Unitized Endowment Pool - Definition
Written by Jason Gordon
Updated at December 19th, 2020
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Unitized Endowment Pool (UEP) Definition
A Unitized Endowment Pool (UEP) is an endorsement investing in which diverse endowments can invest in the same category of assets. A UEP is similar to mutual funds, investors in UEP receive returns in their investments monthly. New investors or endowments that have interest in joining the UEP can do so by purchasing units in the pool at a particular value at the specified buy-in date.
A Little More on What is the Unitized Endowment Pool (UEP)
The mechanics used in Unitized Endowment Pool (UEP) are like those used in a mutual fund, the only distinguishing factor is that UEP is designed for endowments and not retail investors as commonly found in mutual funds. There are three investing options through which endowment funds can be utilized, unitized endowment pool is one of the three options. UEP is run in a large scale, multiple endowments pool funds together to realize a substantial amount of cash that can be used for investment. Individual units in a UEP are owned by endowments, this means that each endowment's shares in a the pool is identified through the UEP units they own.
Pros and Cons of UEP
Due to the choice of securities that UEPs invest in, endowments receive attractive returns. UEPs invest in securities such as private equity which are less-liquid. Although, endowments receive attractive returns, there is a high liquidity risk associated with such investments. Most UEPs look out for securities that offer higher and attractive returns, hence, they do not mind taking on more risk in the bid to look for better rewards. Another benefit of UEP is that it is much easier to sell the units of UEPs. Also, most UEPs have much knowledge about emerging-markets equity, expertise of UEPs in the management of large endowments is another advantage.
References for Unitized Endowment Pool - UEP
https://www.investopedia.com Investing Alternative Investmentswww.investorwords.com/17479/Unitized_Endowment_Pool_UEP.htmlinvestment_terms.enacademic.com/14460/Unitized_Endowment_Pool_-_UEP
Academic research for Unitized Endowment Pool - UEP
Endowment Spending: A Look Back., Rogers, F. (2012). Endowment Spending: A Look Back. Commonfund Institute. Counterfactual analysis of compulsory unitization as a solution to the common pool externality in the oil and gas industry, Herrera, C. (2017). Counterfactual analysis of compulsory unitization as a solution to the common pool externality in the oil and gas industry (Doctoral dissertation). Standard SevenFinance, Bok, D. Standard SevenFinance. Common Pool Resources, Meinhardt, H. I. (2002). Common Pool Resources. In Cooperative Decision Making in Common Pool Situations (pp. 1-14). Springer, Berlin, Heidelberg.