In this issue Compensation and the Top 100+ Chief Investment Officers Fiddles and finance: Navigating an inefficient market OCIOs and the costs of outsourcing Charts (6): pay, performance, OCIOs ————————————————– Paying the Top Guns of Institutional Investing Last month in Part One of this report we focused on relative performance. We ranked 107 CIOs by trailing 5-year returns. See: https://www.charlesskorina.com/?p=4828 Now, we focus on how much institutions pay these excellent people. The bare comp numbers lead us to the tricky and perennial question of whether their pay is properly aligned to their performance (or vice-versa), and we offer some analysis and opinion from the point of view of working headhunters. We also consider the cost of an OCIO firm relative to an in-house CIO-led investment office. Now, on to the charts! COMPENSATION: TOP 100+ CHIEF INVESTMENT OFFICERS R a n k AUM FY16 ($bn) 5-yr Rtn FY16 (%) Chief Investment Officer or (OCIO firm) Institution Total Pay CY 2014 or other – – – – – – 1 $34.5 5.9 (Mendillo, Jane) Narvekar, Narv Harvard U $13,757,369 Pay for 18 months 2 $25.4 10.4 Swensen, David Yale U $4,888,288 3 $1.6 6.3 Investure (OCIO) Smith College $4,121,170 4 $1.5 6.1 Makena (OCIO) Washington & Lee U $4,117,307 5 $1.0 7.0 Investure (OCIO) Middlebury College $4,078,000 6 $8.4 8.4 Malpass, Scott C. U of Notre Dame $3,906,277 7 $9.0 7.4 (Narvekar, Narv) Holland, Peter Columbia U $3,765,705 8 $1.1 5.9 PWP/Agility (OCIO) U of Colorado Fdn $3,503,221 9 $9.6 6.5 McLean, William H. Northwestern U $2,957,882 10 $1.4 6.3 Cambridge Assoc (OCIO) U of Arkansas Fdn $2,846,082 11 $1.2 6.2 Mercer (OCIO) Syracuse U $2,768,573 12 $9.0 7.0 Triplett, Neal F. Duke U $2,679,889 13 $26.4 6.2 (Zimmerman, Bruce) Harris, Britt U Texas/Texas A&M $2,485,650 14 $22.2 9.4 Golden, Andrew Princeton U…
Top endowment chief investment officers: five year performance
In this issue Part I: Top 100+ Chief Investment Officers Part II: Allocations, Skill, and Destiny Part III: Outsourced CIOs hold their own Charts (9): Performance, Portfolios, Rankings & Return ————————————————- This letter looks at the most recent five-year performance of over one hundred of the world’s best university endowment chief investment officers. We rank their returns, review their performance, and reveal their strategies for the decade ahead. Endowment chief investment officers (and other non-profit CIOs) have an infinite investment horizon, a global playing field, and can invest in anything anywhere – within the broad policy limits set by their institution. They are the top guns of the institutional investment world. We recruit these investment heads for endowments, foundations, family offices and institutional investment firms. And, we (and many others) regard the CIOs at major American universities and foundations as the best of the best. A CIO candidate may have a sterling character, a stunning intellect, and a winning smile. Those things do count. But will he or she make money for our clients? Recruiting a high-profile investment executive is a complex process, but it starts with objective measurements. We compile the information presented in this report for internal use to help us as recruiters, and we think it will be useful to boards, trustees, CEOs and all our readers. Chief investment officers “make things happen.” Security selection, manager selection, timing, and fees play an important role in investment performance- allocations don’t explain everything! We also uncover the emergence of a new consensus around a 60/40 – alternatives/public markets – portfolio, even as we report on the embarrassing success of the old 60/40 stocks/bonds This is our SEER report: Skorina’s Enhanced Endowment Report. The enhancements are the names and returns of individual CIOs (or OCIOs), data which are not readily available elsewhere. If…
Foundation Chief Investment Officers and the American dream
Our letter this month focuses on the venerable foundations of New York City and one of their most accomplished investment pros: Kim Y. Lew, chief investment officer of the Carnegie Corporation. We have an in-depth conversation with Ms. Lew on her career in foundation investing and the future of women and minorities in her field. We also look at pay and performance in the NYC foundations, with some illuminating charts for our quant readers. Our friends at the Foundation Center tell us there are 243 American foundations with over $1 billion in assets and New York City harbors 31 of them, including some of the biggest and most storied. The money wasn’t all made there, but it tended to flow toward Manhattan because that’s where the money-managers were. According to David Swensen, “a deep appreciation of history” is essential to an investment professional. Not just knowledge, mind you; but appreciation. History may have temporarily put that money in their care, but markets and circumstance are always threatening to take it back. Goethe’s Faust got it right when he declaimed: “That which thy fathers have bequeathed to thee, earn and become the possessor of it!” Mr. Carnegie and Ms. Lew: When Andrew Carnegie endowed the corporation with $125 million in 1911 — perhaps $3 billion in 2017 dollars — he founded the largest charitable entity of its day. Along with the creation of the Rockefeller Foundation in 1913, this marked the beginning of the modern era of foundation philanthropy. The Carnegie Corporation, headed by the eminent Vartan Gregorian, marked its centenary in 2011, the year Kim Lew became co-CIO, and it is still among the twenty-five largest foundations in the U.S. Despite continuing to give away at least $150 million every year (5% of net investment assets), the Corporation’s endowment is larger…
Harvard throws in the towel, UTIMCO reboots
In this Issue Harvard throws in the towel Texas turmoil: UTIMCO reboots A talk with UTIMCO’s Bruce Zimmerman Top 25 Endowments: latest returns for FY2016 Compensation at UTIMCO What’s ahead for endowment returns? Purgatory or Hell ————————————————– Harvard throws in the towel In our piece on Harvard last July titled “The Harvard Endowment: Time for some Creative Destruction?” we wrote the following… It’s been ten years now since Jack Meyer stepped down as head of the Harvard Management Company, while David Swensen – now in his 31st year – has carried on at the Yale Investment Office. Each endowment has pursued its own distinctive management model: HMC with its “hybrid” internal/external approach, versus YIO’s exclusive reliance on cherry-picked external managers. We can now call the winner: It’s Yale. See: “The Harvard Endowment: Time for some Creative Destruction” It’s here: https://www.charlesskorina.com/?p=3631 Well, the creative destruction has arrived in the person of Narv Narvekar. On January 25th, reporters Dawn Lim and Juliet Chung broke the big news in the Wall Street Journal that Harvard will adopt a new model of endowment management. Maybe we should call it the “Columbia model” rather than the Yale Model, but it amounts to the same thing. In brief, Harvard Management Company will cut its staff by 50 percent, outsource internally-managed assets, and hire a CIO which, technically, HMC has never had. The new CIO will be Richard Slocum, an old colleague of Mr. Narvekar’s from JPMorgan. With a separate CEO and CIO, and a much smaller staff, HMC will look a lot like Columbia under Mr. Narvekar. We all knew changes were coming, but we didn’t foresee such rapid and dramatic restructuring. Obviously this happened with the full support of Chairman Paul Finnegan and the HMC board and was probably in the works since Mr. Narvekar was offered the…
Ranji Nagaswami new CEO at Hirtle Callaghan
Ranji Nagaswami new CEO at OCIO provider Hirtle Callaghan Ms. Ranji Nagaswami joins Hirtle Callaghan as CEO. Ex advisor to Mayor Michael R. Bloomberg, CIO AllianceBernstein, Co-head fixed income UBS, MBA Yale, BS Bombay University