Board of Trustees and Investment Committee Roles and Responsibilities
There are fundamental principles of effective endowment management that we have organized into what we call “the 6 Ps of Investment Stewardship”– Purpose, Policy, Process, Portfolio, People and...
Investment Governance | Are You Asking These Three Questions?
In the midst of a global pandemic, many non-profit business models are being challenged which has put significant pressures on staff, governing boards and committees. These pressures on time and...
Foundation Spending Strategy – Meeting the Moment in 2020 and Beyond
This year has been incredibly difficult. One of the most contentious and turbulent presidential elections and transitions in American History. COVID-19 and the consequential social and economic...
Chart of the Month | Are Value Stocks Finally Going to Make a Run?
The month of November saw a sharp rotation into value equities at the expense of technology and communication services companies, causing investors to wonder whether the long-run dominance of growth...
A Financial Framework for the COVID Crisis
Despite the fall semester looking much better than the worst-case scenarios contemplated in early summer, higher education in America continues to grapple with the enormous challenges that the...
Chart of the Month | Recession Impacts on Employment and Wages
It may come as a surprise to many that average disposable personal incomes have increased by 6.6 percent from February prior to the pandemic through August. This is down from a high of 9.8 percent in...
Study of Foundations Key Highlights 2019 [Infographic]
For the year ended December 31, 2019, participating private foundations reported an average return of 17.4 percent while participating community foundations reported an average return of 18.2 percent...
The Key Endowment Questions for Challenging Times
During this time of unprecedented challenges, the financial health of colleges and universities is a critical concern. Boards, investment committees, institutional leaders, and their advisors must...
How to Measure Private Equity Investments
Private capital investors use a particular set of quantitative and qualitative measures to assess performance. While the standard benchmarks used for marketable securities are sometimes applied to...
Top Ten Tips for Better RFPs
A tightly run RFP process can help ensure your organization will find an ideal investment partner to help you fulfill your organization’s mission. As the second installment of our blog series on the...
Chart of the Month | Low Rates Make Record Government Debt Manageable – For Now
Few people would have predicted that U.S. equity markets would be higher today than at the start of 2020 if told that a virus would infect over 7.0 million people in the U.S., cause over 200,000...
Should We Issue an Investment Manager RFP? 7 Key Considerations
Best practice for nonprofits is to issue a Request for Proposal (“RFP”) for an investment management partner every market cycle. Typically, that is at least every 7 to 10 years, or as it is...
Balancing Purpose, Payout, and Permanence: A Strategy Guide for Foundations
In partnership with the Council on Foundations, the National Center for Family Philanthropy has released Balancing Purpose, Payout, and Permanence: A Strategy Guide. Commonfund Institute is very...
Chart of the Month | Inflation Expectations Surge, Driving Real Interest Rates Down
Chairman Powell’s speech at Jackson Hole during the last week of August confirmed the Fed’s dovish policy stance, giving investors ample support in terms of low rates and a flexible inflation...
Investing in Racial Equity: A Primer for University & College Endowments
Commonfund and Commonfund Institute are very happy to contribute to the new report from Intentional Endowments Network (IEN), “Investing in Racial Equity: A Primer for University & College...
Observations on Diverse Manager Selection Across Asset Classes
At Commonfund, we believe diverse managers offer clients access to investment talent and valuable investment opportunities and therefore should be explored and invested in. Overlooking the merits of...
Capturing Credit Opportunities in Times of Crisis
Key takeaways During periods of dislocation in high-quality credit, investors should stay the course within fixed income portfolios and maintain active risk to benefit from the inevitable rebound...
Chart of the Month | Markets are Running Ahead of Economic Reality
When investors open their second quarter investment reports, many will be shocked by the magnitude of stock market gains in the second quarter. Their surprise could be voiced by a rhetorical question...
Real Estate – Can’t Touch This!
Few markets have been as heavily impacted by the onset of the global pandemic as real estate. Real estate is considered a hard asset that “you can touch and feel”, but during a pandemic no one wants...
Diversity and Inclusion: Ways to Make a Change
Across the United States, citizens are gathering to protest the unjust deaths of George Floyd, Breonna Taylor and Ahmaud Arbery; each of these individuals fell victim to police brutality and racial...
Balancing Risk and Return
Risk surrounds us, and for investment fiduciaries it is inescapable if meaningful real returns are to be sought. While risk and return constitute the axes upon which investment portfolios are built,...
Chart of the Month | Measuring Social Distancing with Mobility Trends
We continue to monitor the level of social distancing as an indicator for business activity and improvement in consumer sentiment. Personal spending experienced the largest month-over-month drop on...
