University endowments are trading the solitude of their leafy campuses for the hubbub of Wall Street.
Mount Holyoke, a liberal arts college set among the trees of Pioneer Valley in Massachusetts, is the latest school to announce plans to relocate its endowment to a financial center. It joins Cornell, Michigan State, Hamilton and several other schools that have moved to the New York area and Boston in recent years.
Mount Holyoke plans to follow a familiar playbook: create a new chief investment officer job and place the executive close to prominent managers for better access to their funds. The college, with an endowment of $780 million, plans to hire a CIO in the coming months and shift the office to New York or Boston.
“We think that will attract the most talented candidate,” said Louise Wasso, chair of the investment committee at the women’s college.
Endowments are sidling up to the titans of finance in hopes of boosting the returns that support school budgets.
“There have definitely been things we’ve been able to invest in because I was out here at the right place at the right time,’’ said Michigan State’s first CIO, Philip Zecher, who opened his office in 2016 in Connecticut, a hedge fund haven. “If I had to travel here, I probably wouldn’t have been at some of the events.’’
Performance Goal
The $2.9 billion endowment’s returns ranked among the lowest of the Big Ten universities in fiscal 2015 when Michigan State ran the fund from its farmbelt home in East Lansing with the help of consultants. In 2017 and 2018, with Zecher placing bets from Greenwich before moving to Stamford, the fund has been the best performer in the Big Ten, according to data compiled by Bloomberg.
Cornell, which left the gorges of Ithaca for an office near Times Square in 2017 as part of an overhaul of its $7.2 billion endowment, has seen a small performance bump. It rose to the sixth spot in the Ivy League rankings in fiscal 2018 from last place two years prior.
“The intent is to improve performance relative to Cornell’s Ivy peers,’’ said CIO Kenneth Miranda, who took the job in 2016 and cites reduced travel time in meeting managers in New York as a benefit of the move from Ithaca.
Endowments are expanding following their arrival on the East Coast, where investment talent is easier to find.
Adding Staff
Michigan State is hiring one or two investment directors over the next school year. Lehigh, which in 2017 moved near Times Square from Bethlehem, Pennsylvania, plans to add a senior investment analyst as the fifth person on the team, according to CIO Kristin Agatone. And Hamilton, which shifted to Greenwich from the rural town of Clinton, New York, has a new director of investments starting in the fall.
“Managers are not coming to Clinton,’’ said Anne Dinneen, who took the Hamilton CIO job in 2015 and oversees about $1 billion. “It’s become more of an access game if you want to have top-quartile performance.’’
The growing number of endowments clustering around Wall Street provides another perk: networking.
Dinneen is part of a lunch club of about a dozen CIOs of endowments and foundations who meet every few months at rotating conference rooms to exchange ideas. Joseph Bohrer, the first CIO of Lafayette’s $833 million fund, goes to the lunches. He opened the Pennsylvania-based school’s office on Park Avenue in Manhattan five years ago.
“It’s really vital to have contacts with other people who have the same job,’’ said Lucy Rinaldi, CIO of the Albert and Mary Lasker Foundation, who started the club about five years ago. “People will say, ‘Do you know about this manager?’’’
–With assistance from Michael McDonald.
This article was provided by Bloomberg News.
