Operating Assets

When Leaks Turn into Floods:
Challenges Facing Higher Education

Posted by Timothy T. Yates, Jr. on Jan 19, 2018

Topic: Governance and Policy | Industry Knowledge | Investment Strategy | Operating Assets | Outsourced Investing | Risk Management

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...

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2017 HEPI: Highest Increase Since 2008

Posted by Commonfund on Dec 12, 2017

Topic: Governance and Policy | Industry Knowledge | Operating Assets

This week Commonfund released the 2017 update to the Higher Education Price Index® (HEPI). It includes three important changes that investors should take note of: (1) the 2017 HEPI inflation rate was 3.7 percent - the highest increase since 2008, (2) seven of the eight HEPI components showed positive increases, with just Supplies and Materials registering a slight decrease of 0.5 percent as compared to the prior year and (3) fringe Benefits increased 5.9 percent, the most since before the Great Financial Crisis.

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Spending Policy: Is Yours Ready for the Next Downturn?

Posted by Timothy T. Yates, Jr. on Nov 7, 2017

Topic: Governance and Policy | Investment Strategy | Operating Assets | Outsourced Investing

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, to provide a stable. predictable and hopefully growing source of income to the institution that the long-term portfolio supports. Why the conflict? Because in order to generate returns that will sustain real purchasing power in perpetuity, the portfolio must be exposed to risk which often means volatility and thus potential instability or unpredictability in the income stream...

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Never Enough: Challenges Facing Private Colleges

Posted by Commonfund Institute on Sep 14, 2017

Topic: Governance and Policy | Industry Knowledge | Operating Assets

The traditional small, private, liberal arts college model of higher education has been under stress for some time. Viewed as economic entities, these institutions — like their larger peers, the research universities — rely on three main sources of income: tuition, fees and grants, and distributions from their endowments. Unlike research universities, however, small liberal arts colleges are facing a unique combination of headwinds that deeply challenge their operational model and may, in many cases, pose threats to their continued existence. In this article, we describe those challenges and outline some steps that governing boards and administrations may have to take in order to ensure the survival of their institutions.

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The Crowded Liquidity Trade

Posted by Ryan Driscoll, Jon Speare, Michael Strauss on Apr 10, 2017

Topic: Fixed Income | Investment Strategy | Operating Assets

Over the past few months, we have seen a massive shift of investor assets from prime to government money market funds in response to post-crisis regulatory amendments that have been years in the making. Surprisingly, the market reaction happened quickly and dramatically, even though the changes were widely known. In October 2016, SEC rule amendments were implemented to prevent the possibility of cash investments, specifically prime money market mutual funds, from “breaking the buck” and resulting in liquidity panics in the future.

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Five Takeaways from Treasury Symposium 2017

Posted by Jon Speare on Feb 23, 2017

Topic: Asset Allocation | Governance and Policy | Industry Knowledge | Operating Assets

Treasury Symposium 2017 was held in New Orleans earlier this month. 285 senior financial officers from over 100 large universities participated in the strategic discussions. Once again, the takeaways from the three-day Symposium were thought-provoking as well as cautionary for the higher education industry.

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2016 HEPI Report Released

Posted by Commonfund Institute on Oct 31, 2016

Topic: Governance and Policy | Industry Knowledge | Operating Assets

The annual Commonfund Higher Education Price Index (HEPI) report provides an analysis of HEPI and the cost factors associated with the index. Download your copy today to determine increases in funding necessary to maintain both real purchasing power and investment at your institution.

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Bridging the Budgetary Gap: Where Did Our Operating Income Go?

Posted by Ryan Driscoll, Jon Speare, Michael Strauss on Sep 15, 2016

Topic: Industry Knowledge | Operating Assets

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, risk free or minimal risk investments provided support for operations with returns that are currently unimaginable.

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Where Did Our Operating Income Go?

Posted by Ryan Driscoll, Jon Speare, Michael Strauss on Sep 15, 2016

Topic: Fixed Income | Governance and Policy | Industry Knowledge | Operating Assets

Treasury managers face a new challenge to an old problem. Their institutions historically have relied on operating income to provide a necessary influx to operating budgets. Prior to 2008, risk free or minimal risk investments provided support for operations with returns that are currently unimaginable. The concept of a risk-free instrument yielding anything significantly above 0% in the future does not take into account the post crisis world of capital markets, specifically cash markets. So, the world of five percent cash returns is gone, and has little chance of re-emerging. This leaves a shortfall in how treasury managers balance budgets and fund capital initiatives going forward.