In Remembrance
The senseless killings of Ahmaud Arbery, Breonna Taylor and most recently, George Floyd have once again brought the scourge of racism to the forefront of our nation’s conscience. For many Americans,...
When Will this Crisis End? 3 Keys to Recovery
When will this crisis end? Following are three key issues fiduciaries should keep in mind concerning COVID-19 and this pandemic recession and recovery. The path and trajectory of COVID-19 This is...
Seven Ways to Diversify Your Private Equity Portfolio
A strong private capital program requires consistent, diversified investing over time. It is also necessary to have— or obtain externally— resources for research and due diligence before you invest;...
Stewardship During This Crisis: Five Things for Boards to Consider
As the world continues to grapple with the social, economic, and public health implications of the current COVID-19 crisis, nonprofit organizations and their boards are working tirelessly to...
Chart of the Month | The Fed Rides to the Rescue
The Federal Reserve is determined to support the economy and the normal functioning of capital markets during the COVID-19 pandemic. As of April 29th, the total asset size of the Fed’s balance sheet...
Crisis Response: A Framework for Strategic Decisions
With the equity markets retracing some of the losses that occurred in the first calendar quarter of 2020, endowment market values are likely recovering more quickly than we may have feared during the...
Five Key Points of the Investment Policy Statement
The central document guiding the management of a nonprofit institution’s endowment—essentially, the strategic plan of the investment committee—is the investment policy statement (IPS). The IPS should...
COVID-19 and Nonprofits | Five Observations from China
Although the full effects of the COVID-19 pandemic on U.S. nonprofits will not be known for some time there may be something to learn from what we’re seeing in China. China was the first country to...
Do Bear Markets Favor Active or Passive Investing? It Depends.
In the ongoing debate about active versus passive investing, conventional wisdom posits that active investing outperforms passive in recessionary or bear market environments. The question is: Will...
Chart of the Month | The Dangers of Timing a Bear Market
It has been well documented that trying to avoid market downturns by selling out of stocks and moving to cash can be damaging to long-term portfolio values. And while there are strong behavioral...
Diversity, Equity, and Inclusion: Staying the Course in Uncertain Times
The times we are living in are unprecedented. On March 11th, the World Health Organization (WHO) declared that the spread of COVID-19 constituted a global pandemic. Currently, in the U.S., the virus...
10 Tips for Stewarding People Remotely
Six key words – Purpose, Policy, Process, Portfolio, People, and Perspective – form a framework for effective endowment stewardship. As trustees, investment committee members, and senior management...
Coronavirus: Five Key Questions for Nonprofit Institutions
There is no question that we are in unprecedented times and will likely remain so for longer than we anticipated even a few weeks ago. The speed at which a new reality has been imposed on all of us...
Chart of the Month | A Price War Erupts in the Oil Market
Oil prices declined over 21 percent on March 9, 2020, the largest single-day decline since January 1991 during the Gulf War[1]. There was optimism prior to the OPEC (Organization of Petroleum...
Market Commentary: Impact of the Coronavirus on Markets and Portfolios
After a strong calendar year 2019, the S&P 500 reached its most recent all-time high on February 19, up nearly 5 percent since the year began. Now, a week later, the global equity markets have fallen...
How to Select a Private Equity Manager
Are you are considering investing directly with a private equity manager? If you opt to go direct, you will be tasked with selecting, managing and disposing the assets entirely on your own. It may be...
Study of Independent Schools Key Highlights [Infographic]
For the fiscal year ended June 30, 2019, independent schools reported a 5.7 percent return in endowment assets. In this infographic, we report the key highlights from the 2019 Commonfund Benchmarks...
Chart of the Month | Central Banks Increasingly Accommodative
World markets appeared to be returning to their upward trend in the beginning of February after a volatile start of the year. While concerns about global growth caused by the coronavirus outbreak are...
Long-Term Equity Investors: A Global Perspective
Over the past decade U.S. equities have consistently outperformed international markets, leading many investors to question the role of non-U.S. equities in their portfolio. While the current cycle...
Commonfund’s First Invitational Diverse Manager Day
On January 16th Commonfund held its first invitational Diverse Manager Day. The day was made possible as a result of the success we had from submissions to the Diverse Manager Portal launched last...
2020 Investor Survey: Private Markets Sentiment
For the third year in a row, Commonfund Capital conducted a year-end annual survey of institutional investors to gauge their sentiment about private market investments. Survey responses totaled 267...
Chart of the Month | Election Year Market Trends
As we enter the 12th year of economic expansion since the Great Financial Crisis, investors continue to wonder whether 2020 will be the year when equity markets finally experience a correction....
