Articles

Inaugural Corporate Responsibility Report and 2018 Mid-Year Letter

Posted by Mark J.P. Anson, Commonfund on Jul 12, 2018

Topic: Governance and Policy | Industry Knowledge | Investment Strategy | Responsible Investing

We are pleased to share with you our inaugural Corporate Responsibility Report. Since our founding in 1971, Commonfund has pursued a singular mission – to enhance the financial resources of our clients by delivering exceptional performance, service and insight. Beyond our focus on investment excellence . . .

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Diversity and Emerging Managers

Posted by Commonfund Institute on May 21, 2018

Topic: Asset Allocation | Industry Knowledge | Investment Strategy | Responsible Investing

The benefits of diversity are widely recognized in the work place and among educational institutions and other nonprofits. Yet, the concept of investment management firms that are minority owned and operated lags, partly because of the challenge of attracting investors’ capital . . .

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Inflation Expectations are Rising. How Can Investors Protect Portfolios?

Posted by Ivo C. Nenin, Kristofer Kwait on May 14, 2018

Topic: Asset Allocation | Industry Knowledge | Investment Strategy | Market Commentary | Real Assets

In March, capital markets entered their tenth year of post-crisis recovery. For diversified portfolios, these have been some of the most profitable times, characterized by strong returns, positive correlations between equities and bonds and robust illiquidity premiums from private programs . . .

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ESG Investing Becomes Mainstream

Posted by Commonfund Institute on May 4, 2018

Topic: Asset Allocation | Industry Knowledge | Investment Strategy | Responsible Investing

Can a sustainability strategy be tied to better financial outcomes? The subject of ESG, or investing in accord with environmental, social and governance principles, arose in several sessions at Commonfund Forum 2018. One session, in particular, was devoted to the ongoing evolution of responsible investing, with a focus on ESG.

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Private Capital: Key to Unlocking Growth in Emerging Markets

Posted by Commonfund Institute on Apr 25, 2018

Topic: Industry Knowledge | Investment Strategy | Market Commentary | Private Capital

After a turbulent period, emerging markets have delivered double-digit returns in recent years. Private investments in emerging markets offer a way to diversify beyond the public markets and, in general, have also been a source of strong returns...

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Viewpoint:
Being Objective

Posted by Commonfund Institute on Feb 22, 2018

Topic: Governance and Policy | Industry Knowledge

Every year, the NACUBO-Commonfund Study of Endowments® (NCSE) reports new data—on investment returns, asset allocation, risk management, donations and gifts, and much more. But some data points are relatively static. In this Viewpoint we will dive deeper into long-term return objectives and the investment policies that support the objectives of the endowment.

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Governance Best Practices: How Does Your Board Measure Up?

Posted by Commonfund Institute on Jan 11, 2018

Topic: Governance and Policy | Industry Knowledge

Since our founding in 1971, a core element of the Commonfund mission has been to provide insights on a broad range of governance, policy and investment challenges. An engaged governing board is important in all environments – but perhaps no more so than today. Markets are at new highs, yet there remains much uncertainty – from the inevitable market correction to disruption of many nonprofit operating models to the impact of recently enacted tax law changes. As we start 2018, Commonfund Institute convened a panel of thought leaders to discuss current practices in nonprofit governance and offer ways for boards to bring best practices to their processes and deliberations. The discussion was moderated by John S. Griswold, Founding Director of the Institute. The three panelists were: Thomas K. Hyatt, partner in the Washington office of Dentons US LLPand co-chair of the firm’s U.S. Nonprofit Entities Practice. He is a Senior Fellow for Public Policy at the Association of Governing Boards of Universities and Colleges (AGB) and was recognized as Outstanding Nonprofit Lawyer of the Year for 2017 by the American Bar Association. Robert B. Litterman, PhD., Chair of the Risk Committee and a founding partner of Kepos Capital, a New York City-based systematic global macro investment firm. In a 23-year career with Goldman Sachs he headed the firm’s risk management function and co-developed the Black-Litterman Global Asset Allocation Model, a mathematical model for portfolio allocation. He is Chair of the Board of Trustees of Commonfund, and serves on other boards, including the World Wildlife Fund and the Robert Wood Johnson Foundation. David Nygren, PhD., founder of Nygren Consulting and previously founding Senior Partner of the Corporate Governance Consulting Group at Mercer Delta Consulting. Formerly, he was Executive Vice President of DePaul University and has held teaching and research appointments at Harvard, Yale and Boston University. He has served on or chaired the boards of numerous organizations in education, health care and the arts.

