SEATTLE — Not everybody thinks outsourcing is such a great idea.
In fact, Casey Family Programs, Seattle, has bucked the trend, pulling back the foundation's $2.2 billion in assets, which had been managed entirely by Russell Investment Group, Tacoma, Wash.
The move is designed to enhance returns for the foundation, trim fees and give foundation officials greater control over the assets, explained Gloria Reeg, chairwoman of the foundation's investment committee.
Ironically, Ms. Reeg was head of Russell's global consulting practice until April 2001, when she left the firm. She still believes in the virtues of outsourcing, but thinks institutions with at least $1.5 billion in assets can take care of themselves.
"Russell recognizes that foundations of all sizes ultimately need to assess their own capabilities and priorities, and decide whether outsourcing or building capabilities in-house is a better fit for their organization," said Jennifer Tice, a Russell spokeswoman, in an e-mail to Pensions & Investments. "We respect the decision the Casey family foundation has made and wish them well as they seek to achieve their investment goals."
"We absolutely believe that multimanager programs are appropriate for all levels of institutional clients — including the larger markets. In fact, we're seeing more institutions interested in outsourcing their investment management and pension administration functions," Ms. Tice added.
With the help of consultant Ennis Knupp & Associates, Chicago, where Ms. Reeg also has worked, Casey trustees have tuned up the foundation's asset allocation. In particular, they set a new 5% allocation to private equities, boosting the total target equity allocation to 65% from close to 60%.
Meanwhile, trustees have dropped their 5% allocation to a hedge fund of funds managed by Russell. Casey officials want to understand their exposures and want a better fee schedule than a fund-of-funds program charges, Ms. Reeg said, adding many of the strategies offered by hedge fund managers are attractive.
Plans are to expand the foundation's real estate and international investments, but details will await the hiring of a chief investment officer, a new position. Heidrick & Struggles, Chicago, has just been hired to conduct the search.