Impact Investing - A Market Matures
Investment strategy influenced by altruistic intentions – broadly, impact investing – has long held sway in a small number of portfolios. Historically, impact investing has failed to gain significant...
Integrating ESG into Private Equity Portfolios
Many investors today, particularly nonprofits, are seeking to align their investment portfolio with the mission of their organization. Commonfund is a signatory to the PRI and as part of our...
Chart of the Month | Jobs Across the Country
The November non-farm payrolls report far exceeded investor expectation and bolstered the perception that the domestic economy continues to grow more than a decade into this recovery. Payrolls were...
Purpose: What is an Endowment?
A critically important asset for many nonprofit organizations is their endowment, sometimes referred to by a different name such as long-term investment fund. So important is this pool of financial...
Chart of the Month | Fed Funds Rate Reduction Drives Markets to New Highs
U.S. equities reached an all-time high at the end of October as downside fears abated and risk-on sentiment improved. Among the positives, successful completion of “phase one” of the U.S. – China...
The Economy and Markets March On
Summary Positive signs on trade drove recent new highs in the U.S. equity markets The Fed continues to be accommodative and employment is strong Growth is slowing but is supported by the consumer,...
Commonfund Forum Goes Global
During the week of October 14th, 2019 Commonfund Institute hosted our first Forum outside of the United States in Tokyo, Japan. We were honored to be joined by many leading Japanese institutional...
Tactical Allocation: Winning Strategy or a Fool’s Game?
Institutional investors overseeing long-term pools of capital typically define their strategic asset allocation with specific targets and bands or ranges around those targets, which allow for...
Chart of the Month | Strange Happenings in the Repo Market
An obscure but very large part of the financial markets caused a stir in late September. Lending rates spiked in the repurchase (repo) markets as institutions sought short-term liquidity. The rate...
Three Considerations for Your Private Equity Structure
This is the third blog in a private capital series based on our guide, “Succeed in Private Capital Investing”. You can see the previous blog here. Having determined the size of your private capital...
Announcing the Commonfund Diverse Manager Portal
In the fall of 2018, Commonfund announced the creation of its Diversity and Inclusion Office with the mission to “intentionally promote and foster inclusion and equity across Commonfund and our...
Chart of the Month | Yield Curve Inversion - Signal or False Positive?
Lately, there has been quite a bit of hand-wringing by the financial media about the yield curve inversion. It seems that many prognosticators believe that an inversion is a clear market signal that...
Looking at Gender Lens Investing
What is Gender Lens Investing? Gender lens investing has garnered significant traction in the last decade. Broadly speaking, gender lens investing aims to achieve financial returns and benefit...
Study of Foundations Key Highlights [Infographic]
For the year ended December 31, 2018, participating private foundations reported an average return of -5.3 percent while participating community foundations reported an average return of -3.5 percent...
Traits of High-performing Boards … and Steps Toward Becoming One
Tom Hyatt is a partner in the Washington. D.C. law firm of Dentons US LLP and an authority on nonprofit governance. This blog is excerpted from a presentation he made recently at the Commonfund...
Back to Basics: The ABCs of Governance
Tom Hyatt is a partner in the Washington. D.C. law firm of Dentons US LLP and an authority on nonprofit governance. This blog is excerpted from a presentation he made recently at the Commonfund...
Diverse and Emerging Manager Programs: Worth Doing Well
Michael Rowland is the Commonfund Institute Summer Intern. He is a rising senior at Case Western Reserve University. He is majoring in Finance and Accounting. What are Diverse and Emerging Manager...
Recession – Maybe This Time is Different
The July Federal Open Markets Committee (FOMC) meeting signaled the end of central bank rate normalization with the first rate cut in more than a decade. The last time the FOMC cut rates was in...
Chart of the Month | Economic Expansions Getting Longer
Following the July FOMC meeting and with investors digesting the first rate cut since 2008 it is important to recognize that the domestic economy is now experiencing the longest period of economic...
Commonfund Hosts Girls Who Invest at NYC Event
Girls Who Invest (GWI) is an organization focused on bringing more women into the field of asset management, a goal that Commonfund strongly supports. Every year, GWI invites rising juniors into...
The 5 Top Stewardship Imperatives
Christopher K. Merker, PhD, CFA, is a financial advisor and director of Private Asset Management at Robert W. Baird & Co. and an adjunct professor at Marquette University. He is also the co-author of...
Higher Education: Philanthropy is an Adjunct, Sensible Public Policy Deserves Tenure
In the last few months, high profile nonprofit institutions have come under intense scrutiny for ethical dilemmas pertaining to the stewardship of resources meant to support mission. This is Part...
