By Natalia Manzocco
Ryerson’s gambles in the financial world have been paying off and now the school is ready to pour extra resources into earning even more cash.
Janice Winton, the school’s executive director of financial services, said in the 10 years that Ryerson has had its current endowment fund, it has grown from $5 million to nearly $40 million.
The fund has also been steadily moving up the ranks compared to other Canadian universities, In 2003, Ryerson ranked 37th and in 2005 it landed at 32nd. Overall, Ryerson has the ninth highest growth rate at 29.3 per cent.
This spike in financial growth has led Ryerson to consider creating a financial committee that would oversee these investments. “The committee will look at who’s investing these funds for us, who our investment manager is, and the types of things we’re investing in,” Winton said.
The committee will likely include members of the Board of Governors, and potentially some other financial experts brought in to advise the board.
Currently, Ryerson’s investments are overseen by Sceptre Investment Services, a Toronto firm that manages stocks, bonds and holdings for 10 other Canadian universities.
Eric Kirzner, a finance professor at the University of Toronto, sees the formation of the committee as an important next step for Ryerson.
“Traditionally, you do want to have an investment committee with trustees who oversee this — and it’s also not uncommon to have an outside contractor who handles the funds.”
Kirzner also suggests an additional firm might soon be needed to handle Ryerson’s growing investments. “I see quite a few portfolios, and it isn’t common to see one of this size run by one single manager.”
Kirzner said portfolios of Ryerson’s size usually employ a manager for both domestic and foreign investments. The rapid growth of Ryerson’s endowment fund, as well as the ever-changing nature of the stock market, means shifts in Ryerson’s investing habits as well. Sceptre has begun putting more and more of the equity money — 49 per cent of Ryerson’s investment budget — into non-Canadian companies like Nestle, General Electric and Time Warner.
The stocks, as invested in 2006, were divided almost equally between Canadian and international corporations. Three years ago, an investment policy released by Ryerson suggested that 80 per cent of its equities be put into domestic companies, and only 20 per cent into foreign holdings.
The University of Toronto, whose endowment fund is close to $2 billion, invested only 15 per cent in Canadian companies in 2005. “Over time, the financial world has been much more global,” Sceptre’s David Pennycook said. “It used to be that people would put very little into foreign markets, but companies like Coca-Cola or Honda or Toyota are all huge global companies.
“They’re important, well-known names, so people are becoming more comfortable with investing outside the Canadian market.” Kirzner calls Ryerson’s move towards global investments a “wise” decision.
“I’d say that the current 50-50 divide is even a bit too high on the Canadian side.”
“The Canadian market is quite small compared to the rest of the world,” echoes Dr. Vanessa Magness, a finance professor at Ryerson’s School of Business.
While Canada has been doing well lately, “normally, people are encouraged to invest more in international companies,” she said. “Canada is only a small piece of the puzzle.”