Bloomberg: Help Wanted on Campus
By Gillian Wee – Aug 18, 2010
Bloomberg Markets Magazine
Top U.S. universities are looking for a new breed of investment manager who can be nimble in tough times.
After U.S. endowment funds lost an average of 19 percent in the year ended in June 2009, universities began reviewing how they manage their money. Many of them cut jobs, delayed construction projects and sold bonds to make ends meet. And more than half a dozen top colleges–including Ivy League members Cornell University in Ithaca, New York, and Dartmouth College in Hanover, New Hampshire–are looking for new chief investment officers.
“Turnover is higher,” says Charles Skorina, a headhunter of 30 years who runs Charles A. Skorina & Co. in San Francisco and advises endowments on staffing. “Endowments are in a bind because it’s almost impossible to pay a competitive salary given the politics and budget cutbacks of the schools.”
CIOs on average earn $500,000 to $600,000 a year compared with the $700,000 to $3 million a Wall Street portfolio manager would make, Skorina says. Endowments and trustees are weighing candidates with MBAs or finance Ph.D.s and with experience investing in volatile markets at foundations, pension funds or other endowments.
“They’re looking for CIOs who can move quickly to take advantage of opportunities–who aren’t afraid to voice their opinions,” Skorina says. “In years past, it was much more collegial. The boards and the CIOs had plenty of time to agree.” Dealing with a school’s trustees adds complexity to the investment officer’s job. “He has to go to board members who are scared or aren’t professional investors and say, ‘I need to do this fast,’” Skorina says.
Outside management firms such as Goldman Sachs Group Inc., Pacific Investment Management Co., Perella Weinberg Partners LP and TIAA-CREF have added or expanded asset management services for endowments in the past year. U.S. institutions will outsource more than a half trillion dollars in investments by the end of 2012, more than double the $195 billion as of the most recent data at the end of 2008, according to estimates by Darien, Connecticut-based consulting firm Casey, Quirk & Associates LLC.
The chief investment officer needs to monitor the investments closely, especially because exposure to fraud has grown as markets have become more volatile, says Chris Bittman, who was CIO at the University of Colorado from 2004 to 2009 before joining Perella Weinberg’s endowment fund management group. Colorado was one of the first to hire private investigators to check out potential investments. “Now, it has become a minimum expectation,” Bittman says. “In a post-Madoff world, the bar is higher and you can presume nothing.”
Gillian Wee covers endowments at Bloomberg News in New York. gwee3@bloomberg.net
