A TOTAL ENTERPRISE APPROACH TO ENDOWMENT MANAGEMENT

By Mark A. Schmid, VP & CIO and Que Nguyen, MD of Strategy – The University of Chicago

Introduction

The crisis of 2008 and the ensuing losses in risky portfolios, including endowment portfolios, continue to affect the financials of universities, despite the rebound in asset prices over the past two years. Although the smoothing inherent in most payout formulas dampened the immediate impact of investment losses, it also spread out the pain over a longer time period. Endowments have always been and continue to be institutions with a long term outlook for investments, but universities do have immediate financial obligations in their day to day operations.