It takes character to sit with all that cash and to do nothing —Charlie Munger

Jason Zweig – columnist, The Intelligent Investor, WSJ – wrestled recently with one of life’s enduring puzzles. Why do investors so often fall for the myth of the “dazzling investor” and lure of easy money?

Smart, savvy financiers took heady fliers on the media’s latest shooting star, twenty-four year old wunderkind Leopold Aschenbrenner, for example, and so far it’s been a white-knuckle ride.

Investment talent can come from the strangest places, we know, we’ve recruited some zingers over the years. But unless these oracles have had a few hard knocks along the way, they too often believe that this time really is different.

Sooner or later, however, a pesky bear market or related catastrophe gets in the way.  Or as Viktor Chernomyrdin, a former Russian Prime Minister once put it, “The thing that never happens just happened again.”

Here’s a chart on past market declines and eventual recoveries.

Link: Market Declines: a History of Recoveries, MFS Investment Management

Even Berkshire Hathaway, with a compounded annual gain of 19.9%, nearly double the S&P 500′s 10.4%, “has had 10 negative return years, four years where it has fallen greater than -20% and six years where it underperformed the S&P500 by more than -20%.”

In Charlie Munger’s final interview he was asked an interesting question. If he and Warren Buffett were in their thirties starting over again today, did he think they could match their past investment success over the next sixty years? He answered this way. They were very intelligent, they worked very hard, and they were very lucky. But could they do it again? Probably not.

How many times in anyone’s life is a person given the opportunity to check all three boxes, he mused.  Mr. Buffett, half tongue-in-cheek, once suggested another reason in Berkshire Hathaway’s 2022 Annual Report, “And, yes, it helps to start early and live into your 90s as well.”

The right stuff

As an analyst at Chemical Bank, back during the Mesozoic era, one of my assignments was to follow our Chicago based trading clients. As I soon learned, staying on top of any trader’s book was tough enough. But ascertaining their talent, discipline, and durability was exponentially more challenging.  I pored over track records, history, context – statistics not stories, to rephrase psychologist Daniel Kahneman – and still wondered how the best ones did it.

Mr. Zweig’s colleague at the WSJ, Spencer Jakab points out that it can take years, even decades to judge the good from the lucky. (Paradox of Skill, Brad Steiman, DFA). Aschenbrenner’s sole claim to fame was a 165-page essay titled “Situational Awareness: The Decade Ahead,” a paper he wrote in his early twenties.

Markets and economies eventually recover as do great investors like Warren and Charlie — the ones with patience and discipline.  We’ll see what Mr. Aschenbrenner learns from his debacle. He’s still in business managing an estimated $10 billion in assets.

In the end, Charlie’s right, it does indeed come down to character, along with brains, grit, and a little luck. As our go-to OCIO maven Jon Hirtle remarks time and again, “serious investors care deeply about keeping their promises.”  We couldn’t agree more.

—Charles Skorina

Customers may forget what you said but they’ll never forget how you made them feel. – Maya Angelou

Our summer 2026 Outsourced Chief Investment Officer (OCIO) directory features one-hundred-eight service providers with contact names, numbers, and emails for each.  Our goal is to help families and institutions locate, review, and connect with full-service discretionary outsource investment managers.  No ads, no paywall, no charge.

OCIO AUM reached $5.64 trillion at the end of 2025, an 8.9 percent jump ($463bn) from a year ago.  And, as usual, the big got bigger.  Fifteen firms over one hundred billion manage about seventy-five percent of the assets (mostly pension assets) leaving roughly a trillion four for the pros and pretenders.

(15 largest OCIO providers)

Keeping commitments

The outsourced full-discretion investment business is hyper-competitive, hard to differentiate, and expensive to scale, with hundreds of players including RIAs, banks, brokers, and asset managers all competing for institutional and ultra-high-net-worth discretionary mandates.  It’s hard to cut through the clutter.

Worse still, few OCIOs are able to convincingly explain their competitive edge or why it should matter.  Most firms read the same on paper.  So when it comes down to finals, empathy and likeability usually clinch the deal.

My conclusion after years working with both OCIOs and their clients?  Families and nonprofits really don’t care about a firm’s “passion for investing.” They care about service and security and keeping promises, not swaps and overlays and some proprietary secret sauce.

Investment performance may rule one out, but it’s seldom the reason for a winning selection.

The OCIO story is a compelling proposition for many institutions and high-net-worth families, but it’s an intensely competitive arena.  If you are not taking care of your client, someone else will.