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Year-End Update and 2018 Outlook | Rational Resiliency

Posted by Catherine Keating on Dec 14, 2017

Topic: Asset Allocation | Equities | Fixed Income | Governance and Policy | Industry Knowledge | Investment Strategy

As we come to the end of 2017 and look forward to 2018, we are approaching the tenth year of the post-crisis recovery. With synchronized global growth for the first time in a decade, equity markets near all-time highs, and a year of strong double-digit portfolio returns, investors should be feeling exuberant. And yet we find the exuberance of most institutions with whom we work tempered by concerns about the future.

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Catherine Keating Profiled in the Fall 2017 Issue of UVA Lawyer

Posted by Eric Williamson - UVA Lawyer on Nov 9, 2017

Topic: People

Catherine Keating Profiled in the Fall 2017 Issue of UVA Lawyer: “We want to manage our clients’ money the way they would manage it,” said Keating, who became the president and CEO of Commonfund in 2015. “That means every basis point matters, because that’s a basis point that they can spend on their missions.”

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What’s the Difference? Time-Weighted Return vs. Internal Rate of Return

Posted by Commonfund on Oct 27, 2017

Topic: Industry Knowledge | Investment Strategy

Investors often ask about the difference between time-weighted return (“TWR”) and internal rates of return (“IRR”). In general, TWR is used by the investment industry to measure the performance of funds investing in publicly traded securities. By contrast, IRR is normally used to gauge the return of funds that invest in illiquid, non-marketable assets—such as buyout, venture or real estate funds. This article will explain why public and private investment returns are reported differently and how the calculation methodologies differ.

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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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Hedge Fund Land:
An Expensive Amusement Park?

Posted by Mark J.P. Anson on Aug 16, 2017

Topic: Asset Allocation | Hedge Funds | Industry Knowledge | Investment Strategy

In a series of articles, we have addressed two recent investment “fatigues” experienced by institutional investors: Active vs. Passive; and Global (ACWI) vs. US benchmarks. In this article, we tackle the third and last “fatigue”— Hedge Funds. Hedge funds have come under extreme criticism lately for their expensive fee structure, lack of performance, and too much “beta” wrapped up in an “alpha” fee structure. It appears that hedge funds are run more for the amusement of the hedge fund manager and less for the benefit of the hedge fund’s clients. These are all legitimate concerns but we still believe that there is value to be found in Hedge Fund Land.

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Viewpoint: Increased Responsibility

Posted by Commonfund Institute on Aug 8, 2017

Topic: Governance and Policy | Industry Knowledge | Responsible Investing

In recent years, growing attention has been paid to the use by endowed institutions of so-called responsible investing practices. The three main practices — environmental, social and governance (ESG) investing; socially responsible investing (SRI); and impact investing (also known as mission-related investing or MRI) — are defined in this article.

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Implications of New York’s Excelsior Scholarship Program

Posted by Commonfund Institute on Jun 6, 2017

Topic: Governance and Policy | Industry Knowledge | Investment Strategy

While opening opportunity to many New York families, the recently enacted Excelsior Scholarship Program will likely stress the financial resources of small private colleges and universities in New York State, particularly those with a high percentage of state resident students, modest endowments and high tuition discount rates. With revenues from tuitions facing pressure, the importance of endowment in support of operating budgets and scholarships will increase.

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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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Viewpoint:
Counting the Cost

Posted by Commonfund Institute on Mar 30, 2017

Topic: Governance and Policy | Industry Knowledge

How much does investment management cost? Fiduciaries, donors and stakeholders at endowed institutions have a strong interest in finding a good answer to this question, particularly in this era of low returns when costs may occupy a comparatively large proportion of the total return percentage. But achieving that goal is harder than it seems. In our white paper of 2015, “Understanding the Cost of Investment Management,” we outlined the types of cost that institutions pay— including those that are not specifically invoiced, and of which many fiduciaries may be unaware. This year, we enlisted the aid of institutions participating in the NCSE to dig more deeply into one of the main factors that influence investment cost: the investment vehicles employed in managing the portfolio.

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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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Year-End Letter & 2017 Investment Outlook

Posted by Catherine Keating on Jan 3, 2017

Topic: Asset Allocation | Investment Strategy

We would like to wish you the very best in the New Year, and we are pleased to share with you our year-end letter and comprehensive investment outlook for 2017. For a more detailed look at our expectations and portfolio positioning going forward, download our Year-End Letter and 2017 Investment Outlook | Thriving in a Diverging World.

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Quant Corner: Understanding Active Risk and Tracking Error

Posted by Jess Gaspar on Nov 7, 2016

Topic: Asset Allocation | Investment Strategy | Risk Management

Investors frequently focus on the total return they experience in their portfolios. In periods when absolute returns are high, they feel good; in periods when absolute returns are low, they feel bad. Yet good performance and bad performance should not be evaluated in a vacuum, they should be evaluated relative to the risks undertaken in their portfolios.

