FEMM - Yoder To Endowments: Size Doesn't Matter
By Jay Yoder
Small endowments can emulate the asset allocation models of larger funds
despite the difference in asset sizes, Jay Yoder, head of the investment
committee at Albright College, told attendees at Information Management
Network's Foundations & Endowments Summit in San Diego. He added
that size is also not excuse for poor performance, and that following the
lead of larger funds, such as Yale University, requires finding the
person to oversee the endowment whether it's a cio, investment committee
member or consultant. The key is finding someone with established relationships
with top managers who can pull strings to get those firms to waive investment
minimums, explained Yoder, who was formerly cio at Smith College
and Vassar College, and now oversees Albright's $40 million endowment.
One stumbling block to smaller endowments investing like large funds can
be a knowledge gap. Endowments should avoid investing in asset classes where
there is a lack of knowledge, said Philip Moore, managing director
at Pacific Investment Consultants. Yoder disagreed. He noted that
endowments can educate themselves or hire someone with knowledge to assist
rather than miss out on opportunities.
Yoder also commented on the "Yale endowment model," which many in the mainstream
media have attacked. He noted the model, which involves more equity investments
and alternatives, is not dead, and pointed out that it has worked successfully
19 of the past 20 years. The alternative to the model would be more fixed-income
investments, but that would mean endowments would not be able to meet their
spending rates plus inflation, Yoder explained.
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