Commonfund Institute’s John Griswold Discusses a Changing Endowment Management Environment

“The investment business is changing,” John Griswold YC ’67, executive director of the Commonfund Institute, told MBA for Executives students in a talk at Yale SOM on October 2.

November 2, 2015

Griswold, who directs Commonfund’s investor education and market research, spoke with students in the EMBA program’s asset management focus area about the evolution of endowment management.

Griswold created the Commonfund Benchmarks Studies, databases that collectively survey the investment performance and practices of more than 1,400 nonprofit institutions annually, and are widely seen as leading indicators of trends in investment management.

Many of the higher education, healthcare, and nonprofit organizations discussed in the studies “are experiencing enormous stress at the same time that you have this great growth of wealth in this country,” he said. “They’re all going after a lot of the same major donors to increase their support, to increase their endowments in many cases.”

In this competitive market, sound investment strategy is critical, Griswold said. Organizations need focused boards (or investment committees) that aren’t continually second-guessing and changing a fund manager’s strategy. New board members in particular tend to bring their own biases to investment strategies, which can interfere with a manager’s ability to keep a fund on track and maximize returns over time.

The solution is two-fold: “You need a strong chair on the committee or on the board,” Griswold said. “It’s a very important part of your long-term performance.”

And fund managers also need to have excellent research and data that support their own investment strategies in the face of board skepticism.

Griswold also shared some other recent findings in Commonfund research. Decreased government funding is impacting many organizations, making them rely more heavily on their endowment growth, he said. And, he noted, following the financial crisis of 2008, managers realized that they needed to build greater diversity into their portfolios. As a result, holdings in alternative strategies—such as energy and natural resources—are becoming increasingly popular among endowments.

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Karen Guzman

Associate Director of Communications