Читать книгу Alternative Investments - Black Keith H. - Страница 76

All investors need a process by which asset allocations are set and managers are selected. Traditionally, an institutional investor would have an internal staff that would make recommendations to an investment committee, which would then vote on recommendations at quarterly meetings. The quality of the votes and recommendations depends on the experience and composition of the members of the endowment's staff and investment committee.

Investors with smaller assets under management tend to have smaller staffs. In 2011, NACUBO estimated that college and university endowments with less than $100 million had just 0.4 staff members dedicated to endowment issues, meaning that a single staff member, such as the chief financial officer or treasurer, was responsible for the endowment along with a wide variety of other budget and financial issues. In contrast, the endowments with over $1 billion in assets tend to have large and sophisticated internal teams, averaging over 10 investment professionals. These teams tend to be well experienced and highly compensated, allowing them to manage some of the assets in-house as well as recommend investment managers. Whereas 79 % of the largest endowments employ a chief investment officer (CIO), less than 3 % of endowments with less than $100 million in assets employ someone whose full-time role is to oversee the endowment portfolio.

In addition to internal staff and an investment committee, many endowments employ external consultants. In 2011, NACUBO estimated that 79 % to 94 % of endowments with between $25 million and $1 billion in assets, and 68 % of the largest endowments, employed consultants. A non-discretionary investment consultant makes recommendations to the endowment on asset allocation, manager selection, and a wide variety of other issues, but leaves the ultimate decision to a vote of the investment committee. There is growing use of the outsourced CIO (OCIO) model, in which the endowment gives discretionary authority to an external consultant who may make and implement prespecified decisions, such as manager selection and asset allocation decisions, without taking those decisions to a vote. Endowments with smaller internal teams appear to find the outsourced CIO model attractive, as between 42 % and 62 % of endowments with assets below $100 million had hired OCIOs by 2011. The trend toward hiring OCIOs accelerated after the 2008 financial crisis, when investors realized that tighter risk controls and quicker rebalancing decisions were needed. Williamson (2013) reports that global OCIO assets under management had reached $1.066 trillion by 2013, including $619 billion in the United States, a growth rate of 59 % in just two years. In addition to small endowments and foundations, corporate pensions with liability-driven investing targets are increasingly likely to hire an OCIO.

The Commonfund Institute (2013) notes a number of benefits to hiring an OCIO, especially for endowments that are devoting ever-larger allocations to alternative investments. An OCIO firm will have a large staff and significant infrastructure resources that are shared across all its clients. This institutional-quality firm has resources that could not be afforded by smaller investors. There are economies of scale in manager research, as hedge fund and other alternative managers can visit the consultant or OCIO firm rather than visiting the dozens of underlying investors. The OCIO firm can be cost-effective when compared to attracting, training, and retaining investment professionals, who may be difficult to find and retain in a market where there is a growing demand for those who have experience managing foundation and endowment assets. For investors who do have staff, the OCIO may help train and educate that staff. Whereas 44 % of investment decisions take more than three months when an investment committee retains discretion, the OCIO model can make investment and rebalancing decisions on a far more frequent basis.

Lord (2014) studied the common factors shared by the largest and most successful endowments. Ideally, the investment committee would be staffed by investment professionals and others who have experience serving as corporate executives or board members. If those investors have experience in alternative investments and a wider variety of investment strategies, the resulting portfolio tends to be more diversified and experience higher risk-adjusted returns. Investment committees with significant representation from donors or employees of the universities tend to have lower allocations to alternative investments. Decision-making is improved when committee members have multiple perspectives and an ability and willingness to openly debate issues. When adding new members to the investment committee, endowments should seek members with knowledge and experience that differ from those of current committee members. Finally, top-performing endowments have a commitment to educating staff and committee members on new asset classes before allocations are made.