach. Additionally, sustainable investing is a priority, emphasizing how investments can positively impact the environment, support innovation, and promote sustainable living.

Rhave explains their approach to investments: We review a company’s business structure and revenue streams. ESG considerations are part of the process, particularly social and governance aspects like board equality, female representation, and pay equality, which are examples of factors reviewed when relevant.

Q4: : How do you balance returns with ethics?

Artin: There's a misconception that doing the ethical thing produces less returns than doing the unethical thing. In my experience, that's not true. If you study the market, you'll see that sustainable investments in the S&P 500 have outperformed fossil fuel companies over the last 10 years. Investing in energy companies allows shareholders to use proxy voting to influence and drive positive changes within the company toward sustainability.

Rhave describes SFU’s commitment to sustainability: In 2021, following a community-led mandate, the SFU Board decided to divest from investments contributing to climate change. The fund now avoids companies generating 30% or more of their revenues from fossil fuels. Most investments now have no fossil fuel exposure. As fiduciary stewards, the fund ensures investments are used responsibly, avoiding negative environmental impacts and aligning with SFU's institutional values.

Q5: How does SIAS support SFU's financial goals?

Artin:  A big part of SFU's mission is driving innovation for a sustainable future. At SIAS, we’ve adopted this philosophy by divesting from energy companies and maintaining a fossil fuel-free mandate. Despite the potential drag this creates, we still beat the benchmark last quarter by 66* basis points, achieving our client’s goal to outperform.

*Correction: Artin states '66 basis points' in the video, but the correct figure is 64 basis points.

Rhave highlights the strategic shift: We divested from ETFs and are now at a position where we manage 35 individual securities and only two exchange-traded funds (ETFs), which we are also going to divest from.

Note: ETFs are investment funds that combine multiple assets, such as stocks or bonds, and trade like individual stocks.