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Opportunities Arise for Liquidity Investors

Posted by Jon Speare, Michael Strauss on Aug 19, 2016

Topic: Market Commentary | Operating Assets

For the last several months, significant asset flows have moved from institutional to government-only money market funds in anticipation of new regulations. On October 14, 2016 regulations will finally go into effect for non-government institutional money market funds, with the highlighted feature being the shift from a fixed $1 transaction share price to a floating NAV. These portfolios will be priced using the market-based value of the actual portfolio holdings, out to four decimals. This means that Endowments, Foundations, and other businesses that manage operating cash will no longer be able to hold funds in stable fixed $1.00 share price institutional money market accounts.

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What’s Next for Cash Investors?

Posted by Commonfund on Jun 7, 2016

Topic: Asset Allocation | Investment Strategy | Market Commentary | Operating Assets

In the static low-rate environment of recent years, it seemed as though there was no “what’s next” for cash. Today, that has changed, as there are major forces reshaping the regulatory and interest rate regimes.

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Time to Temper Interest Rate Risk in Operating Portfolios

Posted by Jon Speare, Michael Strauss on May 25, 2016

Topic: Investment Strategy | Market Commentary | Operating Assets

Given the changing tone coming from Fed officials the last two weeks and the latest FOMC minutes, it appears that our monetary policy leaders are looking for an opportunity to restart the normalization process for short rates. As we highlight in our latest web commentary “When Doves Change Their Feathers”, Fed officials are trying to correct the financial market’s assessment of the most likely path for monetary policy.

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Strategies for The New World of Cash Investing

Posted by Jon Speare on May 4, 2016

Topic: Operating Assets

This week at the Association for Financial Professionals New England meetings, I participated in the panel entitled “Strategies for the New World of Cash”. Our discussion focused on upcoming money fund reforms scheduled for October 2016 and the ramifications for large cash and operating asset investors.

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What’s Next for Operating Assets?

Posted by Jon Speare on Apr 19, 2016

Topic: Operating Assets

After eight years of zero percent rates and a few years of anticipating change, the summer of ’16 is now upon the operating asset investor. All that is certain is change; change in regulation, change in environment, change in offerings, change in rates, and by the end of the summer, change in responsibilities.

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Download Commonfund’s Sample Operating Asset Policy and Guidelines

Posted by Commonfund on Oct 22, 2015

Topic: Governance and Policy | Operating Assets

Commonfund has developed a sample Operating Asset Investment Policy based on best practices in cash investment management. Download your copy today.

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Managing Operating Assets: Part II
Market Environment

Posted by Jon Speare on Aug 13, 2015

Topic: Fixed Income | Operating Assets

In our last article, we discussed the changing structure of liquidity products available to investors. Now, we will revisit the topic and take a look at events that could potentially impact the short-term investment markets over the next 12 to 18 months.

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Managing Operating Assets: Part I
Clarity in Liquidity

Posted by Jon Speare on Apr 5, 2015

Topic: Fixed Income | Operating Assets

Since the fallout of the 2008 Financial Crisis, Cash Investors have been waiting for a “new normal” environment, which would replace the recent period of zero yields and uncertain regulatory reforms. The past five years have proven to be an interim “healing” timeframe where monetary policy from the Federal Reserve and evolving sanctions from regulators focused on the improvement of financial institutions’ capital structures. The consequences for institutional investors were highly uncertain risk/return characteristics for cash and liquidity investments.

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Working Capital: Challenge and Opportunity

Posted by Commonfund on Aug 17, 2014

Topic: Industry Knowledge | Operating Assets

University campuses have begun to think differently about operating asset management, better ways to balance liquidity, risk and return.

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Subscribe and Manage Your Frequency to Insights Blog

Posted by Commonfund on Jan 5, 2014

Topic: Asset Allocation | Equities | Fixed Income | Governance and Policy | Hedge Funds | Industry Knowledge | Market Commentary | Operating Assets | Outsourced Investing | People | Private Capital | Responsible Investing | Risk Management

Subscribe to the Insights Blog from Commonfund to stay informed with the latest information for nonprofit investors and the public sector.

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Cash Investing Update

Posted by Jon Speare on Feb 3, 2012

Topic: Market Commentary | Operating Assets

Over the next weeks and months, changes will be occurring that will affect cash investors significantly. Although we are still experiencing a zero – rate environment that began three years ago, it has not been a zero – risk environment for the cash investor.

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