Editor:
 
Regarding your article "West Kowloon authority changes tack, shortlists consultants", it is a farce that the West Kowloon Cultural Desert (sorry, District) has to manage this endowment at all. The government could have left the money in the Exchange Fund and provided funding for WKCDA against a budgeted plan, but they sensed that the Legislative Council was in a happy enough mood to give a lump-sum approval and this would avoid ever needing Legco approval again for financing WKCDA. So they split off the money into a separate fund under WKCDA, and now that is looking for separate asset managers.
 
In the past, the government did the same with the MPF Authority, which has a HK$5 billion endowment. They've also done it with the Research Grants Council (HK$18 billion) under the University Grants Committee. The problem with the endowment approach is (i) financial independence reduces future accountability; and (ii) that the money tends to get stranded beyond its original purpose -- for example, the MPFA is supposed to cover its costs by charging fees to trustees based on assets under management. It doesn't need the HK$5 billion, but sits on it and doesn't charge trustees anything.
 
Anyway, whatever you think of the endowment approach, now that the government has endowed all these bodies (rather than budgeting each body out of recurrent government revenue), the simplest way to manage these endowments would be to have each of these bodies put the money back in pooled funds under the Hong Kong Monetary Authority's supervision, and contract that out to asset managers centrally.
 
Regards
 
David M. Webb
Editor, Webb-site.com