"University endowment managers have generally outperformed the market benchmarks. However, their knowledge has not been well documented in any book. This book fills that gap and should be of significant help to all those who want to learn from extensive interviews with a number of endowment managers." PREM JAIN, McDonough Professor of Accounting and Finance, Georgetown University
Learn how higher education's largest endowments consistently achieve higher investment returns than the overall market.
The Chief Investment Officers who oversee the top academic endowment funds manage over $400 billion in total assets. Over the last ten years (1999 2009), large endowments returned an average of 6.1%, compared to the S&P 500 index average of 2.22%, an outperformance difference of over 8%. With the recent sharp economic downturn, and a decade of inflation-adjusted flat returns in the overall equities market, institutional and individual investors alike are looking to endowments for proven strategies for improving the performance of their portfolios. Outperform: Inside the Investment Strategy of Billion Dollar Endowments interviews top CIOs from leading endowments, to detail how they consistently outperform the market, what they predict for the coming years, and how small investors can employ their investment philosophies.
Preface ix
Acknowledgments xiii
PART I ACADEMIC ENDOWMENTS
Chapter 1 Academic Endowments Overview 3
The World of Endowments 4
History of Endowments 6
Academic Endowments in the Context of the Investment World 7
Large Academic Endowments 7
Implications for Individual Investors 17
Summary 19
Notes 20
Chapter 2 Historical Endowment Performance 21
Investment Returns 22
Asset Allocation 28
Summary 30
Notes 31
Chapter 3 A Look Inside Endowments 33
Endowments Are Different 33
Endowments Define Asset Classes Broadly 35
Endowments Achieved a One-time Sophistication Improvement 36
Endowments Are Nimble 36
Endowments are Evaluating Approaches to Managing Tail Risk 37
Endowments also Manage Working Capital 38
Endowments Manage Liquidity Carefully 39
Endowments are Changing their Approach to Performance Measurement 41
Summary 41
PART II PUBLIC UNIVERSITIES
Chapter 4 Jonathan Hook, Chief Investment Officer The Ohio State University 45
Chapter 5 Guy Patton, President and CEO The University of Oklahoma Foundation 57
Chapter 6 Bruce Zimmerman, Chief Investment Officer University of Texas Investment Management Company 69
PART III PRIVATE UNIVERSITIES
Chapter 7 James H.C. Walsh, Chief Investment Officer Cornell University 81
Chapter 8 Sally J. Staley, Chief Investment Officer, and Anjum Hussain, Director of Risk Management Case Western Reserve University 95
Chapter 9 Mary Cahill, Vice President of Investments and Chief Investment Officer Emory University 113
Chapter 10 Don Lindsey, Chief Investment Officer George Washington University 125
Chapter 11 Scott W. Wise, President Rice Management Company 141
Chapter 12 James (Jim) Hille, Chief Investment Officer Texas Christian University 153
Chapter 13 Jeremy Crigler, Chief Investment Officer Tulane University 167
PART IV ADVISORS AND MANAGERS
Chapter 14 Sandy Urie, President and Chief Executive Officer, and Celia Dallas, Co-Director of Research and Managing Director Cambridge Associates 181
Chapter 15 Lyn Hutton, Chief Investment Officer Commonfund 199
Chapter 16 Thruston Morton, CEO and Chief Investment Officer Global Endowment Management 217
Chapter 17 Mark W. Yusko, CEO and Chief Investment Officer Morgan Creek Capital Management 231
Chapter 18 Rafe de la Gueronniere, Principal New Providence Asset Management 247
Chapter 19 Bob Boldt, Chief Executive Officer Boldt Ventures 267
Conclusion Concepts for Individual Investors 281
Lessons for Individual Investors 281
Trends 288
Predictions for Endowments 292
Summary 294
Glossary 297
About the Authors 307
Index 309
