Author: Amy Paterson

TIFF’s 2022 Sustainability Report shares the various ways in which TIFF incorporates ESG and DEI into our firm culture and investment processes. We provide information on TIFF’s estimated carbon emissions and offset plan, corporate diversity and inclusion initiatives, sustainable investment principles, and manager diversity. In 2022, we made continued progress in sustainability with a particular focus on mitigating and managing climate change and supporting the inclusive growth of the asset management industry.

Download the report to see how we partner with members, managers, and stakeholders to deliver positive societal impact.

Connect with peers and TIFF’s Investments team in person to share key investment insights. These events are tailored to address our members’ most pressing concerns and focus on providing perspective around today’s complex investment landscape.

In March 2023, TIFF Investment Management launched our Investment Navigator series. This series aims to bring together industry peers in different cities to discuss important investment topics and how investors are accounting for them through portfolio management. Each event will provide an intimate setting for members to network and ask questions of TIFF’s Investments team. Whether you are an endowment, foundation, or other institutional investor, the Investment Navigator series is an excellent opportunity to connect with peers, share your point of view, and learn from the TIFF team.

The first stop in our series was Chicago, IL. CIO Jay Willoughby, and Managing Director – Equity-Oriented Strategies Trevor Graham addressed such market considerations as inflation, cash management, and the role of private equity today. Attendees raised concerns about preserving cash and ensuring the safety of cash on hand, particularly for smaller endowments and foundations. They also asked about TIFF’s strategic asset allocation and whether we were making tactical moves in response to inflation. Private equity was also discussed, with questions about valuations and whether TIFF was still generating positive returns in light of the current market environment.

Get ready, the next stop on TIFF’s Investment Navigator series is coming to New York, NY.

For information on other future events, please visit tiff.org/events.

Zhe Shen, Co-Portfolio Manager of the Diversifying Strategies group at TIFF Investment Management, was quoted in the April 5 issue of FundFire regarding investor interest in a hybrid model of public and private investing. According to Shen, the recent public equity market downturn has directly impacted directional hedge funds’ historical track records in real-time, likely causing investor interest in this model to slow down.

Read the full article: Hedge Funds Face Softening Investor Appetite for Private Asset Deals

March Madness

Recent market action calls to mind a quote attributed to Vladimir Lenin: “There are decades when nothing happens; and there are weeks where decades happen.” The past year and the past several weeks feel more significant than normal. We thought a brief recap of what got us here, where we are, and what the future might hold could be helpful. With events today moving fast, this letter will probably have a shorter shelf life than some of our other commentaries, except that you will forever be able to tease us for making projections of any sort in such a turbulent time.

This is an excerpt from a longer commentary. Please Download the PDF to read the entire 1st Quarter 2023 CIO Commentary.

NACUBO 2022 – TIAA Report on Endowments

NACUBO is the National Association of College and University Business Officers. One of their services is an annual survey about their members’ investment programs, which is released six or seven months after schools’ June fiscal year end.

One of the more striking takeaways in this year’s report was just how well college and university endowments have performed compared to passive, index-based measures. According to the survey results, endowments in general have significantly outperformed markets. This is in sharp contrast to a commonly held view that active investing has failed its adherents.

It is widely believed that very large universities have outperformed mostly due to large positions in Private Equity and Venture Capital.

• The data does show a pretty strong relationship between private investments and better performance for almost all reported periods.
• But the data also shows that midsized and smaller endowments have, as a group, outperformed market-based measures as well – though not to the degree of their larger peers.
• This is true over the past one-, three-, five-, and ten-year periods.
  • Endowments larger than $50 million outperformed over 15- and 20-year periods as well.
  • Only a handful of smaller endowments report 15- or 20-year results.

Why do we think endowments have outperformed passive? It’s hard to say with certainty, but a few things come to mind as possible explanations.

1. Investment committees, at least the ones we work with, are successfully taking advantage of endowments’ perpetual time horizon. Investing for the long-term means endowments can take appropriate risks, incorporate alternative and less-liquid investments, and not overact to volatility.
2. Endowments are perhaps getting better advice on the structure and implementation of their programs. Many endowments have outsourced to fully discretionary approaches, where we believe the odds are better for success, particularly for those with fewer than a billion dollars to invest.
3. Smaller endowments as a group have a home market bias resulting in slightly higher weights to US stocks, which have outperformed the rest of the world since the 2008 financial crisis. Larger endowments tend to be more truly global in their equity investments.
4. Endowments generally – even smaller endowments – have less exposure to traditional Fixed Income than a generic mix of 65% stocks and 35% bonds. The 2022 bond rout left 10-year aggregate bond returns at about 1.5%, which helped comparisons for portfolios that avoided traditional bonds.
5. Many smaller endowments are taking advantage of pooled investment vehicles where they can invest in hard-to-access strategies, giving them an edge over more commonly offered investment products.

Before closing out, we should emphasize that while NACUBO data is the best we have, it is not perfect. There are some reporting inconsistencies across the almost 700 schools that participate, and we cannot know exactly what drives trends in the data. Skeptics might claim endowments have been more lucky than smart in their asset allocations. We don’t think the majority of almost 700 investment committees got lucky and we think the higher education community should be proud of their stewardship of endowment assets.

To view a short video introducing this topic, click here: TIFF’s Strategy Director Spotlight Series: Higher Education