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Looking at recent turnover, 9 departing female CIOs have been replaced by men; while only 3 were replaced by other women.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

11 / 21 / 2018
by Charles Skorina | Comments are closed

Honey, We're Rich!

Say what, dear reader?  You have just been blessed with a humongous liquidity event?

After decades of work and a bit of luck you "suddenly" have millions, perhaps even tens or hundreds of millions of dollars in investible wealth after selling your business or going public.

You are now officially rich, and it feels great.

But wait.  What's that?  Obscure family members you never knew existed are beseeching you for "loans"; allegedly good causes from Missoula to Mozambique are demanding donations; sketchy financial "advisors" are bombing your email and phones with "once-in-a-lifetime opportunities."

First things first

We've recruited family office investment heads and advised on selecting wealth-management firms.  But it works both ways.  We listen very carefully to our clients and learn a lot from them.

Here is some advice from clients who have been through it.

1. The very first thing.  Hire a tough, experienced lawyer who is used to dealing with wealth managers, brokers, and solicitors.  (Not just the firm who helped you with routine legal chores on the way up.)  It will be money well spent and you won't regret it.  You will need a real pro to run interference for you against the sharks.

2. The very next thing.  Hire a reliable and reputable accountant who understands the complexities of wealth-management.  You will need financial controls and a voice of caution.  Dollars can slip away fast without an experienced check on your newly-rich exuberance.

3. Take your time.  No sudden moves.  Think about how to organize your affairs, your objectives, impact on family-members and upcoming generations.

4. Establish a realistic spending rate.  And stick to it.  One rashly-purchased yacht, jet, or hobby-ranch can punch a surprisingly big hole in your seemingly-unsinkable new fortune.

Fortune and fate

Entrepreneurs and business titans mostly made their money from shooting the lights out on a single venture.  Dell, Brin, Gates, Zell, Zuckerberg, went "all in" and won big.  Their recipe?  Highly-concentrated investments, risk-taking, innovation, and sheer audacity.

But here’s the rub.  Wealth is created by entrepreneurs, but maintained by diversification, sophisticated risk-management, and prudence.

And that's the dilemma.  People good at wealth-creation have had little time or experience with wealth-maintenance, where capital preservation is paramount, and diversification is the key.  It's a different mind-set and a different set of skills.

Family wealth management: build or buy?



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Compensation and chief investment officers

11 / 04 / 2018
by Charles Skorina | Comments are closed

Who are the best-paid endowment CIOs?

Compensation is a delicate issue; but recruiters need to keep track of it.  And, we see no reason why we shouldn't share some of that bounty with our readers.   (See our complete compensation chart just below.)

Most of it is publicly available, anyway; as long as you're willing to scrounge for it.  Private schools and some publics disclose it in IRS filings.  The hitch is the long time-lag -- more than two years -- before the data is publicly available.  The corresponding data for most public schools is often fresher, but it's scattered among various and often quirky databases in various jurisdictions with various disclosure rules.

It's ironic that data for public colleges has sometimes been the least public.  But that's changed somewhat in recent years as more states adopt sunshine laws for public-employee pay generally.  Or, you can file a FOIA request.  But it's been like pulling teeth in many places.

And, even when public-school CIO comp is published, it can't always be trusted.  Clever college administrators have sometimes found (or constructed) loopholes in those sunshine laws which let them conceal part of the CIO pay-package.

A recent and noisy case in point arose in Michigan.  The official University of Michigan salary-disclosure listing (page 447) for 2017 showed CIO Erik Lundberg's total comp as $720,000.

We've been skeptical of that number for a while, but the U was eventually prodded into disclosing that Mr. Lundberg actually made $2 million in 2017.

Although the gross number had become public, the Detroit Free Press still sued the University to obtain details about how it was calculated.  

The judge sided with the Freep, but the university argued that they had legitimate reasons for keeping them private.

"Despite the court's ruling, we believe disclosure of the ... Incentive Plan will put U-M at a competitive disadvantage," a school spokesman said.  "Because there are very few public universities in our endowment peer group, virtually no comparison [sic] schools will ever have to make their plans public.  These are the employers against which the university competes for talent recruitment and retention."

The fact that a major university would go to some trouble to avoid disclosing that information does speak to the highly competitive market for top CIOs.  If you have a good one (and Mr. Lundberg is very good), there's always anxiety that someone with deeper pockets will whisk him or her away.   And, if you're crafting a competitive offer, it certainly helps to know exactly what you have to beat.

As the Lundberg case confirmed, these pay packages are complex.  In our chart below, we can only offer the bare numbers.



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