Chart of the Month | Defensive Stocks at a Premium
The valuation premium (forward price/earnings) of defensive stocks versus cyclicals has climbed steadily over the last seven months. Limited risk appetite, slowing growth, low interest rates and...
Building a Private Equity Allocation
Building a private capital allocation that makes a difference to your portfolio takes time and dedication. The first step is deciding to make a meaningful allocation to private capital. Then, to...
The Case for Using the Higher Education Price Index® (HEPI) to Define Inflation for Colleges
When calculating return targets for an endowment portfolio, a conventional piece of the equation is often the Consumer Price Index (CPI). CPI plus 5% is the common short-hand formula for institutions...
Investment Manager Fees Part II: Creating Alignment
In Part I of this blog series, “Investment Manager Fees: Out of Sight, Out of Mind”, we discussed our approach to determining the value of an asset manager and how we might calculate a fair price for...
Nonprofit Hospitals - Big Business in Nonprofit Clothing?
In the last few months, high profile nonprofit institutions have come under intense scrutiny for ethical dilemmas pertaining to the stewardship of resources meant to support mission. This is Part Two...
Summer Reading from the Stewardship Academy Faculty
As the last week of June approaches, investment stewards begin to prepare for summer – a time for relaxing, reflecting, and reading. We asked faculty members from the Investment Stewardship Academy,...
Chart of the Month | Conflicting Signals in Stock and Bond Markets
The Bond markets’ expectations of U.S. Federal Reserve (Fed) rate cuts changed drastically last Friday on the news of President Trump’s intention to impose tariffs on Mexico, in an attempt to...
Museums and Cultural Institutions: To Accept or Not to Accept, That Is the Question
In the last few months, high profile nonprofit institutions have come under intense scrutiny for ethical dilemmas pertaining to the stewardship of resources meant to support mission. In a three-part...
Commonfund Forum: A Carbon Neutral Event in 2019
In just two years Commonfund will celebrate its 50th anniversary as a non-profit investment manager for educational endowments, foundations and other tax-exempt investors. Throughout those almost...
Investment Manager Fees: Out of Sight, Out of Mind
One of the most pressing questions facing fiduciaries is that of investment management fees. We think it is a healthy and necessary discussion, as even small fees can have a big impact on performance...
Risk Management and Operations: 5 Takeaways from Commonfund Forum 2019
The majority of investors’ attention is often focused on the performance of the funds or managers in their portfolio. And rightfully so. The numbers that appear on statements month after month will...
Taking a Fresh Look at Spending Models
Investors have limited control over the returns their portfolios generate. They have more control over their spending. That doesn’t make it easy. Compared to some earlier periods, volatility in the...
Surprising Stewardship Lessons from the Miracle on the Hudson
“When you’ve suffered a complete loss of engine thrust over the largest city in America, you must act quickly and independently to address the developing situation. But, you must also trust in the...
5 Key Questions: Comparing Fees of OCIO Providers
The market for Outsourced Chief Investment Officer (“OCIO”) services has boomed over the last decade. Today, OCIO assets under management are by some estimates nearly $1.5 trillion, 2.5 times the...
Chart of the Month | U.S. Jobs Machine Keeps Cranking
This month we turn our attention to the economy and, specifically, employment. As investors contemplate when this historically long period of economic growth might end, employment trends are one of...
Donor Advised Funds: Changing the Philanthropic Landscape for Higher Education
Donor Advised Funds (DAFs) are the fastest growing giving vehicle in philanthropy. The Council on Foundations defines DAFs as: “A type of charitable giving fund that is established by a donor with an...
A sit-down with Richard Fisher
As a follow-on to the Commonfund Forum 2019 panel discussion, The Global Economy and the Return of Risk, Richard Fisher, former President and CEO of the Federal Reserve Bank of Dallas, further...
Private Market Investing vs Public Market Investing, What’s the Big Difference?
The first step of successful private market investing is to learn what private capital is, what its risks and rewards are, and how it differs from public market investing. Private capital provides...
Commonfund Forum 2019 Attendee Statistics [Infographic]
Commonfund recently hosted its 21st annual Commonfund Forum in Orlando, Florida. The event brought together institutional investors to engage in a two-day conference to explore cyclical trends and...
Study of Independent Schools Key Findings [Infographic]
Schools participating in the Commonfund Benchmarks Study® of Independent Schools (CSIS) for the 2018 fiscal year reported an average return (net of fees) on their endowment assets of 7.4 percent. The...
