James Walsh, the departing chief investment officer of the $4 billion Cornell University endowment, Ithaca, N.Y., plans to start a $150 million hedge fund featuring performance fees spread out over three years.
The fund, named Cayuga Capital Partners, will invest in global stocks and bonds, he said in a telephone interview. Mr. Walsh, who is English, will base the fund in London.
Cayuga Capital will “broadly” follow the standard hedge fund fee structure of 2% of assets and 20% of investment gains, while offering some investor-friendly terms, Mr. Walsh said. Half the performance fee will be charged in the first year and the rest over the next two years. The fee won’t kick in until returns exceed inflation plus 2%.
“Having been an institutional investor for a number of years, we thought about what we would want in terms of terms,” said Mr. Walsh, who announced in February he would leave Cornell in late June. “We’re trying to align ourselves with investors.”
Cornell is searching for Mr. Walsh’s replacement while its three senior investment officers — A.J. Edwards, David McNiff and John Regan — lead the endowment on an interim basis.