CHICAGO — Seven years after a hedge fund loss brought notoriety to the Art Institute of Chicago, the museum has brought its $889 million endowment back up to strength and is embarking on an ambitious new investment approach.
On the job for six weeks, Hirtle Callaghan & Co., West Conshohocken, Pa., was hired by the non-profit art museum and school to straddle the divide between consultant and money manager. Hirtle Callaghan touts itself as an outsourced chief investment officer and is better known as a total portfolio management firm that assumes portfolio construction, investment manager selection and administrative duties for institutional clients.
But thanks to an extremely able investment committee, the Art Institute is anything but typical when it comes to investment oversight. Hirtle Callaghan will advise the endowment portfolio, but primarily will manage funds of funds only in public equities and fixed income, said Eric Anyah, the Art Institute's vice president-finance.
When it comes to alternative investments, the museum has it covered.
Members of the investment committee were hand-recruited for their money management savvy. Among them:
•Kenneth C. Griffin, president and chief executive officer of hedge fund manager Citadel Investment Group LLC;
•Eric T. McKissack, CEO, CIO and co-founder of value manager Channing Capital Management LLC;
•Neil G. Bluhm, principal at real estate specialist Walton Street Capital LLC, who co-founded JMB Realty Corp. in 1969;
•A. Steven Crown, general partner and vice chairman of Henry Crown & Co., part of the third generation of the Crown family private equity dynasty;
•Byron Trott, managing director, partner, vice chairman of investment banking and co-head of the Chicago office of Goldman Sachs & Co.; and
•David J. Vitale, president and CEO of the Chicago Board of Trade.
Although some non-profits name big donors as trustees and give them titular committee positions, trustees were recruited for the investment committee because of their qualifications, especially in alternative investments, said Mr. Anyah. Each also serves on a subcommittee — private equity, real assets (including real estate) and hedge funds — that construct portfolios and select managers, with input from staff and Hirtle Callaghan.
“We are very fortunate to have an investment committee of this caliber. We feel like everyone on the committee is at the top of his class,” Mr. Anyah said.
Some, like Mr. Griffin, are big donors: He and his wife, Anne Dias Griffin, made a $19 million donation in 2006 that jump-started the museum's current expansion; and the central court within the new building will be named in their honor when it opens in 2009.
But Mr. Griffin brings another skill set: Last year, he launched a hedge fund-of-funds company, Citadel Alternative Asset Management, New York. The fund-of-funds company, is experienced in evaluating and selecting hedge fund managers, and is helping with the Art Institute's hedge fund manager evaluation.
A Chicago-based recruiter, who serves on a number of non-profit boards and asked not to be identified, said the Art Institute's investment committee members “are the kind of guys who really know their investment areas and are ... not at all shy about getting very involved in the investment process, arguing for their favorite strategies and manager.”