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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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Viewpoint: A Firmer Foundation

Posted by Commonfund Institute on Sep 2, 2016

Topic: Governance and Policy | Industry Knowledge | Responsible Investing

How long is the long term? A year ago, private and community foundations appeared to many observers to have recovered from the losses suffered in the 2008–09 global financial crisis. Double-digit investment returns had been reported in every year except FY2011 and FY2014, donations to community foundations had returned to their pre-crisis levels and the investment strategies of successful foundations were once again followed closely in the financial press.

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Active Management Fatigue and What to Do About It

Posted by John Delano, Jess Gaspar, Kristofer Kwait on Jun 14, 2016

Topic: Asset Allocation | Investment Strategy

Active management has struggled for several years, raising questions about whether active management can ever outperform again. Traditional active manager style tilts, like value and size, have detracted from performance in recent periods. Over the long run, these tilts tend to mean revert around positive trends, creating reasons to be optimistic about active management’s prospects. On the other hand, only 30 percent of managers truly deliver positive alpha after controlling for typical active management style tilts.

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Catherine Keating speaks with Institutional Investor

Posted by Institutional Investor on Jun 10, 2016

Topic: Asset Allocation | Investment Strategy | Market Commentary

Catherine Keating sits down with Institutional Investor to discuss the investment edge for nonprofits in a low-interest-rate environment and the active-versus-passive debate.

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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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Ideas for Next Gen Energy Investing

Posted by Commonfund on May 17, 2016

Topic: Asset Allocation | Industry Knowledge | Investment Strategy | Responsible Investing

Advances in alternative energy technologies promise to reduce the world’s dependence on fossil fuels. Largely, however, they remain just that—a promise. So, where are the opportunities to invest in the evolving energy environment? At Commonfund Forum 2016, a panel discussion took on this question.

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Unhedged Commentary:
The $3 Trillion Question

Posted by Mark J.P. Anson, Ryan Driscoll on May 5, 2016

Topic: Hedge Funds | Investment Strategy

The growth of the hedge fund industry over the past decade has been tremendous, with more and more institutional and retail investors allocating capital to investment strategies that fall outside the boundaries of traditional stock and bond funds.

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The Big Picture: Integrating Investments, Finance and Development

Posted by Commonfund on May 3, 2016

Topic: Governance and Policy | Industry Knowledge | Investment Strategy

Most things function a lot better when all the moving parts work together—nonprofit institutions included. The synergies afforded by collaboration across organizational boundaries may be the most underutilized way to leverage your organization’s resources.

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Asset Allocation with Private Equity

Posted by Commonfund on May 2, 2016

Topic: Asset Allocation | Investment Strategy | Private Capital

Private assets such as private equity and venture capital have long been a thorn in the side of asset allocators and chief investment officers. Their lack of liquidity makes it hard to model their return streams as an input to an asset allocation model, risk budget, or optimization function. Typically, asset allocators make assumptions based more on intuition and expectation than fact.

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Emerging Markets:
Balancing Risk and Reward

Posted by Commonfund on Apr 13, 2016

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

Investors poured $2 trillion into emerging economies between 2009 and 2014. Then prices for a basket of commodities fell—dragging crude oil down to levels not seen in a decade and dashing investors’ hopes at the same time. What now?

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Rethinking Risk and Diversification

Posted by Mark J.P. Anson, Catherine Keating, Bruce Zimmerman on Mar 23, 2016

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

Asset allocation is still the foundation on which better risk-adjusted returns are built. But asset allocation has changed, along with all the associated tools for pursuing return and managing risk. Have you kept up?

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Viewpoint:
Seven Years On

Posted by Commonfund Institute on Mar 11, 2016

Topic: Industry Knowledge

How long is the long term? A year ago, endowments appeared to many observers to have recovered from the losses suffered in the 2008-09 global financial crisis. Double-digit investment returns had been reported in every year except FY2012, donations had returned to their pre-crisis levels and the investment strategies of successful endowments were once again followed closely in the financial press.

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Top 5 Questions of Nonprofit Fiduciaries

Posted by Steve Snyder on Jan 27, 2016

Topic: Governance and Policy | Industry Knowledge | Market Commentary

Investment committees and staff often question what’s next for the markets and what they should do about it. In this article we address top five concerns and questions we have heard followed by our guidance for nonprofit fiduciaries.

