Investment of Saudi Universities’ Educational Endowment: Sample of King Fahad Petroleum and Minerals University Endowment Fund


March 30, 2016
Dr. Muhammad Shariff Bashir Al-Shariff

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This study investigates the experience of scientific endowment in Saudi universities by examining the performance of the Endowment Fund of King Fahd University of Petroleum and Minerals (KFUM). The Endowment Fund aims at providing KFUM with the additional resources needed to ensure the highest quality education and research. The Endowment Fund was established to raise, invest and expand funds from an array of non-governmental sources whilst encouraging the spread of a culture of philanthropy for education amongst potential beneficiaries. The present study is based on a descriptive approach to explain the fund objectives, investment strategy, and its achievements while the analytical approach uses to evaluate the Endowment Fund performance, distribution of its investment portfolio in comparison with other investment funds of selected American universities. The Endowment Fund of KFUM is invested effectively and prudently utilizing Shariah-compliant strategies set to fulfill the financial objectives of the fund. Investments are made in a diversified range of asset classes that includes murabahah and trade financing; local and regional, international market equities; sukuk and alternative investments such as real estate, private equity, commodities and hedge fund. Results of the study confirmed that the Endowment Fund of KFUM has achieved continuous growth since its inception, and increased cash assets followed by real estate portfolio. As it turns out that the distribution of the investment portfolio of KFUM endowment fund was similar to what is prevalent among some American universities in terms of the style and method of distribution of the investment portfolio. The present study concludes by discussing some useful policy implications. Keywords: Scientific endowment, investment of endowment, endowment fund, investment portfolio, Saudi universities.

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