Archive for the ‘Newsletter’ Category

From Russia, with math! Anastasia Titarchuk takes over New York State’s CRF fund

09 / 17 / 2019
by Charles Skorina | Comments are closed


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The mysterious shortfall in women chief investment officers

05 / 06 / 2019
by Charles Skorina | Comments are closed

In our last newsletter we looked at the number of women CIOs at big endowments*.  Among 109 North American endowments over $1 billion we identified 20 (including one female director of investments and one CFO who liaises with their OCIO providers).

That’s just eighteen percent – less than one out of five.

For this issue we also took a look at the mid-sized schools (in the $500 million-to $1 billion bracket), to see if the situation is any better.

Unfortunately, that’s a no.  We found 10 females among 85 schools.  That’s just 12 percent – a significantly lower representation that among the bigger schools.

We've inserted a chart below with the CIOs ranked by AUM.

Twelve percent in this group is not quite as bad as it sounds.  That’s because mid-size endowments are less likely to have dedicated in-house investment staff – either men or women.

Many prefer to outsource, or to use a committee-and-consultant model without an internal investment office.

But it’s still not a great number.

Although we haven’t done an exact count, we should note that females are well represented among professional slots at the major OCIO firms and consultants.  These are good jobs, and often a gateway to CIO jobs (although they usually don’t pay as well).

This may somewhat mitigate the overall situation for women jobseekers.

Charting the trend

That’s the static picture, but the trend is even more important.

Is that gap worsening, or about the same over recent years?

Unfortunately, it seems to be widening.

Looking at recent turnover, 9 departing female CIOs have been replaced by men; while only 3 were replaced by other women.

Just one departing male was succeeded by a female.

These turnovers are detailed in the next chart.



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Ranking top colleges by 5-year returns

04 / 17 / 2019
by Charles Skorina | Comments are closed

In February we published an abbreviated list of five-year endowment performance for fiscal year end June 30, 2018 for 61 schools to compliment the release of the annual NACUBO TIAA study.  Today, we introduce our big list with one hundred large endowments.

Every CIO on our list is experienced, dedicated, and adept at running a diversified portfolio.  But MIT produced a five-year return of 12 percent while the University of Chicago posted 6.87.  Why the divergence?

Different institutions, different goals

Every school has its own endowment payout rate and tolerance for risk.  Some schools rely heavily on the income, others place more weight on growing the principal.

It takes years to fully implement a multi-asset, multi-generational investment strategy and altering course mid-stream – a new investment chair? a change in CIOs? – can sap performance for a decade.

The challenge for the board and chief investment officer is to maintain course when market fluctuations shake conviction and crowd psychology rattles trustees.

Most high-performance institutions on our list have stable boards and long serving chief investment officers.  See: A College Investor Who Beats the Ivys.

Happy boards, happy staffs

The personalities, preferences, and experiences of board members interact in a variety of ways, usually good, sometimes bad, and occasionally incoherently.  The trick is to figure out how to work together, achieve a consensus on investment policy, and let the staff handle the investing.

#1: No surprises

Serving on a nonprofit board has many upsides; personal satisfaction, peer recognition, and an opportunity to make a difference.  But when things go wrong, the reputational risk is brutal.

No board member at Michigan State or Southern Cal could have foreseen the scandals that erupted on their watch.  And we wrote at length about past challenges at the Harvard endowment.  It takes a long time to dig out from under poor management as the current board and CEO/CIO can attest.

The job of the investment staff is not to beat Yale, it’s to meet the objectives set by the board.  



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Latest 5-year Endowment Performance

02 / 07 / 2019
by Charles Skorina | Comments are closed

Five-year endowment performance:

Behind the NACUBO numbers

This February has been a rough one for weather in much of the USA, but two events this month should bring a little sunshine our way.

First, NACUBO rolled out their annual endowment study: the semi-official league tables for endowment investors.  Then, next week, NACUBO and TIAA will host their conference in New York where presenters and attendees will ponder the numbers.