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Early Start to the Chinese New Year

Posted by Ryan Driscoll, Michael Strauss on Jan 12, 2016

Topic: Market Commentary

With the Chinese New Year still a month away, economic and market events in China have dominated world financial markets in the first week of 2016. Concerns about developments in China ultimately dominated the financial markets last week, producing the worst start of the year for many markets around the world: Japan down five percent, the United States down six percent; Europe and the Emerging Markets broadly down seven percent, and China down more than 11 percent (with an additional five percent decline on Monday).

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A Message for the New Year: Priorities for 2016 & Beyond

Posted by Catherine Keating on Jan 4, 2016

Topic: Asset Allocation

As we begin 2016, our Chief Executive Officer shares thoughts on Commonfund, views on the capital markets and priorities for 2016 and beyond. For a more detailed look at our expectations and portfolio positioning going forward, download our 2016 Global Economic and Investment Outlook.

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Global Economic & Investment Outlook:
2016 – A Year of Transition

Posted by Commonfund on Jan 4, 2016

Topic: Asset Allocation | Equities | Fixed Income | Hedge Funds | Market Commentary | Private Capital

Our 2016 Global Economic and Investment Outlook provides a detailed look at our expectations and portfolio positioning going forward.

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Writing your Outsourcing RFP

Posted by Commonfund on Nov 12, 2015

Topic: Industry Knowledge | Investment Strategy | Outsourced Investing

Once an institution decides to pursue the outsourced CIO or investment office option, it usually leads to the creation of a request for proposal, or RFP. Considering that the outsourced model is a strategic partnership with some degree of shared fiduciary responsibility and a greater degree of discretion, it is critical to research and ask the right questions during the evaluation process. Based on best practices of the outsourced ser- vice model, the following are some critical areas that should be taken into consideration and researched during the RFP process.

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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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After the Waterfall: Contagion or Rebound?

Posted by Michael Strauss on Oct 7, 2015

Topic: Equities | Market Commentary

A waterfall selloff in the equity market this summer has reignited fears that a recession is on the horizon.

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Showdown at the Fed

Posted by Michael Strauss on Aug 17, 2015

Topic: Market Commentary

Congress is angry again. And this time, they’ve got the Federal Reserve in their crosshairs. In February, Fed Chair Janet Yellen testified to Congress on the state of the economy. The question-and-answer period of the two-day testimony was dominated by criticism of the Fed by the extreme right and, to a lesser extent, the extreme left.

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Commonfund Roundtable | Impact Investing

Posted by Commonfund on Aug 17, 2015

Topic: Industry Knowledge | Responsible Investing

Impact investing is showing growth around the world. According to the most recent J.P. Morgan/Global Impact Investing Network Impact Investor Survey, the number of institutional investors engaging in meaningful impact investing (committing $10 million or more to impact investments) increased by 26 percent in 2014, and the amount such investors planned to commit to impact investments was projected to increase by 19 percent to $12.7 billion in 2014 from $10.6 billion in 2013.

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Quant Corner – Dollar Allocation ≠ Risk Allocation

Posted by Jess Gaspar on Aug 17, 2015

Topic: Industry Knowledge | Risk Management

DOES A 70/30 PORTFOLIO HAVE 70 PERCENT OF ITS RISK IN EQUITIES? While this question may appear to channel the old joke ”Is the little red schoolhouse red?”, the answer is clearly that a 70/30 portfolio does not have 70 percent of its risk in equity. In fact, it has nearly 100 percent of its risk in equity. This first installment of Quant Corner explains why that is the case, and why investors should resist the temptation to move away from a fully diversified portfolio.

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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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Is the China Growth Story Still Real?

Posted by Michael Strauss on Aug 6, 2015

Topic: Equities | Market Commentary

While returns are still up on a year-to-date basis, Chinese equity markets have plunged almost 30 percent this summer.

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Download Your Guide to Outsourcing

Posted by Commonfund on Jul 21, 2015

Topic: Industry Knowledge | Outsourced Investing

Is your Investment Committee focused on the right strategic objectives or do they get bogged down in tactical issues like reviewing investment managers? Your committee members only have a limited number of hours together during the year and maximizing their effectiveness is key. Many non-profits institutions have decided to pursue outsourcing investment management to a fiduciary partner who can dedicate the appropriate time, resources and expertise. If you are considering this approach, it’s critical to know the right questions to ask during the evaluation process.

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Western Washington University:
Active minds changing lives

Posted by Commonfund on Jun 3, 2015

Topic: Partners

Right-sized, well balanced, with an extensive range of strong academic programs and some enlightening stats that speak to all of it: Western Washington University (WWU) produced nine Fulbright Scholars in 2013, leading the nation among public master's-granting institutions; it's the leading university of its size in sending graduates to the Peace Corps for the third straight year; and according to WIRED magazine, Western is one of five universities sending the most graduates to Microsoft Corp.