The Fallacy of Manager Diversification – How “Horse Races” Can Increase, Not Reduce Risk
On the surface, hiring two (or more) multi-asset managers to manage an entire portfolio may seem like a good idea. Intuitively, it would seem to reduce manager concentration risk, and provide...
Chart of the Month | One Reason Investors Are Feeling Uneasy
Investors of all types, including those that represent institutions, are clearly feeling more uneasy than they have in years. It isn’t just the spike in stock market volatility that buffeted...
Getting Started in Responsible Investing
The biggest challenge in implementing any type of responsible investment program is in clearly defining and prioritizing those issues most relevant to an organization. Although it may seem a...
5 Steps to Success in Private Capital Investing
Investors participate in private equity markets for two main reasons: to pursue increased investment return and to add portfolio diversification. Even well-informed investors who are experienced in...
Stormy Markets, Steady Institutional Investors
This blog is reprinted with permission by Net Assets, published by the National Business Officers Association (NBOA). The original article can be found here. Investment guidelines enable...
What’s in the Data? HEPI 2018 Highlights
Commonfund Higher Education Price Index (HEPI) data show that inflation for colleges and universities was 2.8 percent for fiscal year 2018, a decline from last year’s 3.3 percent but higher than the...
Identifying an “E” Factor
Over the past year the Commonfund investment teams have undertaken research to identify and isolate a new factor associated with the environmental sustainability of a stock (or a portfolio of...
Applying the Endowment Model to Diversity and Inclusion
Commonfund recently launched a Diversity Office, a formal, cross departmental effort focused on diversity and inclusion. The mission of the Commonfund Diversity Office is to intentionally promote and...
A Cost-Effective Approach to Hedge Fund Allocations: Part 2
Let’s start with a quick recap of Part 1 of this story, which can be boiled down to three main points: Investors often spend too much for market beta, paying “2 and 20” for hedge funds that deliver...
A Cost-Effective Approach to Hedge Fund Allocations: Part 1
At the risk of beating a dead horse, hedge funds are not an asset class. This is especially true in the way in which Commonfund selects and constructs its hedge fund portfolios: focusing...
Are You Ready for the Next Crisis?
Ten years ago Lehman Brothers failed, representing the largest bankruptcy in history, and accelerating a global financial crisis that would knock many non-profit portfolios backward. This came on the...
7 Major Findings - Commonfund Benchmarks Study of Healthcare Organizations
Fifty-six healthcare organizations participated in the 2016–2017 Commonfund Benchmarks Study® of Healthcare Organizations. These organizations reported an average investable asset pool of $2.1...
Viewpoint: Responsible Investing - Read All About It
The new and newsworthy in this year’s Council on Foundations–Commonfund Study of Investment of Endowments for Private and Community Foundations® (CCSF) is headlined by responsible investing. No other...
Five Questions to Ask Your Advisor: Costs of Portfolio Management
Costs matter. With expectations for lower market returns over the coming years, every basis point of net performance is particularly important. Furthermore, the compounding effect of high fees can...
The Four P’s of Investment Decisions: Lessons from the Commonfund Institute
Three days after becoming Executive Director of the Commonfund Institute, I found myself at Yale University in New Haven giving welcoming remarks at our annual educational program. Although I will...
Equity Portfolio Construction – Through a Risk Factor Lens
At Commonfund, we aim to build multi-manager, active risk equity portfolios with a clear objective of consistent outperformance versus passive policy benchmarks. Our approach is to take intentional...
What are the Differences Between SRI and ESG?
The Challenges of Terminology There are a great many terms referring in some way to practices related to responsible investing: socially responsible investing; mission-related investing; impact...
Bonds: Unwanted and Unloved but not Unnecessary
Well, the party may finally be over. Like the college dean who shuts down the campus party, the Fed has finally taken away the interest rate punch bowl that investors have enjoyed for so long. It may...
Real Estate Credit Environment: Risk Off - Risk On
Earlier last year real estate markets received a scare as CMBS spreads widened, particularly in lower rated and more junior tranches. Additionally, one of the most respected U.S. real estate...
Investing in Diversity
At Commonfund, we scour the globe to find investment managers that we believe have the ability to consistently produce excess returns (alpha) over and beyond their benchmark. But alpha alone is not...
10 Key Takeaways from Commonfund Forum 2018
Commonfund recently hosted its 20th annual Commonfund Forum in Orlando, Florida. The event brought together 400 institutional investors from the U.S., Puerto Rico, the Virgin Islands, Canada, Chile...
Forum 2018 Attendee Statistics [Infographic]
We recently hosted our 20th annual Commonfund Forum in Orlando Florida. The event brought together institutional investors to engage in a two-day conference to explore cyclical trends and tactical...
