Risk Management

Equity Portfolio Construction – Through a Risk Factor Lens

Posted by David Scarozza on Jun 28, 2018

Topic: Equities | Industry Knowledge | Investment Strategy | Market Commentary | Risk Management

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 and measured “risk away from the benchmark” by allocating to a variety of managers who employ active risk strategies...

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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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On Complacency | Why Risk Management Always Matters

Posted by Dana Moreau, Brian Rondeau on Sep 14, 2017

Topic: Governance and Policy | Industry Knowledge | Investment Strategy | Risk Management

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 always properly planned for. We are in the midst of one of the longest economic expansions in U.S. history, 98 months and counting, trailing only the 120 month and 106 month expansions of the 1990s and 1960s, respectively. There have been bumps along the way, but this has been an extended benign period for risk in the capital markets.

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How Much Beta is in Your Equity Portfolio?

Posted by David Scarozza on Jul 18, 2017

Topic: Asset Allocation | Equities | Investment Strategy | Risk Management

It’s undeniable that every active equity manager’s chief competitor these days is the passive alternative against which its investors measure their performance. This is as true for a singularly focused equity mandate manager as it is for an organization like Commonfund, who assembles multi-manager active risk equity portfolios that seek to exploit the potential advantage of scouring the globe in pursuit of strategies that offer both the possibility for excess returns and excess return source diversification.

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WannaCry? WannaRun, WannaHide!
Managing Cybersecurity Risk

Posted by David Young, Brian Rondeau on Jun 7, 2017

Topic: Industry Knowledge | Risk Management

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 these events with measures of volatility remaining muted. There are always additional risks lurking and the WannaCry ransomware attack highlighted one of the largest.

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The Misperception of Illiquid Investments

Posted by Kent Scott, Paul Von Steenburg, Timothy Yates, Jr. on May 15, 2017

Topic: Asset Allocation | Industry Knowledge | Investment Strategy | Outsourced Investing | Real Assets | Risk Management

With many market participants expecting low nominal returns across traditional asset classes in the coming years, investors may be looking to increase their exposure to illiquid asset classes such as private equity and venture capital. This article addresses head-on, investors’ misperception about illiquid investments: they aren’t as illiquid as many fear.

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Is the Endowment Model a Crowded Trade?

Posted by Mark J.P. Anson on Apr 11, 2017

Topic: Asset Allocation | Industry Knowledge | Investment Strategy | Risk Management

With core tenets of the endowment model seemingly under stress for the last several years, some investors have questioned the long-term viability of the model. At issue: Are too many investors piling into the same ideas and thus squeezing out opportunities for better returns? In this 2017 Commonfund Forum Spotlight, three CIOs tackled questions designed to surface concerns about the model and provide insight based on their long experience.

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What do the Cable Television and Hedge Fund Industries Have in Common?

Posted by David Scarozza on Feb 28, 2017

Topic: Asset Allocation | Hedge Funds | Investment Strategy | Risk Management

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” price structure, heavily favoring the sellers, that is breaking down due to the recent proliferation of distribution alternatives. This is giving consumers the option to be far more choosey about the prices they are willing to pay for varying levels of content.

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Active vs. passive: There is no debate

Posted by Mark J.P. Anson on Jan 31, 2017

Topic: Asset Allocation | Equities | Fixed Income | Investment Strategy | Risk Management

Like King Kong vs. Godzilla, the investment debate of active vs. passive continues. I really enjoyed those cheesy old movies from Japan that pitted the two big monsters of science fiction. But as I recall, there was never a clear winner: Sometimes King Kong won the battle, sometimes Godzilla.

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Does Your Investment Policy Statement Account for Risk?

Posted by Commonfund Institute on Jan 20, 2017

Topic: Governance and Policy | Industry Knowledge | Investment Strategy | Risk Management

In the past, many investment policy statements gave relatively cursory treatment to risk, its quantification and its potential impact on the asset pool. Market collapses and credit crises demonstrated that many institutions’ portfolios carried unacknowledged risks, that their risk profiles in general were higher than they thought, and that the risk tolerance of their fiduciaries was lower than acknowledged. Today, then, it is entirely appropriate to put risk at the top of the process of investment policy development.

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