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It Ain’t Over ’til It’s Over – Economy Rebound

Posted by Michael Strauss on May 20, 2015

Topic: Market Commentary

2015 Q1 economy rebound - Continued strength in corporate earnings, a rebound in housing and consumer income, combined with a “go-slow” approach by the Federal Reserve, are all good signs . . .

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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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Viewpoint: Changing our Minds

Posted by Commonfund Institute on Jan 12, 2015

Topic: Governance and Policy | Industry Knowledge

It is often said that we live in a world of change, but it is surprising how slowly that change can occur. Seven years after the onset of the Great Recession, many business school students are still taught that portfolio volatility is a suitable proxy for risk. In an encouraging contrast, however, this year’s NCSE data show that endowment fiduciaries at educational institutions are increasingly—and meaningfully—assimilating new practices in measuring and overseeing risk, taking steps to acknowledge and understand it in its various forms.

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John Griswold receives Sarah Daignault Award for his outstanding support of independent schools

Posted by Commonfund on Jan 1, 2015

Topic: People

John Griswold receives Sarah Daignault Award awarded for his outstanding support of independent schools

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The Battle Continues | In like a bear, out like a bull

Posted by Michael Strauss on Nov 5, 2014

Topic: Market Commentary

For the last several weeks the financial markets have been caught between the battle of better economic and earnings news in the U.S., versus challenges on the international front including a deterioration in economic activity in Europe, political uncertainty in Brazil and Argentina, unrest in the Middle East and Russia/Ukraine, as well as a dose of Ebola fears.

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Viewpoint: Alphabet Soup – Responsible Investing

Posted by Commonfund Institute on Oct 12, 2014

Topic: Governance and Policy | Industry Knowledge | Responsible Investing

Responsible investing has been used as an umbrella term that includes some investment practices of long standing and some that are relatively new arrivals. Simple, clear definitions of responsible investing practices are not difficult to find; here are the ones...

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Missouri Baptist Foundation

Posted by Commonfund on Oct 3, 2014

Topic: Partners

The Missouri Baptist Foundation (MBF) has a noble calling: to support and strengthen the good work of the show me state's ministries, missions and baptist churches — all giving of their time, talents and treasures to share the gospel, feed the hungry and help those in need.

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The Lincoln University

Posted by Commonfund on Oct 3, 2014

Topic: Partners

Founded in 1854, The Lincoln University is the nation's oldest degree-granting institutions for persons of African descent. Lincoln is committed to maintaining a nurturing and stimulating environment for learning, teaching, research, creative expression and public service for a diverse student body, faculty and workforce.

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Form Follows Function in Multi-Asset Investing

Posted by Steve Snyder on Sep 17, 2014

Topic: Asset Allocation | Industry Knowledge | Outsourced Investing

Interest in multi-asset investing is growing and the inflows confirm it: Institutional assets committed to multi-asset investing are reported to have increased to $773 billion at year-end 2013, up from $442 billion at year-end 2010, while the second quarter of 2014 represented the 11th consecutive quarter of fund flows into the strategy. The trend isn’t confined to the U.S., either, as industry data indicate that in Europe some €62.5 billion was committed to multi-asset funds in the first six months of 2014.

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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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Greenhouse effect

Posted by Commonfund Institute on Aug 17, 2014

Topic: Industry Knowledge | Risk Management

In the last five years, as world markets have recovered from the global financial crisis, institutional portfolio returns have generally been strong. While many factors have played a part in this scenario, historically low interest rates and accommodative monetary policies on the part of the Federal Reserve and the European Central Bank—an artificial environment like that of a greenhouse—are among the main causes for the high equity market returns of the last few years.

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Smart money, crowded trades?

Posted by John Delano, Kristofer Kwait on Aug 17, 2014

Topic: Hedge Funds | Industry Knowledge

Approaches to stock selection vary widely across the hedge fund universe, even among managers practicing the same strategy. Valuation, potential catalysts, time horizons and technical factors based on price history all influence decisions to own a stock, both in terms of names and position sizing and hedging. A name that is attractive to one manager may leave another unmoved, or escape consideration altogether.

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Global private equity: what and why

Posted by Mark Hoeing, Miriam Schmitter on Aug 17, 2014

Topic: Asset Allocation | Industry Knowledge | Private Capital

An article in the previous issue of Insight sought to discern the difference between perception and reality in private equity investing generally, and included a companion article focused on European private equity specifically. Now, we take a deeper look at international private equity, with an emphasis on Europe as well as Japan and Australia. Once again, there is a perception gap that may lead long-term institutional investors seeking to diversify their portfolio both by asset class/strategy and geography to overlook what we believe are compelling opportunities outside the U.S. Herewith, the what and why of international private equity.

