One question nagging at the back of the minds of more than a few Oxford administrators and academics at the moment must be: how exposed are we to the ongoing international financial crisis and the crash in share prices?

Most of Oxford University’s funds are now controlled by Oxford University Endowment Management, (OUEM), a wholly-owned subsidiary of the university based at King Charles House, Park End Street.

It has the colossal sum of almost £1.3bn under management (according to 2010 accounts) in the shape of two pots of money: the endowment fund worth £828.5m, and the capital fund worth £461.7m.

Impressively enough, in 2010 the endowment fund achieved a return of 11.7 per cent while the capital fund achieved 9.4 per cent for the university, colleges and other charitable trusts whose objectives are for the benefit of Oxford University.

Operating alongside and parallel to OUEM is Oxford Investment Partners (OXIP).

Its chairman is former Chancellor of the Exchequer and undergraduate at Christ Church, Lord Lawson.

It manages investments for five colleges: Christ Church, St Catherine’s, Balliol, New College and, richest of all, St John’s. It is 60 per cent owned by the colleges concerned and 40 per cent by its own managers, who all have impressive City backgrounds.

On June 30, OXIP had a total of £492.6m under management in two funds: OXIP Limited Partnership with £454.2m (of which £120m belonged to the colleges), specially designed for charities, endowments and pension funds in order to preserve their tax-free status, and OXIP Diversified, worth £40.4m, which attracts investment from tax paying companies including individuals with at least £100,000 to invest.

In addition to these funds, many colleges, both here and in Cambridge too, have huge assets that are not invested in equities.

For example, it was long believed you could walk to Cambridge from Oxford without ever leaving land either owned by St John’s, Oxford, or St John’s, Cambridge. And Christ Church’s land wealth alone is estimated at about £240m.

But Karl Sternberg, former chief investment officer at Deutsche Asset Management and now director and institutional fund manager at OXIP explained that in July the equity market dropped 3.3 per cent and OXIP assets dropped just 0.6 per cent.

He said: “Of course Oxford University is exposed to share falls. But it is a long term investor, probably the longest term investor in the land apart from the Church and we still plan for the long term.”

I remember the story about an Oxford college bursar, faced with woodworm in the Great Hall, who discovered that the founder had specially planted an oak spinney against just such an eventuality 400 years before — and that the trees were just ready for timber.

Mr Sternberg added: “It’s important not to panic and to even see this as an opportunity and, to some extent at least, to buy some shares cheaply.”

He added that it was important to see the difference between speculation and investment. OXIP had not, for example, bought gold, which is rising fast, because long-term assets producing good yields of five per cent above inflation was what he wanted to see.

At OUEM, the advantages of long-term investment enjoyed by endowment funds, and their perceived ability to ride out volatility, was also the key note.

University spokesman Ruth Collier said: “The funds under management by OUEM are invested in a wide range of assets, with equities just one part. The funds have clear return and risk objectives, and these return objectives are long-term. It is the longer-term returns that are important when it comes to endowment assets.

“The Oxford Endowment Fund has been in place for almost three years, and to July 31, 2010, the fund has an annualised three-year return of 1.2 per cent versus its benchmark of 0.8 per cent. For comparison with the equity markets, the MSCI World had an annualised three-year return of -0.1 per cent and the FTSE All Share -2.5 per cent during that period.

“In 2008-09, a previous period of intense worldwide financial turbulence, the two funds managed by OUEM returned -5.8 per cent and -3.9 per cent respectively. For comparison, the MSCI World Index returned -6.3 per cent and the FTSE All Share -10.9 per cent.”

The Oxford fund was set up in the wake of an initiative at Cambridge to set up an investment office under Nick Cavalla, then chief investment officer of Man Global Strategies.

No other UK university is thought to have an endowment big enough to justify such treatment — and this wealth of ages, built up over 600 years, is a huge asset for Oxford as a whole.

As an Oxford college bursar once told me, the point about managing money for a college as opposed to a rich individual is this: a college never dies, so you really can think long-term and at least to some extent ride the short-term volatilities of markets.

Not for them the possibility of dying when your shares are valuable and then being forced to pay out death duties when they have plummeted.