We work with investors across a variety of mandates with a focus on:
Outsourced solutions – discretionary and non-discretionary programs to assist investors in the management of their entire portfolios
Alternative investment strategies – a range of strategies offered as a part of a comprehensive and integrated alternatives portfolio or for specific mandates
Private capital – a broad array of U.S. and global venture capital, private equity and natural resource programs
Commonfund manages a range of investment programs to institutional investors across most asset classes and strategies. We offer commingled funds as well as separate accounts for eligible investors. Our approach is to seek to diversify risk and to leverage the best investment talent in all segments of the capital markets. We do this by constructing multi-manager programs that combine not just our investment outlook, but also the best thinking of leading investment strategists from numerous independent investment firms around the globe. The goal: well-constructed investment portfolios offering diversification, optimal risk/return and low cost.
Commingled Funds: We manage commingled multi-manager investment programs in virtually all sectors of the capital markets including (note that not all programs are available at all times):
- U.S. equities
- Developed and emerging market equities
- U.S. fixed income
- Global fixed income
- Hedge funds
- Distressed investing
- Private Capital
Our process of fund construction within our commingled programs is both strategic (to take advantage of secular shifts and market cycles generally covering three - five year periods) and tactical (to realize value from pricing and valuation anomalies – generally one to three year opportunities). When the opportunities to be compensated for market risk are slight, we will adopt a more defensive approach in our fund strategies. Likewise, when market conditions reward risk we will be more opportunistic and aggressive.
An active investment process can be easily confused with market timing; however, in our context investment decisions are always within the long term policy guidelines we set forth for our funds.
The key elements of our process:
- Portfolio Construction – the structuring of portfolios unconstrained by traditional benchmark demands, permitting the “best thinking” of portfolio managers to be realized;
- Due Diligence & Manager Selection – objective and highly structured processes for portfolio construction, manager selection, valuation and execution, thereby eliminating “emotional” reflexes;
- Risk Management – a disciplined approach to due diligence, risk management and fund operations that these disciplines be applied consistently for each fund, manager and holding;
- Portfolio Rebalancing – the principles seek to reduce “left tail” risk, manage beta and unconstrain sources of alpha
Separate Accounts: While we believe that our commingled investment programs provide a strong combination of risk-adjusted return, diversification and cost-effectiveness for most investors, there are circumstances where a separate account is more appropriate given an investor’s specific investment goals, risk tolerances, return expectations and possibly investment policy restrictions. For large mandates of generally $100 million or more, Commonfund offers separate account management in:
- Long-only equities
- Fixed income
- Hedge funds
- Private capital
Like our approach to commingled funds, Commonfund’s philosophy of portfolio construction for separate accounts is founded on the principle of active portfolio management – that is the dynamic use of active strategies that can be more opportunistic, aggressive or defensive based on our assessment of capital market conditions. Our experience is that active portfolio management can add value over strictly passive approaches over market cycles. We believe that a carefully constructed portfolio that is based on the investor’s investment objectives, built on the principle that the expected return of an investment should be commensurate with its risk, and managed accordingly, will outperform a passive one.
Underlying this premise is the fact that all sectors of the capital markets are dynamic. Therefore, we believe that active management includes strategically underweighting those asset classes and sectors where capital is plentiful, prices are rich and the expected return is not commensurate with the risk and similarly over weighting those assets where capital is scarce, prices are cheap and there is less risk relative to the expected return. Of course, such decisions must be made in the context of an investor’s long-term policy portfolio.