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Colleges opt for independent investment companies in-house

By NexChange
Asset Management

The University of Washington has joined the growing trend of U.S. universities creating investment management companies.

Many university endowments hold enough assets to manage some, or all, investments in-house, but competition for staff is fierce. UW's $3 billion endowment says it wants better access to "best-in-class" money managers, reports the Seattle Times. Right now UW has a staff of 19 led by Keith Ferguson, formerly of Fidelity Investments.

The University of Texas and the University of Virginia have also created more formal investment companies from their in-house investment teams, giving them more power and putting up barriers between the investments and campus politics. Harvard University established an early management company in 1974. Allowing the companies more control over compensation separate from the university can make them more attractive to skilled portfolio managers and analysts.

 
“It’s partly to signal that we’re a mature, sophisticated operation and we function like any other investment company,” said UW spokesman Norm Arkans.
UW earned 6.8% returns for the year ending June 30, a bit above the median of 3.6% for endowments over $500 million. UW's annual rate of return for the last decade is 7.5%.

 

 

 
Photo: Ming-yen Hsu

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