Catherine M. Keating, Commonfund's new CEO, said one of the firm's biggest challenges will be navigating the next phase of the market cycle.
“We think central banks are going to diverge. We expect the Fed to raise rates,” she said. “As we expect to see more divergence, that's where we think active management can help with (building) portfolios.”
Ms. Keating expects the Wilton, Conn.-based manager of managers to focus on seeking investment opportunities in emerging markets, the energy sector, and environmental, social and governance issues in the near future.Although these aren't new areas for Commonfund, she believes they are the best places to gain alpha. Therefore, Ms. Keating said, she sees the organization placing a new emphasis on those areas in the next couple of years.
As an investment manager, Ms. Keating said she believes these areas will provide good investment opportunities for Commonfund's clients and the company will seek ways to incorporate these themes into the portfolios it builds and manages for its clients.
“Our success will be determined by the returns we generate for our clients,” Ms. Keating said in a telephone interview. And we think targeting these areas … will be important for our clients going forward.”
Because economies within the emerging markets diverge from one another, Ms. Keating said she believes that Commonfund can find some good investment opportunities there. And because of current oil prices and the cyclical elements of energy and natural resources, the company also believes there are a number of alphaopportunities there as well.
In addition, the staff at Commonfund is hoping to properly educate clients on the particulars of ESG, using the Commonfund Institute, which publishes research and conducts studies, and a monthly blog on the subject.
The organization on May 1 released its first study of responsible investing, revealing the responsible investing practices, policies and portfolio strategies of 200 educational institutions representing $88.8 billion in endowment assets.
Ms. Keating took over the role of CEO from Verne Sedlacek, who retired in February in February. She had been head of investment management, Americas, at J.P Morgan Asset Management in New York.
“What's special to me it's a chance to combine my profession — asset management — with my passion — the nonprofit community,” she said about taking the position.
Commonfund managed $25.6 billion in assets as of March 31.