John S. and James L. Knight Foundation, Miami, will outsource investment of its $1.9 billion in assets to Cambridge Associates on March 1, said Larry "Bud" Meyer, vice president of communications and the foundation's secretary. Cambridge, which has been the foundation's investment consultant for 18 years, will now make all investment decisions, including asset allocation and manager selection, monitoring and evaluation. James N. Bailey, senior managing director and a co-founder of Cambridge, is lead consultant. Ennis Knupp assisted.
The move is prompted by the retirement in March of Timothy J. Crowe, vice president and chief investment officer, after 15 years with the fund. Mr. Crowe said he decided to take advantage of the foundation's early retirement program and will likely review opportunities elsewhere in the investment management industry.
The fund's current investment process uses a core of active managers - all in alternative investments - surrounded by passive portfolios, which staff tilt tactically and strategically. The asset allocation on the active side is 30% hedge funds, in 22 direct investments; 15% buyouts, including private equity and venture capital; 8% real estate; and 6% commodities. Passive allocations are 24%, marketable equities, both domestic and international; 13% fixed income; and 4% other. Mr. Crowe said annualized returns for the foundation from when he joined in 1990 through the end of 2004 were 13.4%.
Mr. Crowe said the asset allocation and investment of the foundation will likely change once he and his team have left because the process is so labor intensive, although he couldn't offer any specifics. Cambridge's Mr. Bailey could not be reached by press time for a comment on his plans for Knight Foundation's investment profile.
As many as three of the fund's other nine full-time and one part-time investment staffers will remain to oversee internal investment operations. Mr. Meyer said it is not known now which employees will remain in the investment office: Knight officials are hoping to find positions within the foundation for the other employees.