Name: Benafsha Ahmadi ID Number: 26824

Nelab Haidari ID Number: 25189

An endowment is an aggregation of assets invested by a college or university to support its

educational mission in perpetuity. An institution’s endowment actually comprises hundreds
or thousands of individual endowments. An endowment allows donors to transfer their
private dollars to public purposes with the assurance that their gifts will serve these purposes
for as long as the institution continues to exist.

American University of Afghanistan has an endowment of $50 million which will be invested
in different asset class in order to generate returns for the university in the long run which
help the university attracting more students through scholarship expenses and to cover its
operational expenses.

Asset Class

The endowment will be allocated in different asset classes in order to best achieve objectives
and requirments. This class includes private equity, stocks, natural resources, bonds, real
estate, hedge funds, emerging market equity and fixed income.

Stocks: Since Afghanistan does not have a stock market exchange where shares of companies
are traded. We prefer to invest in foreign shares such as India and UK. Investing in stocks
have less risk as long as the economy is doing well.

Market and Geography

We are going to invest in emerging markets for the private equity fund which has the
potential for high growth. Although economy can be unstable, yet the return is very high.
According to Morgan Stanley Capital International Emerging Market Index, 23 countries are
in the list of emerging markets. This includes China, Colombia, India, Indonesia, Malaysia,
South Africa, Turkey and others. The main emerging market powerhouses are China and
India. Together, these two countries are home to 40 percent of the world's labor force and
population. Their combined economic output ($27.8 trillion) is greater than that of either the
European Union ($19.18 trillion) or the United States ($18.0 trillion).

How much would you want to invest in Private Equity/Venture Capital positions?

S.No Asset Type Percentage 50,000,000

1 Venture capital fund 20% 10,000,000
2 Stocks 12% 6,000,000
3 Bonds 6% 3,000,000
4 Natural resources 10% 5,000,000
5 Real estate 13% 6,500,000
6 Hedge funds 15% 7,500,000
7 Emerging market equity 14% 7,000,000
8 Fixed income 10% 5,000,000
Total 100% 50,000,000
 Asset Allocation
10%
20%
Venture capital fund
Stocks
14%
Bonds
Natural resources
Real estate
12% Hedge funds
Emerging market equity
15% Fixed income

6%

10%
13%

What would you look at when deciding which securities or funds to invest in?

The first thing is obviously the risk and return. The more risk we are going to take, the more
return we would have. Since we want to diversify our risks, we will invest in different
portfolio which will have different rate of returns. We are also going to the sector, market and
geography which yields higher returns. The fund invested should keep pace with inflation
because we want our fund to grow. The most important thing in VC is that there should be
possibility for the future exit.

How much risk are you willing to take?

S.No Asset Type Percentage Total Risk %

1 Venture capital fund 20% 10,000,000 25%
2 Stocks 12% 6,000,000 10%
3 Bonds 6% 3,000,000 10%
4 Natural resources 10% 5,000,000 10%
5 Real estate 13% 6,500,000 10%
6 Hedge funds 15% 7,500,000 20%
7 Emerging market equity 14% 7,000,000 10%
8 Fixed income 10% 5,000,000 10%
Total 100% 50,000,000