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Of Apples, Oranges and Onions: Assessing OCIO Performance and Fees

Posted by Commonfund Institute, John Griswold on Aug 17, 2014

Topic: Industry Knowledge | Outsourced Investing

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. When assessing potential OCIO providers, institutions typically first cover two “essential Ps”—the providers’ People and Processes.

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Viewpoint: Looking Modern and Sharpe

Posted by Commonfund Institute on Jul 7, 2014

Topic: Governance and Policy | Industry Knowledge | Risk Management

Every fiduciary knows that risk-taking is an unavoidable part of investing. But how can fiduciaries think usefully about risk in the context of their role as guardians of their institutions’ funds? This question is particularly urgent in the current financial and economic environment, which since early 2009 has been strongly influenced by the policies of the leading central banks, notably the Federal Reserve. The banks’ policies of keeping interest rates extremely low and providing liquidity to the market have supported a broad resurgence in public equity prices in the U.S. and Japan. Although the recovery has seen some pauses and retrenchments as each market has reacted in its own way to the central banks’ policies, the overall direction of prices has been strongly upward.

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Commonfund Roundtable | Evolving challenges in nonprofit governance

Posted by Commonfund on Apr 13, 2014

Topic: Governance and Policy | Industry Knowledge

Commonfund recently convened an expert panel moderated by MYRA DRUCKER (standing, left), Chair of the Board, TrustedPeer Inc. and former chair of the Commonfund Board of Trustees. The roundtable examined recent developments in the ongoing evolution of nonprofit governance. Roundtable participants were (seated, left to right): JOHN GRISWOLD, Executive Director, Commonfund Institute; CINDY LOTT, Senior Counsel to the National State Attorneys General Program at Columbia Law School; and JEFFREY TENENBAUM, Partner and Chair of the nonprofit organization practice Venable, LLP, Washington, D.C. Highlights of their exchange follow.

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Nonstop Non-profit dedicated OCIO

Posted by Commonfund on Apr 12, 2014

Topic: Governance and Policy | Outsourced Investing

As the OCIO model has evolved and expanded in recent years, a number of financial providers have entered markets they may not fully understand—markets such as nonprofit institutions. Their arrival has served to spotlight the differences between generalist practitioners and specialists dedicated to nonprofits. In my experience in the OCIO arena, I have found that nonprofit institutions are often better served by an OCIO provider with a full staff of professionals who are focused solely on nonprofits than by a generalist with a nonprofit's practice among several other competing business units.

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Private equity: perception and reality

Posted by Peter Burns, Mark Hoeing, Kent Scott on Apr 12, 2014

Topic: Equities | Private Capital

For a variety of reasons, some investors believe that private equity may have lost its edge as a key allocation for their portfolios. This perception may overlook reality. A closer examination reveals that the fundamentals are intact and there are attractive opportunities for skilled private equity managers. As always, investors should be discerning in their choice of managers, and continue to place access ahead of allocation. Here, a look at some widely held perceptions and the reality that may be overlooked or misunderstood.

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Risk: the fuel that generates portfolio returns

Posted by Commonfund on Apr 12, 2014

Topic: Industry Knowledge | Risk Management

In a broad sense, how should nonprofit institutional investors think about investment risk and risk management? Just about every nonprofit will answer that question somewhat differently; what is a considerable risk for one organization may be less of a concern for another. Large nonprofits may have a chief risk officer; at smaller and mid-sized organizations, investment risk management is the responsibility of the board, investment committee and senior staff members. For organizations whose mission is investment management, risk and risk management take on a wholly different complexion and level of complexity. Still, there are commonalities that may help even the smallest of institutional investors conceptualize an approach to risk management that is workable and effective.

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ESG: sharpening the point

Posted by Commonfund on Apr 12, 2014

Topic: Industry Knowledge | Responsible Investing

In general, ESG is used to describe a group of characteristics that can have a material impact on the long-term success of a company and, potentially, investment returns. Examples of the “E” in ESG criteria include environmental factors, such as energy consumption and greenhouse gas emissions; examples of the “S” include social factors, such as supply-chain risk management, corporate citizenship, gender and racial diversity, and employee productivity; examples of the “G” include governance factors, such as independent board leadership and CEO compensation.