In between, we have Nancy Szigethy's always engaging NMS Investment Forum in Scottsdale, Arizona.  It's at the Hyatt Regency Gainey Ranch, February 9-12, 2019 - an event which draws top endowment and foundation leaders for camaraderie and Arizona sunshine.

Scottsdale is only a quick drive up the I-10 from our new home in Tucson.  So, if you're planning to attend NMS, shoot me an email at skorina@charlesskorina.com and say hello.  You never know which Hyatt lounge I might find myself in this weekend.

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Endowment performance: a few observations

Our SEER report (Skorina's Enhanced Endowment Report) is enhanced because we disclose performance of individual endowments, which NACUBO is not permitted to do.

This update offers 5-year investment returns for 61 endowments for FY2018.  We consider the 5-year return the most meaningful for comparing the performance of endowments and their chief investment officers.

We'll publish our complete list of CIOs and more detailed commentary when all the returns are in and computed by our clever but overworked staff.

We recruit chief investment officers for a living, so we avidly follow all the US universities and colleges with AUM over $1 billion (and many with less) - and we advise board members, families, and management on investment performance and executive compensation.

Where are the women?

Considering the number of highly-qualified female investment professionals we encounter every day, they are still a distinct minority in the top jobs.  Something is obviously not working in the hiring and promotion process.

Our SEER list below includes 15 women among the 58 individual (non-OCIO) chief investment officers.

That's 26 percent, which doesn't sound too bad.  But the picture is much worse in the larger universe of big-endowment CIOs.  There, the percentage is only about 15 percent, and that's down over recent years.

But we can at least highlight those 15 in their own list, which we've added down below.



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Five-year endowment performance: no bed of roses

12 / 19 / 2018
by Charles Skorina | Comments are closed

Five-year endowment performance: no bed of roses

Chief investment officers at endowments, foundations, and family offices are the top guns of the institutional investment world.  They have an infinite investment horizon, a global playing field, and can invest in anything anywhere - within the broad policy limits set by their institution.

We, and many others, regard the CIOs at major American universities and foundations as the best of the best.

We lean heavily on university endowments for our performance studies and benchmarks because that's where the data is.

Foundations, family offices, and Wall Street firms employ top investment professionals, but it's difficult to extract meaningful data from opaque sources.  So, we go with what we can get.

A five-year return: the Goldilocks number

Institutions go on forever, but chief investment officers unfortunately don't.

Five-year returns give us a good -- albeit imperfect - picture of how CIOs are doing their jobs.  A longer timeframe would blur the responsibility for results as CIOs come and go.

In our chart below, the median tenure of CIOs happens to be exactly 5 years.  (The mean is higher, tipped by a handful of very senior CIOs.)

In our SEER reports (aka: Skorina's Enhanced Endowment Reports) we use the five-year rankings for our own headhunting purposes, and we let you look over our shoulders.

Boards and investment committees set broad policies.  Executing those policies in the day-to-day scrum of the markets -- especially in the hiring, firing and monitoring of external managers -- is the province of the CIO and his/her staff.  As recruiters, we try to understand who's doing it well, or not so well.

Risk versus return – it’s personal

We know that nominal returns don't reflect the different risk-appetites of different investors; and ranking doesn't tell the whole story.

There may be good reasons why one institution prefers a more, or less, conservative risk-return trade-off versus its peers.  We'll say more on that point down below.  But five-year nominal return is our starting point.

Our dataset consists of 34 big, over $1 billion AUM, North American endowments reporting as of early December.

That's only about a third of the whole big-endowment roster.  It leaves about 50 who have yet to be heard from, and another dozen or so who disdain to report their returns at all, even when we ask politely.

But our gang of 34 is big enough to show us how the whole league has performed, and it includes many of the brand-name schools and all the traditional Ivys.



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