Key Findings from 2017 NACUBO-Commonfund Study of Endowments [Infographic]
For the fiscal year ended June 30, 2017, educational endowments reported a 12.2 percent return as the 10-Year return fell to 4.6 percent. In this infographic, we report the top findings from the 2017...
Baring Their Teeth – FAANGs Take a Bite Out of the Equity Market
Narrow market leadership in the U.S. and Emerging Markets proves challenging for active managers Narrow markets are not uncommon to equity investors. They tend to manifest themselves during the best...
A Gap In Reality
With the release of the annual NACUBO-Commonfund Study of Endowments (NCSE) comes the obligatory comparison of 1-year returns. “How did we do relative to the 12.2 percent average return” is a...
Despite Strong FY2017, Endowments Report Decline in Ten-Year Return
Despite 12.2 percent return for FY2017, educational endowments report a decline in their 10-Year return while large institutions lead increase in effective spending rate Data gathered from 809 U.S....
When Leaks Turn into Floods: Challenges Facing Higher Education
2017’s tax legislation is the latest in a growing list of challenges facing higher education. The new excise taxes on endowment earnings of the largest private universities, coupled with the...
Bonds May Not Be Loved, But They Shouldn't Be Forgotten
Summary TODAY, THERE IS A GOOD DEAL OF HAND WRINGING OVER THE RISK OF RISING RATES. WHILE RISING LONG-TERM RATES COULD BE A HEADWIND FOR CORE FIXED INCOME, AS LONG AS RATES RISE FAIRLY MODESTLY THE...
Tax Reform: CPI Plus More
It was another taxing weekend (literally) at Commonfund as we digested 1,097 pages of the conference agreement for the tax reform bill (the “Tax Act”) and its implications for our country and for the...
The Tax Man Cometh (And Not Just for the Ivies)
UPDATE: Since this blog was published there have been further developments related to the Tax Cuts and Jobs Act. Please see our post Tax Cuts and Jobs Act: CPI Plus More for our latest thinking....
Spending Policy: Is Yours Ready for the Next Downturn?
In most Investment Policy Statements there is often a reference to two important, but conflicting, objectives: one, to preserve the purchasing power of the long-term portfolio in real terms, and two,...
Emerging Market Equities Turn the Corner
As we progress through calendar year 2017, we have witnessed the continuation of the equity bull market started in 2009. One difference however, is that leadership has turned (finally!) to non-U.S...
On Complacency | Why Risk Management Always Matters
Like nearly everything in the financial markets, risk is cyclical. History repeats itself. The echoes of past crises are always heard in present ones, yet new crises are rarely predicted and not...
A Primer on Outsourced Investment Management
Once seen primarily as a solution for small institutions with limited resources, outsourcing of the investment management function is now widespread, with a broad range of long-term investors –...
Key Findings from 2016 Council on Foundations-Commonfund Study of Foundations [Infographic]
For the fiscal year ended December 30, 2016, participating private foundations reported an average return of 6.4 percent while participating community foundations reported an average return of 7.3...
How Much Beta is in Your Equity Portfolio?
Leveling the Field in the “Tug of War” Between Active and Passive… Active Equity Manager Universal Objective: Outperform the Passive Alternative It’s undeniable that every active equity manager’s...
Making the Case for Investing in Natural Resources
The natural resources sector is often characterized as cyclical, as producers and service providers experience underlying exposure to and commensurate volatility of commodities in the oil and gas,...
Thoughts on the Role of Credit in Institutional Portfolios
While most institutional portfolios have allocations to investment grade corporate credit, as a strategic allocation high yield and emerging market credit (liquid credit) are sometimes overlooked....
WannaCry? WannaRun, WannaHide! Managing Cybersecurity Risk
Over the last year there has been no shortage of things to keep investors, asset managers, and risk managers concerned. Despite these exogenous shocks most equity markets have continued to shake off...
Flexing Your Global Portfolio Can Lead to ACWI Fatigue, but Don't Throw in the Towel Yet
Like the build-up of lactic acid in your muscles after a strenuous workout, the underperformance of Morgan Stanley Capital International All Country World index (MSCI ACWI) vs. the Standard & Poor’s...
Active Fee Management: Notes from the Front Lines
Few topics get investors’ attention as much as fees. We wouldn’t be human if we all didn’t want to know, in detail, how much something costs. In the world of investing, fees are an even more...
Maintaining Purchasing Power in Today’s Environment | CPI + 5%
At Commonfund, we understand the challenge institutions face of maintaining the purchasing power of their endowment. In fact, achieving a rate of return sufficient to cover inflation, distributions...
