HKU’s Endowment and Investment Management: A Multi-Billion-HKD Reserve — Where It Comes From and How It’s Invested

Bottom line: As of the 2024–25 financial year (ended 30 June 2025), The University of Hong Kong (HKU)’s consolidated total funds / net reserves stood at HK$40.7 billion^※ (as reported in the University’s Annual Accounts 2024–25). Net investment gains for the year exceeded HK$2.6 billion, representing 14.1% of total consolidated income, making investment performance the single largest variable swinging the annual surplus — a good or bad market directly determines whether HKU has a few extra billion to spend in any given year.

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# How Big Is HKU’s Purse?

Thanks to years of accumulation, The University of Hong Kong’s consolidated total funds / net reserves (i.e., net assets) have reached a substantial scale. According to the HKU Annual Accounts 2024–25^※ (on a consolidated Group basis, in HK$’000):

Scope note: HKU’s financial year runs from 1 July to 30 June of the following year; all amounts are from the consolidated Group accounts, in Hong Kong dollars.

Over four years, net reserves grew from HK$30.0 billion to HK$40.7 billion — an average annual increment of about HK$3.6 billion — but the year-on-year swings have been dramatic, reflecting precisely the volatility of investment markets. In 2021–22, the University even recorded a HK$931 million deficit^※ (negative total comprehensive income), the root cause being a sharp downturn in financial markets.

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# Where Do the Reserves Come From? — Three Main Sources

HKU’s net reserves are not a single-purpose fund but are accumulated across three major categories according to the character of the money:

Restricted Funds form the main vehicle for endowments. As of 30 June 2025, restricted funds had grown to HK$12,072 million (approx. HK$12.1 billion)^※ — this is money whose use is restricted by donors, with the University in principle spending only the investment income while preserving the principal (the universal endowment principle of “spending the yield, never touching the corpus”). The major named donations in HKU’s history — such as the designated gifts from the Fung Shiu Lam family or the Tin Ka Ping Foundation — all fall into this category (see details in Benefactors and Named Donations).

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# Where Is the Money Invested? — Financial Asset Scale

HKU’s investment portfolio is reflected on the balance sheet in the form of financial assets measured at fair value. From the annual accounts:

Financial assets carried at fair value total approximately HK$17,769 million (approx. HK$17.8 billion)^※. Together with about HK$16 billion in bank fixed deposits, HKU’s investable asset pool adds up to over HK$33 billion. The portion that the University actively manages and targets for long-term capital appreciation is designated as the Long-Term Investment Pool (LTIP). Since 2024, this pool has been managed by the newly established Investment Office (see Governance section).

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# How Much of HKU’s Income Comes from Investment Returns, and How Volatile Are They?

“Interest and Investment Gain, net” is the single biggest source of uncertainty in HKU’s surplus. The figures for the last six financial years:

Data source: Extracts from HKU Annual Accounts over the years (consolidated Group basis).

One overarching pattern leaps out: the strength of investment markets directly determines whether HKU records a surplus. In 2021–22, when global capital markets tanked, net investment losses exceeded HK$2.0 billion, and the University booked an overall comprehensive deficit of around HK$931 million — the textbook example of an investment drag in recent years. Conversely, in 2020–21 (the post-COVID market rebound) net investment gains reached a spectacular HK$3.3 billion, equivalent to 22.5% of that year’s total income. In 2024–25, net investment gains hit a new recent high of HK$2.65 billion^※, driving the consolidated surplus close to HK$5.0 billion — which the University’s annual report attributes to “improvement in investment performance”.

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# Three Layers of Investment Returns: Numbers, Scope, and Timing

Three technical points are essential for a proper reading of HKU’s investment figures:

① The “net” return concept. The annual accounts disclose “Interest and Investment Gain, net” — meaning gains and losses are reported net, already deducting management fees, transaction costs, and realised and unrealised losses. A single-year figure can be positive or negative.

② “Fair value” measurement feeds directly into the surplus. HKU’s financial assets are measured at Fair Value Through Profit or Loss (FVTPL); unrealised market price movements are recognised in the year’s profit or loss — this is the main mechanism through which investment volatility propagates to the annual surplus. A significant portion of the roughly HK$2.1 billion net investment loss in 2021–22 was attributable to unrealised markdowns on equities and alternative assets.

③ Bank deposit interest and capital-market returns are reported together. With interest rates rising in recent years, the substantial pool of bank fixed deposits (around HK$16 billion) has generated considerable interest income, which is reported together with capital-market returns. Consequently, the “net investment gain” line tends to be relatively sturdy in a high-interest-rate environment.

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# Governance Framework: Who Manages These Tens of Billions?

# Investment Office — a dedicated team newly set up in 2024

In 2024, HKU established an independent Investment Office^※, replacing the previous model of purely delegating to external fund managers with a “professional in-house” approach. Its core mission is to manage the Long-Term Investment Pool (LTIP), pursuing the dual objective of “preserving purchasing power while generating current income”. The Investment Office describes its strategy as a “globally diversified portfolio across multiple asset classes in both public and private markets”^※, ensuring financial sustainability through disciplined asset allocation and rigorous investment standards.

# Investments Sub-committee

Based on publicly available information, HKU’s investment-governance delegation runs: University Council → Finance Committee → Investments Sub-committee. This sub-committee is responsible for overseeing asset allocation of the LTIP, the selection of external managers, and investment performance, while the Investment Office handles day-to-day execution.

# Finance and Enterprises Office (FEO)

The Finance and Enterprises Office (FEO)^※ is the University’s functional arm for overall financial management, covering financial planning, procurement, treasury, asset–liability management and ESG investment policy formulation, and together with the Investment Office it constitutes HKU’s investment governance system.

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# Investment Policy: ESG First and What It Won’t Touch

On the FEO website, HKU has published its Investment ESG Policy^※, which applies specifically to the Long-Term Investment Pool (LTIP). The policy’s key points:

• ESG integration, not trade-off: The University explicitly states that “incorporating ESG factors into the investment process can help enhance returns over the long term”^※; ESG perspectives and financial return objectives go hand in hand.
• Manager selection: Preference is given to external fund managers who demonstrate ESG commitment in their investment processes, and their ESG performance is continuously monitored.
• Climate commitment: HKU supports the goals of the Paris Agreement and aims to achieve net-zero emissions in its investment portfolio by 2050.
• Absolute exclusions: Companies deriving ≥10% of revenue from tobacco products, and any enterprises associated with controversial weapons (cluster munitions, anti-personnel mines, biological/chemical weapons, depleted uranium, etc.)^※ — are categorically excluded from the investment universe.

On the geographic diversification front, Investment Office publications indicate that a portion of the LTIP has been allocated to private equity. In January 2024, HKU participated with a RMB 70 million capital commitment in the Dongguan Qingshuiwan Phase II Venture Capital Partnership^※, a rare instance of a Hong Kong university acting as a mainland China-based private equity LP — a move read by the market as a signal of a more active, multi-pronged investment style.

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# How Did the Endowment Grow from Millions to Billions? — Accumulation Pathways

Three main channels have built up HKU’s endowment:

① Donations & Benefactions: Donation income in 2024–25 totalled HK$945 million (approx. HK$0.95 billion)^※, and in 2023–24 HK$917 million^※. Historically, generous benefactors and corporate donors — names such as the Fung Shiu Lam family, the Tin Ka Ping Foundation, and Li Ka-shing — have steadily swelled the restricted funds. The permanent principal designated by donors constitutes the traditional “endowment fund”.

② Retention of annual operating surpluses: In good years, operating surpluses (such as the approximately HK$4.8 billion in 2024–25) are transferred into Other Funds and enrich the free reserves.

③ Government Matching Grant Scheme: The Hong Kong government has launched several rounds of matching-grant schemes for university donations over the years, which match every dollar donated with a dollar from the public purse, effectively “doubling” the impact of private donations and directly boosting the total endowment.

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# How HKU’s Reserves Compare with Peer Universities in Asia

According to publicly available information, HKU’s investable pool is approximately US$2.5–3.0 billion (around HK$19.5–23.4 billion)^※ (as of 30 June 2024, per PipelineRoad; some figures distinguish the size of the LTIP from total net reserves). This places HKU among the very top in Asia — yet compared with global leaders such as Harvard (around US$56 billion) and Yale (around US$40 billion) there remains an order-of-magnitude gap. By setting up a professional Investment Office in 2024 and raising allocations to alternative assets, HKU is trying to close the distance to the international benchmarks.

Note: Third-party databases such as PipelineRoad often cite an “endowment” figure that typically refers to the principal of a dedicated, named endowment (i.e., the permanent portion within Restricted Funds). This is a different concept from the total funds / net reserves of HK$40.7 billion shown in the annual accounts. Readers should note the difference in scope when quoting.

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# How the Annual Report Talks About Investment Governance

「港大綜合收入於本財政年度錄得增長，主要源於投資表現改善及政府撥款與學費的增加。」 ("The University’s consolidated income for the financial year recorded an increase, mainly attributable to the improvement in investment performance and increases in government grants and tuition fees.")
— HKU Annual Accounts 2023–24, official notes^※

This official language succinctly describes the three drivers of recent financial performance: investment > government grants > tuition fees. That investment comes first means that should the market turn, the official commentary will also first reference the drag from investments — the “investment losses” wording in the 2021–22 accounts is exactly the opposite side of the same coin.

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# Cross-references

• HKU Finances at a Glance — a full picture of annual consolidated income, expenditure, surplus and net reserves
• Benefactors and Named Donations — major donations and named gifts
• The Tin Donor Dynasty — a case study
• Alumni Network and Advancement — matching grants and fundraising mechanisms

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