Commonfund is an asset management firm founded in 1971 with a two-part mission. First, to create investment solutions for nonprofits that previously did not have the scale and access to the best managers and strategies. As importantly, our charter was to also create educational programs that would bring current best practices to institutional investors of all sizes and segments. Our insights have helped to advance asset management practices and grow portfolios through ever-changing investment environments. Commonfund too, has changed and grown dramatically over the years–expanding both our investment solution offerings and the client segments we serve. Yet, our mission has remained the same: to enhance the financial resources and improve the investment management practices of our clients.
Our only business is asset management and we are active in all sectors of the global capital markets – in both public and private markets.
Our core mission is to enhance the financial resources of our clients and to help them improve investment management practices. As a private, nonprofit organization, we are beholden to our clients, not to shareholders or outside owners. This enables us to align our interests with those of our clients and lets us focus our undivided attention on institutional asset management.
How we execute our mission is the key difference that sets us apart, with three mutually supportive components grounded in a strong financial foundation.
Investment programs that seek to generate superior risk-adjusted, long-term investment performance net of fees²
Support based on an in-depth understanding of client needs
Knowledge sharing, educational programs and research that promote best practices among institutional investors
Our strong financial resources serve as the underpinning that enables us to implement our mission. It is this strong base that permits us to hire, grow and retain talented people; invest in information technology and other client support assets; and consistently deliver a broad range of educational programs specifically for institutional investors.
The founding of Commonfund is one of the exciting stories of innovation in asset management. To understand why, return to the late 1960s. In this era, investment returns from college endowments persistently lagged the rate of growth in operating budgets. There was increasing concern throughout higher education regarding the future vitality of these institutions. And, many institutions faced problems of faculty compensation and deferred maintenance. Traditional endowment management as practiced at the time hampered trustees’ ability to address these issues.
But change was in the air. Thought leaders of the day were looking at the then-new concept of total return and thinking about allowing colleges to set their own spending rate. One study, Managing Educational Endowments, concluded that poor results were due to an over-emphasis on avoiding losses and maximizing current income. The Ford Foundation sponsored a landmark study, The Law and the Lore of Endowment Funds, published in 1969, that served as a further catalyst for action.
Out of this came a Ford Foundation grant of $2.8 million for the founding of The Common Fund for Nonprofit Organizations (Commonfund). Two years later, July, 1, 1971, The Common Fund was officially founded. Of the $2.8 million, $500,000 was earmarked for research and publications — a tradition that continues today. By the end of 1971, a total of 72 endowments had invested $63 million. We also launched our first investment fund, the Multi-Strategy Equity Fund, initiating an approach to investing that later would become known as the "endowment model".
Over the years, Commonfund has grown and expanded the range of investment funds and supporting services it offers its clients. Along the way, key milestones in the history of Commonfund include: