Capital management is becoming an increasing challenge for the finance departments of Australia's top universities, according to FIIG Securities.
Australian universities, which typically hold conservative portfolios, are under increasing pressure in a low return investment environment.
Treasury teams are also faced the with addition pressure of uncertain funding sources and the need to invest in innovation and technology.
Other factors such as capital protection and liquidity are putting university treasurers under pressure, says FIIG head of corporate markets and distribution Mathew Simpson.
"The unique nature of university funding sources and cash flow seasonality, coupled with a sustained historically low interest rate environment is triggering many universities to re-think their capital management processes," Mr Simpson said.
"Today, universities with funds in term deposits are receiving 1 per cent less than five years ago, and over 5 per cent less than 10 years ago. That alone indicates the need for treasury teams to look at new options that will work harder to increase returns and get better outcomes for their money, whilst not sacrificing adherence to rightly conservative investment policies.
"Many higher education institutions have their funds sitting in a small subset of available investment opportunities due to strict investment policies and the perceived risks with alternative options. However, many are starting to look at the opportunities associated with engaging a wider competitive universe of issuers and security types.
"There has been a move to broaden the skill base of university finance and treasury teams in recent years, building-out investment expertise in order to address the headwinds being faced by the sector."
