Smith College plans to hire its first chief investment officer and manage its $2 billion endowment internally after using outsourced CIO Investure LLC for 16 years.
An open letter to students, staff, faculty and alumni signed by Smith College President Kathleen McCartney and board Chairwoman Alison Overseth said the Northampton, Mass.-based school’s board of trustees “has decided to establish its own in-house investment office” after having “outsourced the management of its endowment to Investure” since 2004. The decision was made “following more than a year of deliberation.”
As Smith College winds down its portfolio with Investure, the school will continue to work with the firm over the next few years to ensure a smooth transition, confirmed David DeSwert, Smith College’s vice president for finance and administration.
“It has been an honor to partner with Smith College for so many years. Investure was founded on the premise of serving non-profit institutions, with the goal of generating excellent long-term investment performance,” said Bruce Miller, CEO of Investure, in a news release issued by Smith College. “We are proud of our role in helping Smith successfully grow their endowment, and we look forward to supporting Smith in the coming years in this next phase.”
The endowment has more than doubled from around $900 million when Investure was hired.
Investure Chief Operating Officer Puja Seam said in an email the firm had no additional comment beyond Mr. Miller’s statement.
Size appears to be the main reason the school is making this change. Simply put, the board feels the endowment is big enough to manage the portfolio itself.
“Given the current size of our endowment, Smith has become an outlier among higher education institutions that outsource their endowment management,” the letter stated, adding that establishing its internal investment office will allow the school to “further customize (its) investment strategies to Smith’s specific needs and exercise greater direct control over (its) largest financial asset.”
As of June 30, the endowment had a 34% allocation to global equities, 31% private partners, 27% alternative equities, 6% fixed income, and 2% cash and miscellaneous.
Executive recruiting firm David Barrett Partners will assist the school in seeking its first-ever CIO. Once hired, the new CIO will be responsible for establishing and staffing an investment management office to run the endowment.
A Smith College spokeswoman said that the school has not yet announced a time frame for hiring its new investment staff.
Smith College is joining the ranks of other large endowments looking to manage their assets themselves. According to the 2019 NACUBO-TIAA Study of Endowments released in January, roughly 75% of schools with endowments exceeding $1 billion had an internal investment office.