Sorry if this has already been posted, but it's worth the read. I know it's a couple of years old but it's a great story on the Notre Dame endowment. It's been slow leading up to the start of the season so I figured I would add this. I love how all 17 managers are ND grads.
Notre Dame Endowment Recruits Investment Staff From Among Alumni
ENLARGE
Scott Malpass, center, investment chief at Notre Dame, listens during a Mass for members of the university endowment's investment team. ROB HART FOR THE WALL STREET JOURNAL
By
MICHAEL CORKERY
December 26, 2013
SOUTH BEND, Ind.— Paul Buser was finishing up at Harvard Business School and likely headed for a job in private equity when a former professor, Scott Malpass, paid him a visit.
Mr. Malpass invited his young protégé to return to the University of Notre Dame, his undergraduate alma mater, to work at the school's $8.7 billion endowment. To close the deal, Mr. Malpass, Notre Dame's chief investment officer, pulled out an official Notre Dame football jersey, the kind worn only by the varsity players. It had Mr. Buser's name on the back.
"It was almost as if a divine hand had led me to that moment,'' recalled Mr. Buser, 32 years old, who accepted the endowment job in 2009 and has worked there ever since.
The term "school spirit" doesn't adequately describe the atmosphere at the Notre Dame Endowment.
I'm In an unusual arrangement, all 17 investment staff members are graduates of Notre Dame, and all say they are obsessed with their alma mater. Many of them pray together at Masses and play on an intramural basketball team called Options Without a Future, a name inspired by their record on the court, not the endowment's investment returns, which are among the nation's highest.
The endowment's 10-year return of 11% beat the median return of 8% of other large endowments, according to Wilshire Trust Universe Comparison Service. Notre Dame, for example, beat the 10-year return of 9.4% of Harvard University, the largest U.S. college endowment.
Notre Dame's one-year return of 12% as of June 30 also trumped Harvard's 11% return during that time period.
Mr. Malpass recruits many staff members like Mr. Buser from an undergraduate course he co-teaches in which students hone their talents investing $10 million of real money from a pool of Notre Dame's working capital.
One exception: Mr. Malpass's top lieutenant at the fund, Michael Donovan, was his roommate at Notre Dame in the early 1980s.
"They are patriots who bleed blue and gold,'' said Jay Jordan, a trustee and chairman of the Notre Dame investment committee, referring to the school colors.
ENLARGE
A Mass for the investment team that manages the endowment at the University of Notre Dame. ROB HART FOR THE WALL STREET JOURNAL
Financial firms are always striving to create idiosyncratic cultures that marry money making with a stimulating environment. At Bridgewater Associates, the world's largest hedge-fund firm in terms of assets under management, employees are encouraged to be brutally honest with each other when discussing investment ideas. By contrast, Goldman Sachs Group Inc., which is known for its hard-charging ways, is trying to lighten up on its junior analysts by cutting back on weekend work and all-nighters.
The intense loyalty to Notre Dame helps on many levels, but Mr. Donovan, who oversees private-capital investments at the endowment, said the staff has to be sensitive to "group think."
"You don't want to be insular,'' Mr. Donovan said. "We need to make sure there is diversity of thought."
Such commonality isn't unheard of at college endowments. Many of Yale University's investment staff, for example, are alumni. On average, at least half of investment-committee members overseeing college endowments are alumni of the school, according to a study by the National Association of College and University Business Officers and the Commonfund Institute.
The Notre Dame endowment's heavy concentration of alumni is unusual but doesn't worry trustees like Jimmy Dunne.
"These guys are smart, humble and have none of that cockiness and chip-on-the-shoulder attitude you can find on the Street,'' said Mr. Dunne, co-founder of investment bank Sandler O'Neill + Partners. "And the proof is in the pudding."
Behind Notre Dame's success, trustees and investment managers say, is the staff's intense sense of purpose to generate the highest returns for their school. Of course, that is stated goal of any investment operation. But at Notre Dame, many staff members described their work as more of a "vocation," in which outsize returns help further the Roman Catholic school's mission.
