The case of Bhutan Trust Fund for Environmental Conservation

Overview

• Governing Body• Fund at a Glance• Type of Fund• Capital, Investment & Performance• Beneficiaries• Lesson Learnt• Challenges

Governing Body

• Management Board Members- 6 members • Secretariat 11 persons. • Technical Advisory Committee- 7 members. • Investment Committee- 6 members

Fund At a Glance

• Fund Name: Endowment Fund• Country: Bhutan• Objective: Conservation of eco-system and

biodiversity• Governing body: Six Member Management Board • Legal status: Royal Charter, 1996 • Capital: US$ 21 Million• Establishment: May 1992• Beneficiaries: NGOs, RGOB, Individuals, Grass

roots Community.

Type of Fund• Endowment Fund• The Principal capital is kept in perpetuity and

not expended.• Preserve the Real Value, Income Generated is

Reinvested. • Income from investment is used for funding

programs (3 year rolling portfolio market value)

Capital

• A donation of US$ 21 million was raised from: Global Environmental Facility, Denmark, Finland, the Netherlands, Norway and Switzerland.

• Present Endowment is $44.181 million

• Endowment capitalized through the investment interest after program expenses

Investment Structure as of 29 June 2012Bhutan: 6,214,94

4 14%

Off-shore:

37,968,461

86%

Total Portfolio Value

$44,181,405

Investment Structure as of 29 June 2012

Equities54%

Fixed Income46%

Asset Mix

Bhutan Portfolio Value$6,214,944

Investment Structure as of 29 June 2012

Cash & Equivalent2%

Fixed Income36%

US Stocks38%

Asian Stocks14%

Inter-na-

tional Stocks

3%

Natural Resources3% Emerg. Mkts

4%

Asset Mix

Offshore Portfolio Value$37,968,461

Portfolio PerformancePeriod Total Return

Quarter ending 29 June 2012 -2.74%

Calendar year to date 3.15%

6 Months 3.15%

1 year annualized return -5.98%

2 year annualized return 7.47%

3 year annualized return 5.28%

5 year annualized return 4.71%

Since inception - Cummulative 198.42%

Since inception - Annualized 6.44%

Fund Raising• Annual Fund raising strategy under

development.

Beneficiaries

• Mostly Government Agencies- MOAF, MOE, MoWHS, MOEA

• NGO- RSPN, YDF• Communities• Local Governance• Individuals

Lessons learned

• Good investment policy and guidelines and keeping close watch of the Success factors.

• Established Procurement guidelines and Operational Manual (value for money)

• Strong support from International Organizations (UNDP and WWF-US)

• Asset Management Committee-Outside expertise

• Special care from Investment Managers

Challenges in Endowment Fund

• High Volatility of Capital Market- mixed portfolio

• Requires Constant Monitoring of External Market

• Human resources- investment Managers• Thinly spreading the investments and

generation of income is small• Fund lost as transactional costs

Challenges• Lack of investment opportunities within the

Country• High Investment Costs– No Economy of Scale– No Negotiation Power on Fees

Kadrinche & Thank YOu