Investment managers say nonprofit institutions such as universities, hospitals and philanthropic organizations are making more complex investments to meet the needs of their stakeholders.
In tight-budget schools for instance, where there is a great need to invest in future facilities to compete for top talent, expert Jud Koss said more institutions are taking investment strategies seriously. Whether it”™s investing in only fixed-income portfolio items or avoiding sin stocks, the needs of nonprofit institutional investors are changing, Koss said.
In response, Commonfund has announced a rededication to its smaller clients by launching a new multi-asset program for investments under $50 million. Based in Wilton, the investment management company is one of the largest serving nonprofit institutional investors nationwide, managing nearly $25 billion for foundations, pension funds and endowments. It also services family trusts and offices.
“It”™s the formalization of the program that is new,” said Koss, Commonfund managing director. “We”™ve been serving these clients for years but the spectrum of portfolio size is all over the place.”
While Harvard University might have an endowment as large as $30 billion, there are smaller, private endowments that must be managed as well.
“We wanted to dedicate a program to midsize endowments and dedicate investment professionals to their needs, oppose to much bigger private capital hedge fund strategies, which may be appropriate or not,” he said.
“The funds in the multi-asset program are structured for this particular audience.”
Last year, the average college endowment dropped 0.3 percent to $330 million, according to a study by the National Association of College and University Business Officers. The drop was a sharp contrast to 2011, when endowments increased 19.2 percent over the year.
Just like every company needs a business plan, Koss said every endowment needs an investment policy. Commonfund assesses clients”™ needs, goals and then manages the relevant risk factors to create an investment strategy, Koss said. The reorganized program will include a new staff dedicated to group, as well as some additional technological capabilities such as video conferencing.
Steven Snyder, a 15-year veteran at Commonfund will oversee the implementation of a new reporting system that will allow investors to view the analytics of their investments. And Michael Strauss, Commonfund”™s chief investment strategist and economist will construct new strategies for the program.
“An endowment less than $50 million could still be a great nest egg,” Koss said. “You”™ve got to make sure it pays off. If you”™re not making returns that outpace the funds, you”™re eating at the body of the endowment.”
“If you”™re not making returns that outpace the funds, you”™re eating at the body of the endowment.”
