Charles Skorina & Company
● RETAINED EXECUTIVE SEARCH ●
Our clients: visionary families, transformative nonprofits, Wall Street trailblazers
Our vision: build investment preeminence, create opportunity, enrich lives
Our work: provide talent, access, relationships, and insights
LATEST NEWSLETTER
“If I had asked my customers what they wanted they would have said a faster horse.” —Henry Ford
If you were sitting on a college board today, would you take a chance and hire a young David Swensen or Paula Volent to manage the money? Radical thinkers cut from uncommon cloth?
Let’s reframe the question. If institutional investing is all about finding alpha and maintaining an edge, why are so many tax-exempt institutions investing and hiring alike?
Almost forty-five percent of U.S. tax-exempt money is invested with just ten active managers, nearly double the amount two decades ago. To quote one reader’s response to our recent query, “everyone’s in the same funds and there’s leverage everywhere.”
(click link for chart. Data from P&I, chart by Robert Snigaroff, President & CIO, Denali Advisors)
In theory, pensions, endowments, foundations, and the like seek active managers to obtain above-market returns. In practice, that doesn’t seem to be how it works.
A former large endowment CIO mentioned recently that his team would scour the globe for unique opportunities, but the first thing his trustees would ask when told of any rare find was “what other endowments have invested in this?”
Safety in numbers
Most trustees accept the position because they love their institution, and often pay for the privilege, but the reputational risks of sitting on a nonprofit board outweigh the rewards. Media assassinations felled some well-meaning board members recently.
Let’s be honest. If the David Swenson of 1985 applied for a CIO position at Yale today, he would not survive the first round of interviews — a young untested Wall Street banker, working on something called interest rate swaps? No way.
And how about Paula Volent, for twenty years the preeminent CIO at Bowdoin College, currently at Rockefeller University? Year after year she has crushed our endowment rankings.
But she was an art history major running a West Coast fine arts conservation business before her swing to a Yale MBA and money management. Would any college board dare hire someone with that background and mid-career makeover today?
The horns of our dilemma
Here’s our challenge. If boards want a “faster horse” they may not appreciate being shown EVs.
Our pool of investment talent includes hundreds of tax-exempt endowments, foundations, public and private pensions, health systems, associations, and charities, and thousands of for-profit analysts and managers at funds, family offices, OCIOs, RIAs, Wall Street banks, and asset managers.
Yet roughly sixty-five percent of endowment hires come from other endowments, a safe and like-minded cadre of about a hundred candidates.
But that’s not the only bottleneck. In the E&F world, men are twice as likely to land a chief investment officer position as women despite a near fifty-fifty split in staff roles. Our women in finance report focused on the time it took the double X cohort to reach CIO positions.
We counted heads and reviewed backgrounds and what did we find? Most female chief investment officers had an additional five to ten years of work history on their resumes compared to the men. In other words, the men were younger than the women when hired for CIO roles – ten years on average – with less experience.
And forget that hackneyed trope about taking a break for babies. Most served hard time at Morgan Stanley, Montgomery Securities, Goldman Sachs, and other financial firms while raising a family.
The gist is that board members seem more inclined to take a chance on younger men than younger women, which leaves fifty percent of the talent pool out to dry. We who recruit investment talent for industry-leading firms, funds, and families have learned that gender has no bearing on investment performance.
Words worth repeating
For those of us that hunt talent for a living, character, compatibility, and content are key. Character embodies the qualities that define the individual, compatibility – that elusive emotional IQ that Daniel Goldman writes about – builds trust, and content is knowledge and experience accumulated over a lifetime.
Read More »NEWS AND COMMENTARY
ABOUT
Katharine “K.C.” Krieger, new CIO at The Getty
x CIO, The Eli and Edythe Broad Foundation , x Cambridge Associates, BA Colby College
Vincent Tuohey, next president PRINCO
13yrs MITMCo, 2yrs Littlejohn & Co. 4yrs US Army Captain (Iraq), BA & MBA Harvard, MA Cambridge U
Mark L. Baumgartner, new CIO Ray Dalio family office
Scott Chan, succeeds Chris Ailman as CIO of CalSTRS
SKORINA IN THE NEWS
9-2-21 Forbes: Insiders say Yale missed an opportunity to add diversity to its iconic $31bn endowment.
9-1-21 Institutional Investor: How to Reach the Allocator C-Suite.
5-7-21 BloombergNews: Yale Names Alex Banker Interim Endowment Chief, Plans Search
5-6-21 The New York Times: David Swensen, Who Revolutionized Endowment Investing, Dies at 67
5-6-21 Forbes: Yale Endowment Chief David Swensen Leaves Legacy of Top College Investment Leaders
CHARLES A. SKORINA & COMPANY works with leaders of Endowments, Foundations, and Institutional Asset Managers to recruit Board Members, Executives Officers, Chief Investment Officers and Fund Managers.
