Skip to main content
MENU
Subscribe
  • Subscribe
  • Account
  • LOGIN
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE Act 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2022 Retirement Income Conference
    • 2022 Managing Pension Risk & Liabilities
    • 2022 WorldPensionSummit
Breadcrumb
  1. Home
  2. Print
July 07, 1997 01:00 AM

CALTECH SET TO MAKE BIG BET ON ALTERNATIVES

Terry Williams
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    PASADENA, Calif. - The $1.3 billion endowment of the California Institute of Technology set a new target of 25% of total assets for alternative investments, a significant commitment.

    The old allocation to alternatives was small; it was invested primarily in venture capital and buy-out funds, said Philip Halpern, treasurer. Mr. Halpern joined Caltech in mid-1996, following four years as chief investment officer of the $27 billion Washington State Investment Board, Olympia.

    Increasing alternative investment targets is nothing new to Mr. Halpern.

    During his tenure with Washington state, he was involved in that fund's decision to expand its alternative investments to $2.4 billion from $1.6 billion, said James Parker, chief executive officer of the pension fund.

    The actual increase is higher because the fund received distributions of $1 billion in calendar year 1996, said Mr. Parker. The board, with assistance from Mr. Halpern, increased the alternative investment target to 15% of total assets, up from 10%.

    "It didn't surprise me to see that he (Mr. Halpern) would take that position on alternative investments with Caltech," said Mr. Parker. "He saw that returns have exceeded (those of) public equities."

    Caltech's increase is dramatic, but fund trustees will move deliberately to commit and invest the money, Mr. Halpern said.

    "Other universities are fairly opportunistic in this area," he said. "We have dipped our toe in the water in the past, and we have been successful.

    "The worst thing you could do is have an allocation to something and just blindly get into it," said Mr. Halpern. "We will look at everything, but we will only invest if the expected hurdle rates are attractive."

    "We will be looking at absolute return strategies, private equity (such as) buy-outs and venture capital," said Mr. Halpern. "If real estate deals are attractive, we will look at them within this category."

    Because the Caltech staff is developing an implementation plan now, Mr. Halpern was light on the details of how the endowment will proceed. He said, however, the fund will seek to take advantage of perceived "competitive advantages" that it has in private equity.

    These advantages range from Caltech's relative small size and uncomplicated decision-making structure to its technology transfer office as a potential source of deal flow, to the use of the faculty's expertise to evaluate the viability of technology, said Mr. Halpern.

    "We do have some competitive advantages on the private equity side," said Mr. Halpern. "Pension funds have lots of money, but it is hard for them to be nimble and get invested in a meaningful way.

    "We are a funny size, in that it is not cost-effective to hire lots of staff, but big enough to take it (investment in alternatives) seriously," said Mr. Halpern.

    The fund has internal expertise; Mike Beblo, a senior investment analyst, recently joined from Frank Russell Trust Co., where he worked on alternatives.

    The internal staff is complemented by advisers/consultants who have been used on a project-by-project basis, said Mr. Halpern.

    The Caltech faculty is another resource Mr. Halpern thinks the endowment can tap, particularly in venture capital. He anticipated the faculty might be used to evaluate venture capital general partners that bring arcane technologies to the endowment.

    The faculty also can be a potential source of deal flow, he said.

    "Our faculty does a lot of research, a lot of which is commercializable," he said. "There is a source of potential deal flow.

    "We have a technology transfer office here that tries to bring (faculty) ideas to market," he said. "We are a producer of product, so people will be interested in forming relationships with Caltech."

    Some old relationships with the endowment have ended, however. The Carmack Group, a consultant to the endowment, and The Common Fund no longer are used by Caltech, confirmed Mr. Halpern.

    Margaret Price contributed to this story.

    Recommended for You
    Read the print edition of P&I
    Read the print edition of P&I
    How low is low? Projections say it's not low enough
    How low is low? Projections say it's not low enough
    FINRA honors Wharton's Olivia Mitchell with Ketchum Prize
    FINRA honors Wharton's Olivia Mitchell with Ketchum Prize
    Strong Demand Drivers Underpin Private Credit
    Sponsored Content: Strong Demand Drivers Underpin Private Credit

    Reader Poll

    June 6, 2022
    SEE MORE POLLS >
    Sponsored
    White Papers
    Nearing the finish line: Ideas on end-state investing for corporate DB plans
    The Meaning of "Portfolio Intelligence"
    Credit Indices: Closing the Fixed Income Evolutionary Gap
    Forever in Style: Benchmarking with the Morningstar® Broad Style Indexes℠
    Crossroads: Politics, Inflation, & Bonds
    Is there a mid-cap gap in your DC plan?
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    June 20, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE Act 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2022 Retirement Income Conference
      • 2022 Managing Pension Risk & Liabilities
      • 2022 WorldPensionSummit