The endowment pays its staff in line with other large endowments, said Mr. Malpass, who is paid nearly $3 million a year, which is higher than the median salary of chief investment officers tracked by the College and University Professional Association for Human Resources but less than what someone managing a fund the size of Notre Dame's endowment would earn in the private sector.
In 1989, Mr. Malpass, 51, took over as investment chief four years out of Notre Dame at 26, when the endowment had $425 million in assets. Its growth to $8.7 billion has helped fuel Notre Dame's rise from a good school with a good football team into an international university with high-quality students, a more diverse faculty, highly ranked professional schools and many winning sports teams.
One fruit of their labor: The school's annual financial aid budget has risen to $115 million from $5 million in 1990.
The endowment won't invest in companies that manufacture drugs used to induce abortions or biotech firms that are involved in embryonic stem-cell research, which are opposed by the Roman Catholic Church.
Mr. Malpass said he doesn't believe the endowment's push for high returns is incompatible with the Pope's warning of how the excesses of capitalism are contributing to growing income inequalities.
Overall, Mr. Malpass said he believes that free markets have lifted living standards across the world.
"The only way to improve economies is through investment,'' he said. "We have raised the standard of living in the past 10 years pretty dramatically."
Like many endowments, Notre Dame has put great faith in private-equity and hedge funds. Through its venture-capital investment partners, it was an early investor in Google Inc. and Facebook Inc.
Mr. Malpass said he works to gain access to the highest-performing investment firms, which have the luxury to pick and choose their investors.
To achieve that aim, he has a powerful weapon, courtesy of the Fighting Irish, the university's beloved football team. Every year, Mr. Malpass invites investment managers and their families from around the U.S. to a tailgate party and football game on campus.
At the tailgate party, the endowment flies a big yellow flag that reads: "Invest like a Champion Today,'' inspired by a similar slogan popularized by legendary Notre Dame football coach Lou Holtz. "I have always been a big fan of Notre Dame football,'' said Roberto Mignone, a founder of hedge fund Bridger Management who has attended the managers game every year for the past decade. "When I visit the campus, people will ask: 'When did you graduate from Notre Dame?'" he said. "And I am actually bummed to tell them that I went to Harvard."
Notre Dame Endowment Recruits Investment Staff From Among Alumni
Scott Malpass, center, investment chief at Notre Dame, listens during a Mass for members of the university endowment's investment team. ROB HART FOR THE WALL STREET JOURNAL
By
MICHAEL CORKERY
December 26, 2013
SOUTH BEND, Ind.— Paul Buser was finishing up at Harvard Business School and likely headed for a job in private equity when a former professor, Scott Malpass, paid him a visit.
Mr. Malpass invited his young protégé to return to the University of Notre Dame, his undergraduate alma mater, to work at the school's $8.7 billion endowment. To close the deal, Mr. Malpass, Notre Dame's chief investment officer, pulled out an official Notre Dame football jersey, the kind worn only by the varsity players. It had Mr. Buser's name on the back.
"It was almost as if a divine hand had led me to that moment,'' recalled Mr. Buser, 32 years old, who accepted the endowment job in 2009 and has worked there ever since.
The term "school spirit" doesn't adequately describe the atmosphere at the Notre Dame Endowment.
I'm In an unusual arrangement, all 17 investment staff members are graduates of Notre Dame, and all say they are obsessed with their alma mater. Many of them pray together at Masses and play on an intramural basketball team called Options Without a Future, a name inspired by their record on the court, not the endowment's investment returns, which are among the nation's highest.
The endowment's 10-year return of 11% beat the median return of 8% of other large endowments, according to Wilshire Trust Universe Comparison Service. Notre Dame, for example, beat the 10-year return of 9.4% of Harvard University, the largest U.S. college endowment.
Notre Dame's one-year return of 12% as of June 30 also trumped Harvard's 11% return during that time period.
Mr. Malpass recruits many staff members like Mr. Buser from an undergraduate course he co-teaches in which students hone their talents investing $10 million of real money from a pool of Notre Dame's working capital.