Mr. Skorina also publishes THE SKORINA LETTER, a widely-read professional publication providing news, research and analysis on institutional asset managers and tax-exempt funds.
Our Practice:
• We recruit Board Members and Executive Officers, Chief Investment Officers and Senior Asset Managers.
• Our research and analytics are backed by over thirty years of hands-on recruiting experience and an unrivaled personal network.
• We collect performance, compensation, and background data on most senior institutional investment professionals in the U.S. and the funds they manage. We analyze that data to construct profiles of those managers and their funds, identify best-in-class people, and map their career trajectories.
• We share our research and insights in a widely-read professional newsletter – THE SKORINA LETTER – and website – www.charlesskorina.com.
• The New York Times, Wall Street Journal, Bloomberg, Thompson Reuters, Financial Times (Fundfire), Institutional Investor, Pensions & Investments, Private Equity International, and the institutional investment community use our research and analysis. Skorina has been interviewed on chief investment officer compensation issues on Bloomberg TV.
• Our work is regularly re-printed in Allaboutalpha.com and other industry magazines, blogs, and third- party web postings.
• We focus specifically and effectively on the world we know: Board members and Executive Officers, Chief Investment Officers, and Senior Asset Managers at institutional investment firms and funds – including sovereign wealth funds, endowments, foundations, pension funds, banks, investment banks, outsourced chief investment officer firms (OCIO), and sell-side money managers.
Prior to founding CASCo, Mr. Skorina worked for JP MorganChase in New York City and Chicago and for Ernst & Young in Washington, D.C.
Mr. Skorina graduated from Culver Academies, attended Michigan State University and The Middlebury Institute of International Studies at Monterey where he graduated with a BA, and earned a MBA in Finance from the University of Chicago. He served in the US Army as a Russian Linguist stationed in Japan.
Charles A. Skorina & Co. is based in Tucson, Arizona.
Anything new under the sun?
“There’s only one way to describe most investors: trend followers.” —Howard Marks
We recently sent out an email query asking asset managers and chief investment officers, “anything new under the sun,” and received some serious replies. One thoughtful, highly respected, mega-fund chief investment officer wrote:
“There are quite a few interesting trends: AI, energy transition, innovations in healthcare are a few positive ones. Commercial RE, small cap, China and Emerging Markets are a few negative ones.
“The slow pace of private capital coming back to investors is another important trend that everyone is contemplating. Everyone is hoping that lower interest rates will restart more M&A and IPO activity.
“However, personally I think the bigger trend is how investors are thinking about asset allocation. I remember the strong emphasis across the industry on diversification. If you could find uncorrelated return streams, the trend was to add them almost blindly. Diversification and low vol was the main point.
“Today (and for some time), diversification has not been your friend. The future is moving to disruption, and you need companies and funds that have size, data, the ability to invest in AI, and cheap financing.
“Disruption is so large in the U.S. that we may not need geographic diversification like we used to.”
Another CIO replied:
“I find the dominance of U.S. public equities, and a teeny-weeny handful of them at that, to be quite troubling.
“One of our IC members is pushing us to divest of non-U.S. equities and it’s difficult to find any recent data to argue against that, yet the idea of having 40% of our endowment in a stock portfolio that’s really just five giant tech stocks is scary to me.
“We’ve reduced our hedge fund exposure, our real asset portfolio was always pretty small, and those big tech companies are amazing economic engines, so I am not sure I would say we are in a bubble.
“But some of the most successful endowments have one-sixth, one-fifth, or even one-quarter of their portfolios with a single VC firm. Maybe we should be worried.”
Pay and Chief Investment Officers
Speaking of chief investment officers, in case you missed it, here are a few highlights from an interesting paper on chief investment officer compensation by Matteo Binfarè, University of Missouri and Robert S. Harris, University of Virginia:
“Endowments pay CIOs more, rely more on bonuses, attract more experienced professionals, and have lower turnover than pensions.
“On average, endowment CIOs earn a whopping $800,000 in total annual compensation, three times more than their peers at pension funds. Incentive compensation makes up a significant portion of their pay, with more than 40% being tied to incentives — almost four times more than pension plan CIOs.
“Endowments that pay their CIOs top quartile compensation significantly outperform endowments with bottom quartile compensation by almost 100 basis points annually.”
All great stuff, but this begs the question, what are chief investment officers actually getting paid for? Size, complexity, performance?
The compensation conundrum
According to Business Insider, “the S&P 500 average return over the past decade has come in at around 10.2%, just under the long-term historic average of 10.7% since the benchmark index was introduced 65 years ago.”
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