First of all, there are two types: one is public-mostly public university foundations, such as the University of California and the University of Texas. Such foundations need to report to the public regularly. Several characteristics:
1. Due to the need to disclose a lot of information, the school fund may lose part of its excess income by doing so, because investment managers who do not enjoy positions will be excluded. From the perspective of investment allocation, there is bias. If you don't make such a decision because you think opaque managers are worse than transparent managers, then theoretically your configuration is not optimal.
2. The salary of fund managers in public universities should be made public. If the salary structure is completely market-oriented, it will be under great pressure from the public.
I will receive many questions from the public and need the support of the public relations department. Public-private relations are very important.
The second is private-mostly private university foundations. Such as Harvard and Yale.
1. As a privatized department, such a university foundation does not need to disclose too much information.
2. The fund manager's salary can be completely marketized, as long as the board of directors approves it. Earlier, it was reported that the salary of Harvard traders was questioned by the board of directors as high as millions of dollars.
3. Investment is also freer, with more tools and wider investment scope. University foundation is a non-profit organization, which determines that the overall pace of work must be slower than that of major hedge fund investment banks. Moreover, university funds are buyers, and major fund managers, consulting companies, asset management companies and software companies will come to your office to solicit business. In addition, personally, due to the inextricably linked with universities, most university funds have a strong academic atmosphere, many senior executives are professors at the same time, and academic bulls often patronize them. I once opened an "old" EXCEL model written by William Sharpe (Nobel Prize winner and inventor of SharperRatio formula), and I was quite surprised at that time. These people are slow to respond, so most university funds are stable.
Now let's extend the topic. From the perspective of investment, university funds have two main characteristics:
1. Allocation is more important than selection! University funds are actually distributors. The influence of asset allocation on the overall income is far greater than choosing a good manager. After all, university funds pay attention to diversification, and even the best managers can lose more than a single-digit percentage in the whole portfolio.
2. University funds are long-term investors. From a technical point of view, donation is a kind of capital that pursues long-term interests most, because donation has no obligation. If the school has no financial need, in theory, there is no need to consider "redeeming" this donation. So as I asked in a post I answered before, this is why VC/PE has invested a lot in pension donations. Because long-term investors can take away the excess income brought by insufficient liquidity, which is exactly what VC/PE provides. Just because they are long-term investors, people in university funds have long working years and low liquidity, which also compounds the style of the whole fund: long-term stable growth. Tell me something about Yale and Zhang Lei. As far as I know, Zhang Lei only worked as an intern at Yale, but that's enough, because I met David Svencen, one of the greatest investors of our time (or none at all). Moreover, Zhang Lei's ability was outstanding at that time, and he was qualified to be a fund manager. Yale gave the first money, which also promoted the funds of several other schools. By the way, 10 The top six or seven chief investment officers of American university funds are all former employees of David Svencen.