CHAPEL HILL, N.C. -- The University of North Carolina at Chapel Hill is expanding its investment staff and continuing to reshape its $750 million endowment fund, said Mark Yusko, chief investment officer.
Late last month, Mike Hennessy, former director of public investments at Duke University, joined UNC's staff as a senior investment director and portfolio strategist. "Mike will mainly be responsible for public investments and asset allocation," Mr. Yusko said.
Jonathan D. Scanlon, a former manager and financial analyst at Merck & Co., has replaced Mr. Hennessy at Duke.
In addition, UNC has made an offer to a director of investment operations who is scheduled to start April 1. That will bring the staff to five investment professionals plus two administrative assistants.
Mr. Yusko also said he has received trustee approval to add two more analysts to the staff in the next few months.
These are major changes for the endowment fund, which never had a chief investment officer until a year ago, when Mr. Yusko was recruited for the position from the endowment of University of Notre Dame, South Bend, Ind. When he started at UNC, the staff consisted of one investment professional and a secretary.
In other changes to the endowment fund, UNC terminated Lynch & Mayer as manager of a $40 million midcap domestic growth equity strategy because of turnover in personnel at the company, Mr. Yusko said.
No one at Lynch & Mayer returned several phone calls from Pensions & Investments seeking comment.
The $40 million has been redeployed to other strategies, with $20 million going to the Maverick Fund, an opportunistic equity fund; $15 million to the City of London, an emerging markets manager; and $5 million to fund private equity drawdowns.
Now Mr. Yusko is turning his attention to the fund's $250 million domestic equity portfolio. He plans to add one or two large-cap managers to beef up that area.
"We may rebalance the large-cap upward slightly and the midcap down slightly," Mr. Yusko said.
The actual numbers will be determined at the next board meeting, scheduled for Feb. 8. The domestic equity portfolio is around 25% large-cap, 40% midcap, 25% small-cap. Another 10% is in opportunistic equity, invested primarily in public equities long and short.
In January, he spent 11 days touring Asia in search of investment opportunities, and found a number of good ideas he plans to pursue.
"There is real potential in Thailand. The situation in Korea has improved. Hong Kong and China look solid," he noted.
The fund has 5% of assets in emerging markets, which he might double as he finds suitable managers.
"I'm also still on the lookout for good opportunities in absolute return and opportunistic equity strategies," Mr. Yusko said.
The asset allocation of the endowment fund as of Dec. 31 was 33% domestic equity; 16% international equity (with 5% of that emerging markets); 10% opportunistic equity; 9% absolute return; 5% private equity; 7% real estate and energy; and 20% fixed-income (with 7% of that global).