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University of the Virgin Islands

Posted by Commonfund on Apr 3, 2014

Topic: Partners

These Buccaneers pursue a different treasure. There was a time when pirates plied the waters of the Caribbean in the pursuit of gold and other treasure. The Buccaneers mascot of the University of the Virgin Islands (UVI) recalls that era long ago, but today the treasure is vastly different: It's education...toward that goal, UVI is an institution on the move:

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They dig plants at the Botanical Research Institute of Texas

Posted by Commonfund on Apr 3, 2014

Topic: People

Hundreds of thousands of plant species are scattered all over the earth, but if the plant world had a headquarters it might be the Fort Worth, Texas home of the Botanical Research Institute of Texas (BRIT®). Founded in 1987, BRIT is an international scientific research and learning organization focused on deepening knowledge of plants and the value they contribute to life. BRIT’S research has led to the discovery of new plant species, as well as new uses for plants in agricultural, economic, environmental, medical and social fields.

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Frozen – How Does Weather Impact the U.S. Economy?

Posted by Commonfund on Mar 27, 2014

Topic: Market Commentary

The worst winter weather in 20 years in many parts of the U.S. served to temporarily weaken economic activity at the end of last year and in Q1 2014.

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Labor Market Myths Debunked

Posted by Michael Strauss on Jan 13, 2014

Topic: Market Commentary

The headline concerns over the most recent employment data are overstated. Employment trends in the U.S. are actually quite positive and will continue to support economic growth . . .

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Viewpoint: Looking Modern and Sharpe – Study of Endowments

Posted by Commonfund Institute on Jan 12, 2014

Topic: Governance and Policy | Industry Knowledge | Risk Management

Every fiduciary knows that risk-taking is an unavoidable part of investing. But how can fiduciaries think usefully about risk in the context of their role as guardians of their institutions’ funds? This question is particularly urgent in the current financial and economic environment, which since early 2009 has been strongly influenced by the policies of the leading central banks, notably the Federal Reserve. The banks’ policies of keeping interest rates extremely low and providing liquidity to the market have supported a broad resurgence in public equity prices in the U.S. and Japan. Although the recovery has seen some pauses and retrenchments as each market has reacted in its own way to the central banks’ policies, the overall direction of prices has been strongly upward.

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Goldilocks Economy or a QE-Driven Mirage?

Posted by Michael Strauss on Nov 15, 2013

Topic: Equities | Market Commentary

Whether at investment committee meetings, cocktail parties or on the sidelines at fall soccer or football games, no one in the investment community can escape questions about what happens after the Fed stops its latest round of quantitative easing.

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Viewpoint: A Different Kind of Climate Change

Posted by Commonfund Institute on Nov 12, 2013

Topic: Industry Knowledge | Investment Strategy

While operating charities entered the financial crisis with asset allocations that reflected their priorities and preferences at the time — and that were, in many respects, remarkably similar across the three categories of institution — the ensuing seven-year period has seen continual evolution and differentiation, with the result that these organizations, while they have moved in the same general direction of increased diversification, have done so in ways that reflect their own institutional preferences and priorities.

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Fiscal Follies and the Government Shutdown

Posted by Michael Strauss on Oct 8, 2013

Topic: Market Commentary

Recent events have marked the first partial closing of the Federal government in 17 years.

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University Corporation for Atmospheric Research

Posted by Commonfund on Oct 3, 2013

Topic: Partners

It doesn't issue public weather forecasts, but it tracks weather around the globe. It isn't the national hurricane center, but it studies hurricanes as well as other extreme weather. It isn't the federal aviation administration, but it has made flying safer. What it does do touches the daily lives of just about every American, as well as populations around the world.

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Flagler College

Posted by Commonfund on Oct 3, 2013

Topic: Partners

St. Augustine is the oldest continuously occupied European-established settlement in the continental U.S., having been founded in 1565. Flagler College is a mere four centuries younger, having been founded in 1968. But the sense of place that goes with being situated in the heart of St. Augustine clearly helps to define the college.

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10-Point Checklist: Get Governance Right

Posted by Commonfund, Tom Hyatt on Aug 12, 2013

Topic: Governance and Policy

Follow this 10-point governance checklist to address the topics your board is accountable for....

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6 keys to choosing the right outsourced CIO

Posted by Commonfund on Aug 12, 2013

Topic: Industry Knowledge | Investment Strategy | Outsourced Investing

Not long ago, the definition and scope of an “Outsourced CIO” (or OCIO) was narrowly defined. It generally meant investment management—a traditional consulting model in which the process of interviewing managers was delegated to an outside provider. Over time, however, as institutions’ internal staffs have been reduced and stretched, the definition of the model has expanded and evolved in kind. While OCIO was once regarded as merely an investment advisory function, it now can be about a total partnership that delves into deeper issues than an institution’s investment portfolio.