One exception: Mr. Malpass's top lieutenant at the fund, Michael Donovan, was his roommate at Notre Dame in the early 1980s.
"They are patriots who bleed blue and gold,'' said Jay Jordan, a trustee and chairman of the Notre Dame investment committee, referring to the school colors.
A Mass for the investment team that manages the endowment at the University of Notre Dame. ROB HART FOR THE WALL STREET JOURNAL
Financial firms are always striving to create idiosyncratic cultures that marry money making with a stimulating environment. At Bridgewater Associates, the world's largest hedge-fund firm in terms of assets under management, employees are encouraged to be brutally honest with each other when discussing investment ideas. By contrast, Goldman Sachs Group Inc., which is known for its hard-charging ways, is trying to lighten up on its junior analysts by cutting back on weekend work and all-nighters.
The intense loyalty to Notre Dame helps on many levels, but Mr. Donovan, who oversees private-capital investments at the endowment, said the staff has to be sensitive to "group think."
"You don't want to be insular,'' Mr. Donovan said. "We need to make sure there is diversity of thought."
Such commonality isn't unheard of at college endowments. Many of Yale University's investment staff, for example, are alumni. On average, at least half of investment-committee members overseeing college endowments are alumni of the school, according to a study by the National Association of College and University Business Officers and the Commonfund Institute.
The Notre Dame endowment's heavy concentration of alumni is unusual but doesn't worry trustees like Jimmy Dunne.
"These guys are smart, humble and have none of that cockiness and chip-on-the-shoulder attitude you can find on the Street,'' said Mr. Dunne, co-founder of investment bank Sandler O'Neill + Partners. "And the proof is in the pudding."
Behind Notre Dame's success, trustees and investment managers say, is the staff's intense sense of purpose to generate the highest returns for their school. Of course, that is stated goal of any investment operation. But at Notre Dame, many staff members described their work as more of a "vocation," in which outsize returns help further the Roman Catholic school's mission.
The endowment pays its staff in line with other large endowments, said Mr. Malpass, who is paid nearly $3 million a year, which is higher than the median salary of chief investment officers tracked by the College and University Professional Association for Human Resources but less than what someone managing a fund the size of Notre Dame's endowment would earn in the private sector.
In 1989, Mr. Malpass, 51, took over as investment chief four years out of Notre Dame at 26, when the endowment had $425 million in assets. Its growth to $8.7 billion has helped fuel Notre Dame's rise from a good school with a good football team into an international university with high-quality students, a more diverse faculty, highly ranked professional schools and many winning sports teams.
One fruit of their labor: The school's annual financial aid budget has risen to $115 million from $5 million in 1990.
The endowment won't invest in companies that manufacture drugs used to induce abortions or biotech firms that are involved in embryonic stem-cell research, which are opposed by the Roman Catholic Church.
Mr. Malpass said he doesn't believe the endowment's push for high returns is incompatible with the Pope's warning of how the excesses of capitalism are contributing to growing income inequalities.
Overall, Mr. Malpass said he believes that free markets have lifted living standards across the world.
"The only way to improve economies is through investment,'' he said. "We have raised the standard of living in the past 10 years pretty dramatically."
Like many endowments, Notre Dame has put great faith in private-equity and hedge funds. Through its venture-capital investment partners, it was an early investor in Google Inc. and Facebook Inc.
Mr. Malpass said he works to gain access to the highest-performing investment firms, which have the luxury to pick and choose their investors.
To achieve that aim, he has a powerful weapon, courtesy of the Fighting Irish, the university's beloved football team. Every year, Mr. Malpass invites investment managers and their families from around the U.S. to a tailgate party and football game on campus.
At the tailgate party, the endowment flies a big yellow flag that reads: "Invest like a Champion Today,'' inspired by a similar slogan popularized by legendary Notre Dame football coach Lou Holtz. "I have always been a big fan of Notre Dame football,'' said Roberto Mignone, a founder of hedge fund Bridger Management who has attended the managers game every year for the past decade. "When I visit the campus, people will ask: 'When did you graduate from Notre Dame?'" he said. "And I am actually bummed to tell them that I went to Harvard."