Stepping up, or stepping out

While some OCIOs up their game, others are moving on.  FEG and Hirtle & Co. recently rebranded and reaffirmed their commitments, while Cambridge Associates redoubled its efforts and topped $100 billion full-discretion AUM.  Organic growth, not M&A.

Others like Mill Creek, Verus, RockCreek, and Russell (yet again?) have decamped for better-resourced patrons.  And, just the other day, Fiducient Advisors, part of Wealthspire, now owned by Madison Dearborn Partners, recently announced plans to acquire Sellwood Investment Partners.  M&A every which way.

Without a plan for succession and the resources to compete there’s little choice but to sell or merge.

Speaking of which, we have a client, a regional financial corporation with significant multi-state banking and investment operations, who is seeking to augment their full-discretion, investment management capabilities through acquisitions, mergers, and creative partnerships.  In short, we’re looking for a few like-minded OCIOs.  Call us if you would like to discuss.

Hirtle & Co., fresh paint, time-honored values

While we’re on the subject of client-centric care, take a look at Hirtle & Co.’s recent rebrand, a firm I’ve known for years.  In the firm’s letter to clients managing director Susan McEvoy captures the essence of money and mission:

“What matters more to us is what that capital [client AUM] is multiplying in the world: medical research, education, the arts, and the communities we call home; missions that outlast all of us.”

In founder Jon Hirtle’s words, “I joined Goldman right out of the service (The Marine Corps), with a strong sense of idealism and mission.  On my first day in training, I asked my mentor to describe ‘the noble cause.’  He immediately replied, ‘The client.’” That said it all.

Who’s who

If a firm says they provide OCIO services, and their website suggests they do, we’ll usually list them upon request.

However, each OCIO has its own culture, client mix, investment style, and biases.  Some firms focus on indexing and liquid markets, others on alternatives, still others on ESG.  Some customize portfolios for clients, others don’t.  Big, small, specialists, generalists, there’s no lack of choice.

Our advice?  When shopping for an OCIO, it pays to be thorough.  I recently reviewed investment office performance, operations, and talent with the board of a major university.  After numerous interviews with trustees and chief investment officers at peer institutions, my final report included one particular caveat: an OCIO relationship is a marriage not a fling. Once a family or foundation commits to a partner, the bond is not easily undone.

—Charles Skorina

(download PDF directory only)

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Diversification is protection against ignorance; it makes little sense if you know what you are doing. —Warren Buffett (1996 annual meeting)

How boards and investment offices make all the difference

Janet Lorin, Bloomberg News, reported recently that Washington University in St. Louis (WashU) could see an astonishing 3000 percent return on their endowment’s $50 million dollar investment in SpaceX.

When asked how this came about, Scott Wilson, WashU’s prescient chief investment officer said, “We try to find really great partners and do interesting things. When they find something that is super attractive we try to add capital to those individual ideas.”

[For a more substantive reveal, here’s a recent interview with Mr. Wilson, courtesy of Ted Seides, Capital Allocators]

No free lunch

There has been a perceptible shift the last few years away from broadly diversified asset-class constructs toward more concentrated portfolios.

Jagdeep Singh Bachher, Ph.D. and chief investment officer at the University of California regents, wrote in UC’s 2025 annual report that his staff intends to invest in fewer, higher quality, top-performing assets.

“Experience has shown us the value of lean, high-performance teams working collaboratively to manage a concentrated, high-conviction portfolio.

We’ve greatly reduced the number of external managers we use and the number of line items on our books. That makes it easier to understand what we own, especially in a crisis, and gives us fewer decisions to make.

The result is a small, agile team laser-focused on areas where we can outperform the market.”

Boards matter

Concentration and high conviction are all well and good, but how many university trustees have the fortitude to weather unruly markets? As it is, the double-edged attacks on university budgets from research cuts and endowments taxes have put schools in serious binds.

Richard J. Chang, reporting for FundFire (an FT service), noted recently that large endowments contribute on average about ten percent to university budgets, (source: Christian Tiu, associate professor of finance at the University at Buffalo School of Management).

However, some schools lean on their endowment for much greater support, in Princeton’s case for example, sixty-five percent of the 2026-27 operating budget.

Mr. Wilson’s winning ways

Embracing risk is a hard sell on campus these days.

As a former Wall Street trader, fly-over college CIO, and staunch individualist, how many schools would have hired Mr. Wilson as chief investment officer do you suppose? When, by our latest count, nearly two-thirds of university CIOs come from peer group endowments.

Fortunately, the WashU trustees spotted a winner and signed him up. And thanks to Mr. Wilson and his investment team, the endowment has moved from fourth to top quartile and even top decile since Scott joined in late Q4 2017.

