Archive for the ‘NEWS AND COMMENTARY’ Category

04 / 28 / 2017
by Charles Skorina | Comments are closed

Our March letter 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 today – in constant dollars – than it was in 1911.  This is due in part to the forbearance of America's taxpayers via the Internal Revenue Code, but also in large part to the skill of Ms. Lew, her colleagues, and their predecessors in maintaining impressive investment returns over the generations.



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OCIO update: more firms, another $24 billion

09 / 29 / 2016
by Charles Skorina | Comments are closed

Our latest OCIO list (Outsourced Chief Investment Officer) just expanded by three firms since our September sendout, with UBS and PNC Bank rejoining the ranks and Highland Associates in Birmingham, Alabama reaching out for inclusion.

With 74 firms on the list as of November, 2016, total outsourced CIO assets (managed with full discretion) now total $1.367 trillion, increasing by $240 billion since we published our last list in 2014.

(Our full OCIO list of firms for 2016 is presented at the end of this newsletter.)

Our friends at Chief Investment Officer Magazine think that OCIO assets grew 17 percent year-over-year from 2014 to 2015, and almost 10-fold (860 percent) over the eight years 2007-2015.  That eight-year growth ($91 billion to $873 billion) implies an annual growth rate (CAGR) of about 30 percent, but with growth beginning to slow down in 2014.

See: http://www.ai-cio.com/2016-Outsourced-Chief-Investment-Officer-Buyers-Guide/

(Pedant alert: 860 percent growth over eight discrete periods gives us 33 percent annualized.  Continuous compounding gives us about 28 percent.  The underlying data is too soft for over-precision, so we split the difference.)

Our own independent surveys for 2014 and 2016 imply that recent year-over-year growth is now only about 9 percent.  So we agree with Chief Investment Officer Magazine that OCIO growth seems to be decelerating.

Nine percent annualized is still pretty brisk, but it’s not that much higher than the expected growth of managed global assets overall.  It suggests that the OCIO niche may be maturing, with a lot of the low-hanging fruit having been plucked.

My unscientific survey of OCIO managers suggests they're a little more conservative in their own estimates.  They typically tell me they're looking for 5 percent growth, but of course each firm has its own view.

They tell me that the number of RFPs is definitely up, but that potential clients aren't always sure whether they want a fully-outsourced solution, a consulting/management hybrid, or a traditional straight-consulting arrangement.

The number of firms in this niche, however, seems to have plateaued and even fallen off a little in recent years.

Our list has grown from forty-five outsourcers six years ago in 2012 to seventy-nine in 2014 to seventy-one today.

Some have chosen to leave the business for one reason or another.  Those include: Fortress, Fiduciary Research & Consulting, Salient Partners, and UBS. A few others either failed to respond to repeated requests or asked not to be listed.

And, at least three firms - Pacific Global Advisors, Marco Consulting, and Jeffrey Slocum & Associates - have been gobbled up by bigger firms: Goldman Sachs, Segal Rogerscasey, and Pavilion Financial respectively.  So their AUM lives on under another label.

As headhunters, we're not surprised to see that steady growth in outsourced AUM leads to a steady flow of management talent into the OCIO firms.

From the point of view of potential clients, the number of firms competing hard for their business is a good thing.  Not only are the vendors competitive on price, they are building their bench with top talent.



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A Total Enterprise Approach to Endowment Management

08 / 02 / 2016
by Charles Skorina | Comments are closed


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Cambridge Elevates Recently Appointed President to CEO

05 / 14 / 2016
by Charles Skorina | Comments are closed


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We Love Our Ranch, but It’s Time to Say Adios

04 / 28 / 2015
by Charles Skorina | Comments are closed

Thirteen years ago my wife and I bought an 80-acre ranch in Carmelo, Uruguay in South America.  

It's out in the country, but only about 60 miles north of the great city of Buenos Aries in neighboring Argentina.

The old stone farmhouse was quaint and traditional (i.e., a little run-down) but we fell in love with it.

Then we replaced the front door.  And then...well, by the time we had finished with construction six years later, we had ourselves a hacienda in the Spanish Mediterranean/Santa Barbara style, with a main house, guest house suites, caretaker's house, and assorted other structures.  We added a few horses, cows, chickens, dogs, cats and presto, our retirement ranch was complete.

It's a great getaway because it's summer down there when it's winter in North America.  The mild climate, safety and stability, and the friendly people all led us to buy in little Uruguay instead of one of its giant but turbulent neighbors: Brazil to the north, or Argentina to the south and west.

Uruguay is the safest country in South America.  Property rights are secure for both citizens and foreigners; and the weather is pretty much the same as southern California, except that the rains are regular and there is plenty of water.

It's a beautiful, peaceful place to relax when you really need to get away from it all, but it's a long commute from California.

My search work, which I love, does not leave us as much time as we would like for the long trip down and back.  It's a much easier trip for someone living on the east coast to connect to Montevideo or Buenos Aries from New York or Miami.

So, we've reluctantly decided it's time to sell.

The links below will take you to a lot of photographs of the house, grounds, and surrounding area which will give you a much better idea of what it's like.

Please feel free to contact me directly if you have questions, or you can call our broker, Patrick Archer.

See: https://www.facebook.com/EstanciaTierraSanta

See: http://estanciatierrasanta.com/

Patrick Archer: patrick@investba.com

USA:  1.800.251.2720  URY:  598.98.822.048  Skype: patrickarcher



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