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Dealing with the June Swoon

Posted by Michael Strauss on Jul 1, 2013

Topic: Market Commentary

The “sell-in-May” did not quite materialize this year, but the debate about the future course of U.S. monetary policy and the economy fueled a June swoon with a spike in daily volatility for equity markets.

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Dealing with Data Jitters

Posted by Michael Strauss on May 1, 2013

Topic: Market Commentary

The labor market “weakness” in March came after a surge in “seasonal” hiring in February. Likewise, the tempered 2.5 percent gain in 2013:Q1 real GDP reflected a sharp reduction in government spending, but private-sector real growth expanded at a solid 3.2 percent pace.

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‘What, me? Illiquid?’

Posted by Kent Scott, Paul Von Steenburg, Timothy Yates, Jr. on Apr 12, 2013

Topic: Industry Knowledge | Private Capital

Although it has been five years since the collapse of Lehman Brothers—an event that transformed a bad recession into a global financial crisis—the scars of that traumatic episode remain etched in the psyche of many institutional investors. We have new worst-case scenarios in our risk models and a greater appreciation for so-called “black-swan” or “left-tail” events. Nowhere is this lingering fear more palpable than in the consideration of illiquid investments as investors continue to think through the amount of capital to lock up in “illiquid” strategies. Because of this recent history and uncertainty about the future, we often hear investors ask, “Why should I lock up capital for 10-plus years? And if I should, how much?”

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Long-Term Care – Healthcare’s New Regulatory Regime

Posted by Commonfund Institute on Apr 12, 2013

Topic: Asset Allocation | Industry Knowledge

Facing cost pressures and a new regulatory regime, healthcare organizations — especially those in the small and mid-sized range — should consider adopting the principles of the endowment model. Nonprofit healthcare organizations are confronting an unprecedented series of challenges as they strive to maintain positive operating margins in the face of declining reimbursements from insurance companies and government payers. The crisis is particularly acute at smaller and mid-sized organizations. Having played a major role in their communities for decades, they are finding that the healthcare business model is changing.

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ESG and your institution

Posted by Commonfund on Apr 12, 2013

Topic: Industry Knowledge | Responsible Investing

Investing according to environmental, social and governance principles is maturing into a distinct discipline. Robust research results dispute the conventional wisdom about performance trade-offs. If your institution has yet to consider ESG seriously, it may be time to take a closer look. For decades, institutional investors have struggled with the challenges posed by “responsible” investing. These investors faced a wide range of issues—definition, measurement and objective-setting among them. But, the most pervasive question was—and continues to be—whether socially responsible investing (SRI) screens or today’s more all-encompassing environmental, social and governance (ESG) factors help or hurt long-term investment performance.

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Addressing the Big EEEEs – Economy, Employment, Earnings, and the Election

Posted by Michael Strauss on Nov 5, 2012

Topic: Market Commentary

The U.S. economy shows resilience, employment continues to improve while earnings and forward guidance largely disappoint.

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Moving the First Down Chains in the Housing Sector…

Posted by Michael Strauss on Aug 29, 2012

Topic: Market Commentary

The U.S. housing sector is demonstrating newfound strength for the first time in many years amidst concerns of the fiscal cliff, Euro challenges and slower growth in the emerging markets.

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The Dog Days of Summer

Posted by Michael Strauss on Jul 17, 2012

Topic: Market Commentary

Commonfund Chief Investment Strategist Michael Strauss, discusses how the government shutdown impacts the economy with the debt crisis in Europe.

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Déjà vu All Over Again (or Not?)

Posted by Michael Strauss on May 11, 2012

Topic: Equities | Market Commentary

Does European political and macroeconomic concerns impact the U.S.

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Behind the Jobs Numbers: No Need to Panic

Posted by Michael Strauss on Apr 13, 2012

Topic: Market Commentary

The Employment report for March came in well below market expectations as nonfarm payroll employment rose just 120,000 last month, versus market consensus estimates centered between . . .

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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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A Risk Management Assessment: Is a Breakup of the EU Inevitable?

Posted by Commonfund on Nov 21, 2011

Topic: Market Commentary | Risk Management

Once considered taboo, leaders in Europe are contemplating changes in the structure and make-up of the Eurozone. Debt problems, and the challenges of dealing with them, have rattled the financial markets for months and most expect volatility to be the norm for some time to come.

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A Soft Landing in China

Posted by Michael Strauss on Nov 4, 2011

Topic: Market Commentary

Economic activity in China has decelerated modestly while remaining a growth engine for many economies around the world.

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Europe Hits a Brick Wall

Posted by Michael Strauss on Aug 5, 2011

Topic: Market Commentary

The financial challenges in Europe have reached a breaking point and a wake-up call to the leaders in Europe has been made.

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