In our latest endowment performance report, WashU ranked seventh out of one-hundred twenty-two schools over one billion AUM for the ten-year period ending June 30, 2025, doubling in size on Mr. Wilson’s watch from roughly seven billion to over fifteen billion dollars while maintaining a yearly distribution of four to five percent.

The rest of the story . . . (Paul Harvey 1918 – 2009, ABC News Radio)

How WashU built a winning team.

The Washington University in St. Louis endowment had been underperforming its peer group for years and by 2016 the trustees had had enough.

So, the President and board forged a commitment to pursue whatever measures necessary to build a preeminent investment organization – keenly aware that better returns add millions, even billions, to school coffers over time.

In 2016, while he was still CIO of Makena (OCIO), the WashU board asked Eric Upin, an alumnus, university trustee, board chair of the investment management company (and former Stanford CIO) to serve as Interim CIO and Chair of the Search Committee – with emphasis on restructuring portfolio strategy, the investment team, board governance, compensation, and retention.

As a Trustee with full-on university support, Mr. Upin wielded a forceful writ.

The IMC board began their transformation with unvarnished self-reflection and concluded that tentative, short-term thinking was part of their problem. This, in turn, had led to conflicted guidance and mixed signaling to the investment staff.

The board asked:

• What is our primary goal?
• How should we measure success?
• Define the roles of the board and team?

During the year and a half period before hiring Scott Wilson, the board studied the qualities and characteristics of top-performing endowments and portfolios, as well as those that consistently underperformed or fell out of the elite class.

In total, the board spent five years working on governance, compensation, and liquidity management.

Lessons learned

There can be few fields of human endeavor in which history counts for so little as in the world of finance. —John Kenneth Galbraith

I recently reviewed endowment performance and investment talent with the board of a major university.  Subjects under discussion included effective board structure, endowment office best-practices, and adaptive leadership for changing times.  My assignment is to research and report on investment office successes and failures, all-weather overachievers, and pathways to preeminence.

I’m not alone.  A growing number of boards and investment heads suspect the good times and bull market mania might not last and are taking precautions, de-risking and re-thinking conventional portfolio management. Heather Gillers caught the vibe in her recent Wall Street Journal article, “The Ivies Are Having Second Thoughts About Investing in Private Equity.”

We’ve heard rumblings for ages.  Howard Marks sounded the alarm three years ago in his memo Sea Change, when he cautioned that the rapid rates reversal and the end of free money would have profound implications for institutional investors:

It seems to me that a significant portion of all the money investors made over [the last forty years] resulted from the tailwind generated by the massive drop in interest rates.

All-weather winners

Managing money is one of America’s key competitive advantages and we recruit the managers who manage the money.  What hurts institutional investors and family offices hurts us.  If there’s stormy weather ahead, we scout for all-weather chiefs.

Who are the likely winners?  Our client would like to know.  An iconic venture capitalist once told me he put his money on tenacious, dogged optimists, the ones that assiduously work a problem and never give up.

During last week’s board review, as we discussed high-performance offices and indefatigable overachievers, I recalled an article on genius, and several qualities in particular:

Their openness to new ideas and their breadth of interests infuse them with seemingly irrelevant stimulation that can enrich blind variations.

Hey! I know these folks.

Searching through the haystack

We begin every assignment by looking at the data.  Hence our yearly performance reports.  Who’s on top and who’s not?  Returns may be historical, but they are useful clues to the views, process, and discipline of investors and boards and how well they work together.

Chart one*: Endowment payout levels versus performance

*My thanks to an astute west-coast CIO

As the chart implies, if we assume a four to five percent distribution for university operations, add a few points to pace inflation, and another percent or two for contingencies and growth, the investment office needs to generate an average return of at least 8.15%.  Who’s done that?

Our first league table at the end of this note ranks chief investment officers by ten-year returns – data from our January newsletter.  Sixty-seven of one hundred schools over one-billion AUM made that first cut, earning eight percent or more for the period. About two-thirds.  However, when we raised the bar to nine percent, a more realistic hurdle given all the unknowns, just thirty-two schools remain, one-third the total.

How about career experience and years of service we wondered?  How does that factor in?

Turning to the second league table at bottom, with start dates and years in the role, we re-sorted by tenure to spot the correlations between experience and performance.

In the group that generated nine percent or more, the count includes eleven CIOs out of thirty, 37 percent with ten years or more tenure, fifteen CIOs out of forty-three, 35 percent with tenure between five and ten years, and six of twenty-seven CIOs, 22 percent with four years or less.

Experience is important, and a helpful indicator.  But there’s more than that to a winning record.