Key Findings from NACUBO-Commonfund Study of Endowments [Infographic]
For the fiscal year ended June 30, 2016, educational endowments reported a -1.9 percent return as the 10-Year return fell to 5.0 percent. In this infographic, we report the top findings from the 2016...
The Crowded Liquidity Trade
The liquidity markets have experienced one of the largest disruptions since the inception of SEC Rule 2a-71 in the early 1970’s. Over the past few months, we have seen a massive shift of investor...
Commonfund Forum 2017 Attendee Statistics [Infographic]
We recently hosted our 19th annual Commonfund Forum in San Antonio Texas. The event brought together institutional investors to engage in a three-day conference to explore cyclical trends and...
10 Key Takeaways from Commonfund Forum 2017
Commonfund recently hosted its 19th annual Commonfund Forum in San Antonio Texas. The event brought together about 450 institutional investors from the U.S, Puerto Rico and Canada to engage in a...
Long-Term Trends for Long-Term Investors
Nonprofit institutions have the distinct advantage of having the longest time horizon of any investors – often perpetuity. This affords an opportunity to consider investments based on secular trends...
What do the Cable Television and Hedge Fund Industries Have in Common?
These industries may seem an odd pairing, but both are in the midst of a disruption-led, industry-wide rationalization process. The two industries share in common a historically evolved “bundling”...
Constraints Faced by Healthcare Endowments
As a result of the evolving landscape of the healthcare industry, organizations are increasingly being shaped by pressures affecting both the revenue and expense sides of the income statement. On one...
Private Credit Opportunities – Direct Lending to U.S. Middle Market Companies
Much has been made of the challenges endowment, foundation and nonprofit investors face in achieving a CPI+ five percent return target. One way to improve the probability of attaining this goal is to...
Does Your Investment Policy Statement Account for Risk?
Successful investing for long-term funds requires a strategic plan. This is true despite – indeed, because of – the fact that the future is unknowable. The plan must be specific, embodying in...
Healthcare Endowment Management: 3 Questions to Consider
Mounting cost pressures are forcing small and mid-sized nonprofit healthcare organizations to consider adopting endowment management practices similar to those used elsewhere in the nonprofit sector....
Drafting Your Investment Policy Statement: 10 Critical Issues
Endowed institutions differ in their missions, capabilities and resources, and investment policy statements naturally mirror these differences. In that sense, there is no single ‘right’ investment...
Venture Capital - Looking Forward and Upward
Beginning in the second half of 2015, there was growing caution that started to impact pricing and investment activity in early 2016. This valuation cooling period and subsequent shift in mindset...
A False Sense of Diversification?
As we have undergone the process of re-underwriting all of Commonfund’s equity managers and funds over the last 6 months, we have tackled anew the age old question of how many funds does one...
How Does Board Structure Affect Performance?
The structure of a board has an important influence on its effectiveness, and being cognizant of these matters is essential to improving a board’s performance. In this article, we’ll discuss four...
Real Estate – Rates, Rates, Rates
“There are three things that matter in property: location, location, location”. While the age-old adage still holds in many respects, real estate risks, as with the risks associated with all asset...
Fiduciary Responsibility: A Board’s Purpose and Roles
Excellent boards are made, not born. Achieving excellence in board governance requires success in four crucial areas: capable leadership, a sound organizational structure, attention to fiduciary...
Where Did Our Operating Income Go?
Treasury managers face a new challenge to an old problem. Their institutions historically have relied on operating investment income to provide a necessary influx to operating budgets. Prior to 2008,...
It's Not Easy Being Active
It’s not easy being an active equity manager these days. As the chart below depicts, active managers have just come through the worst period for returns in several decades. The chart shows the...
The Billion Dollar Dilemma - What is the Right Governance Model for your Institution?
Finding the right investment governance model for your institution isn’t about size. In the hyper-competitive world of endowment management, something curious happens when the word used to describe...
Five Laws that Led to Uniformity in Nonprofit Governance
With each state having its own court system, uniformity among the states did not exist. While there was agreement on basic common-law trust principles, variations still emerged. As the American...
Better Understanding Responsible Investing Practices
How can you do the most good, with limited resources, when facing enormous problems? That question lies at or near the heart of every decision at a foundation. This is true of the grant dollars which...
A Framework for Nonprofit Governance
Two important laws enacted in the last 15 years have had an impact far beyond the intent of their original authors, causing major, if little-noticed, changes in nonprofit governance. The...
