Endowment Asset Management: Investment Strategies in Oxford and Cambridge

385 Pages·2007·1.96 MB·English

by  Shanta Acharya

Endowment Asset Management
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Endowment Asset
Management
Investment Strategies in
Oxford and Cambridge
Shanta Acharya and Elroy Dimson
1
3
GreatClarendonStreet,Oxfordox26DP
OxfordUniversityPressisadepartmentoftheUniversityofOxford.
ItfurtherstheUniversity’sobjectiveofexcellenceinresearch,scholarship,
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OxfordNewYork
Auckland CapeTown DaresSalaam HongKong Karachi
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Withofficesin
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Guatemala Hungary Italy Japan Poland Portugal Singapore
SouthKorea Switzerland Thailand Turkey Ukraine Vietnam
OxfordisaregisteredtrademarkofOxfordUniversityPress
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PublishedintheUnitedStates
byOxfordUniversityPressInc.,NewYork
©ShantaAcharyaandElroyDimson,2007
Themoralrightsoftheauthorshavebeenasserted
DatabaserightOxfordUniversityPress(maker)
Firstpublished2007
Allrightsreserved.Nopartofthispublicationmaybereproduced,
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ISBN 978–0–19–921091–6
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Toourparents
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Contents
Acknowledgements ix
ListofTables xii
1. Endowmentdefinition 1
2. Theinvestmentcommittee 50
3. Investmentobjective 69
4. Spendingpolicy 98
5. Assetallocation 121
6. Investinginproperty 160
7. Issuesinportfoliomanagement 185
8. Portfoliorisk 208
9. Consultantselectionandmonitoring 233
10. Managerselectionandmonitoring 244
11. Sociallyresponsibleinvestment 270
12. Performancemeasurement 284
13. Endowmentmanagementcost 301
14. Fund-raising:Roleofgifts 314
15. Concludingobservations 325
Notes 343
Bibliography 351
Index 355
vii
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Acknowledgements
Wewishtothankthemanyindividualswhoseencouragementandcontinued
guidance convinced us to work on this book. Especially noteworthy were
SirAlanBudd,DickBrealey,DrJeremyFairbrother,WillGoetzmann,Michael
Gwinnell, Barry Hedley, John Kay, and Tom Seaman to whom we are very
grateful.ThebursarialcommitteesatOxfordandCambridgeUniversities,led
respectivelybyFrankMarshallandChristopherPratt,supportedusgenerously
withtime,interest,andthoughtfulfeedback.
In the course of our research numerous Oxford and Cambridge bursars
and investment committee members spent time answering our questions,
allowing us to record and analyse their responses in detail, and reviewing
ourmeetingnotesaftereachinterview.Manyofthemcommentedonsucces-
sive extracts and draft chapters, which was of particular help in developing
and wording our analysis. We had valuable meetings with Professor Alison
Richard and Dr John Hood, the Vice Chancellors of Cambridge and Oxford
Universities,andtheirrespectivecolleagues.
We would particularly like to express our gratitude to Stephen Barton
(Jesus College), Nick Baskey (Pembroke College), Peter Brindle (Darwin Col-
lege), Gale Bryan (Homerton College), Charles Crawford∗ (St Catharine’s
College), Nick Downer (Selwyn College), Chris Ewbank (St John’s Col-
lege), Dr Michael Gross (Emmanuel College), Donald Hearn (Clare College),
Dr Peter Hutchinson (Trinity Hall), Dhiru Karia (Homerton College), David
Kerr∗ (Robinson College), Charles Larkum (Sidney Sussex College), Dr Sue
Lintott (Downing College), Deborah Lowther (Girton College), Dr Simon
Mitton (St Edmund’s College), Andrew Murison∗ (Peterhouse), John Pegler∗
(TrinityHall),IanDuQuesnay(NewnhamCollege),DrGeorgeReid∗(StJohn’s
College), JenniferRigby(ChurchillCollege),Dr JohnSeagrave (WolfsonCol-
lege),AndrewThompson(MagdaleneCollege),JoannaWomack(ClareHall),
Nick Wright (New Hall), and Dr Nigel Yandell (Corpus Christi College) in
Cambridge.
In Oxford, we would particularly like to express our gratitude to Roger
Boden (Keble College), Dr Anthony Boyce (St John’s College), John Church
∗ Theseindividualswereinpostatthetimeofourmeetingswithinvestmentbursarsin
OxfordandCambridge;theyhavenowretiredormovedontootherpositions.
ix