That one in a million

What distinguishes top investment officers?  Recruiting talent is both science – can we identify skill and persistence in a candidate’s background? And art – intuition and experience.  Is this candidate someone that catches our eye?  Piques our curiosity?  Are their backgrounds different, interesting, exciting?  And how about that second-level thinking Howard Marks refers to?

Here is one example, Ms. Jane Dietze, Brown University’s chief investment officer and perennial chart-topper. Nothing run-of-the-mill about her story.

(Nor Ms. Paula Volent, who frequently held the top spot during her two-decade sway at Bowdoin College, or the many talented women looking for a chance to move up.)

Jane Dietze – Like Mother like Daughter

If you want to know what’s driving Ms. Dietze, you don’t have to look far.

The trend is your friend… until it isn’t. —Anonymous

Our latest endowment performance report features ten-year and one-year returns, along with AUM, for one-hundred-forty-six US and nine Canadian institutions, the latest available.

In our line of work, recruiting talent and creating opportunities for institutional and family office clients, we like hard data on the individuals who manage institutional and family money.  Returns may be historical, but they are useful clues to an investor’s views, process, and discipline.

Bulls and brains

For the fiscal year ending June 30, 2025, institutional investors with public equity tilts lived their best lives ever. Chris Hohn et al at TCI, a value orientated, fundamental investor, earned an estimated $18.9 billion in 2025 according to the Wall Street Journal. CNN’s year-end headline said it all. “US stocks just posted a third straight year of stellar gains.”

(Exhibit 1, Index returns.)

*https://www.spglobal.com/spdji/en/commentary/article/us-equities-market-attributes-june-2025/

But it’s never really that simple, is it?  Institutional investors operate in an uncertain world and despite the last few years of bull market bliss, the tide inevitably recedes. 

As one OCIO industry stalwart writes, the challenge for endowment and foundation investment officers is, “How can we capture real endowment returns that exceed what is required while actively managing downside risk?” 

(Exhibit 2, S&P returns since 1950)

No such thing

When it comes to money, there’s no such thing as passive management.  Robert Seawright in We are all active managers contends that “most descriptions of passive investing assume a cap-weighting strategy, but that is necessarily an active choice. Most ETFs use rules-based, non-discretionary approaches, but the rules are all determined by active choice. Moreover, the active/passive performance divide is more about fees than ideology, and fees are chosen.”

Most stakeholders – pensioners, students, faculty, foundation beneficiaries, charity recipients, board members – focus more on today’s headlines and the next budget or grant cycle than what might happen fifty years down the road.

Top institutional investors take a longer view. They temper their emotions, place well researched bets, and hold fast come rain or shine.

Serious matters

Phil Zecher at Michigan State University, for example, our featured chief investment officer in last year’s endowment report, took the helm ten years ago.  At that time the endowment ranked forty-two, flat in the middle.  Last year MSU’s endowment ranked eighth in our league tables.  This year MSU sits at number four.  Big moves worth millions.  Who says CIOs don’t matter?

Final thoughts

Chief investment officers, investment staffs (and OCIOs) earn serious money for their schools and cost a relative pittance to maintain.  Many college athletic programs, on the other hand, are staggeringly expensive as Matt Hayes recounts in USA Today, and their intrinsic contribution to academic health is debatable.

And yet, when coaches meet with college boards the rooms come alive. Excitement builds, time is forgotten, and everyone wants a selfie with these masters of the arena.

But, alas, when CIOs take their turn it’s back to dreary business.  Eyelids grow heavy, attention wanders.  Like that Philips’ bulb commercial, The Magic’s Gone.  Human nature I suppose, but still, endowments pay the bills and keep the lights on.

The U.S. has the greatest university system in the world, a true competitive advantage, thanks to generous donors and visionary leaders, and our endowments are a major source of financial support.  Chief investment officers, their staffs and outside managers play a vital role in this success.  Let’s show them some love. How about a selfie?

Endowment Performance 2025

We have grouped our endowment performance data into four sections:

122 US endowments over $1bn

23 US endowments, $500mm to $1bn

3 US endowments, non-June 30 FYs

9 Canadian endowments (CAD about $0.70 US)

OCIO firms manage twelve endowments over $1 billion and seven between $500 million and $1 billion among our cohort. They are highlighted in green.

A few public market indexes are included for context.

(Exhibit 3,Various Benchmark Indexes)

Updates and edits

Try as we might, there are bound to be errors. Please let us know. We will make the changes and send out an update in a few weeks. 

To all those who helped us, thank you. We greatly appreciate it.

—Charles Skorina

(download newsletter as PDF) (download tables as PDF)