Integration of ESG Factors in Practical Steps
In the current climate of slow global economic growth and resource constraints at many institutions, integration of ESG considerations in an organization’s investment portfolio may be perceived as a...
Bridging the Gap: Carbon and Fiduciary Responsibility
Most institutional investor discussions and actions regarding global warming have been at two ends of the spectrum: either divest from fossil fuels entirely or remain fully invested. A better...
Responsible Investing for Foundations
Commonfund and the Council on Foundations are thrilled to announce the release of the 2016 Council on Foundations – Commonfund Study of Responsible Investing. It is the largest and most detailed...
Top Ten Risks for Practicing CIOs
A Chief Investment Officer’s primary responsibility is to identify and clearly communicate his/her portfolio’s risks to his/her Board, Investment Committee and/or client(s). About eighteen months...
Common Concerns about Responsible Investing
Discussions about whether responsible investing strategies help or hurt investment performance are complicated by the fact that, there are several broad categories of responsible investing practice...
Operating Charity Implements a Risk-Based Investment Policy
An operating charity in the Northeast is in the process of implementing a risk-based investment policy for its $30 million endowment. The organization’s seven-member Investment Committee includes...
Deciding on an OCIO Provider: Three Factors to Consider
There are three main factors an institution will need to weigh in deciding if working with an OCIO provider is right for them. Those are: Degree of Discretion: What role do the institution’s board...
Responsible Investing: Terminology and Background
The terms socially-responsible investing (SRI), mission-related investing, impact investing and environmental, social and governance (ESG) investing – all frequently grouped under the heading of...
What is an OCIO?
Outsourced investment management, once primarily a solution for small institutions with limited resources, is now used by a broad range of long-term investors. When properly implemented, outsourcing...
Hedge Funds: How Many (or Few) Does it Take?
It’s straightforward to get an answer to that question, at least superficially: draw at random from a manager universe, build hypothetical portfolios with the selected managers, track performance,...
Is Currency an Asset Class?
Currency risk can best be described as the surprise impact that currency exposure has on an investment portfolio. Although currency risk typically confounds investors, it is easy to measure – it is...
Sample Investment Policy Statement Rider for Responsible Investing
A number of clients and prospects have asked how their Investment Policy Statement (IPS) can be amended to accommodate responsible investing strategies. In response, we have prepared a rider which...
Six Key Questions To Ask OCIO Providers
“Outsourced CIO” (or OCIO) is a term that might not be familiar to many. In the past it has been defined as a traditional consulting model in which the process of interviewing potential investment...
New Environmental Regulations and the Impact on Fiduciaries
Developments in world financial markets seem to occur more quickly every year, requiring ever-higher levels of expertise and experience on the part of investment committees. Climate change is a more...
Size: It's Complicated
Assets under management (AUM) among hedge funds has always been characteristically top-heavy, with the majority of capital in the hands of a relatively small number of managers. While the hedge fund...
Calculating Investment Management Costs
The following methodology may be of use in helping you to understand more fully what your organization pays for investment management costs. Identify the fees you pay at the overall portfolio level...
The Curious Case of Risk Exposures in Diversified Portfolios
Our research at Commonfund has found that a 70/30 stock/bond portfolio has north of 99 percent of its risk, as measured by standard deviation, allocated to equities. Thus, portfolio risk typically...
5 Things to Consider When Choosing an OCIO
Nearly all CFOs and investment committees consider it. And more than ever are acting upon it: investigating the possibility of an Outsourced CIO (OCIO) to manage their institution’s investments. The...
Defining Risk For Your Organization
Merriam-Webster’s defines risk as the “possibility of loss or injury.” The financial profession — borrowing from Modern Portfolio Theory — uses the standard deviation of a portfolio’s returns to...
Impact Investing
Recently, Commonfund convened an expert panel of investment managers to hold a roundtable discussion and take a closer look at the different impact investing strategies being implemented today. The...
ESG: What is it?
Generally speaking, Environmental Social and Governance, or ESG for short, is used to describe a group of characteristics that can have a material impact on the long-term success of a company and,...
Straight Talk About Private Equity
For reasons unknown, many investors assume that private equity may have lost its edge as a key allocation for their portfolios. This perception, however, may not align with reality. By taking a...
10 Point Checklist to Get Governance Right
The regulatory and legislative landscape continues to become more rigorous for nonprofit organizations. In an atmosphere of increasing calls for accountability, boards and senior staff need to take...
How liquid are Private Capital Investments?
In the wake of the Global Financial Crisis, institutional investors were rightfully concerned about the liquidity profiles of their long term portfolios. Although markets have recovered substantially...
Chart of the Month | Beware of High Yield Bonds