The investment landscape continues to grow more complex and volatile. At institutions with few internal resources, investment committees have become increasingly concerned about the ability to oversee the day-to-day management of the endowment on a part-time basis. They understand that decisions in this environment must be both quick and educated. In many cases, they decide that in order to best meet their fiduciary obligation, they must engage a partner to provide day-to-day oversight and make informed investment recommendations or decisions on their behalf.
When working with clients as an outsourced option we typically function as the outsourced CIO and/or investment office for the endowment. Working on either a discretionary or non-discretionary basis, we construct, implement, and monitor all aspects of the portfolio. Our approach is customized and offers flexibility that is not always present in other outsourcing solutions. We have provided outsourcing services for well over a decade and have a long-term track record of success.
Our outsourcing work is a natural evolution of our consulting practice. In fact, we have found that the more oversight responsibility that is delegated to us, the greater our clients’ satisfaction, as evidenced in independent third-party client surveys.
For a New England hospital with assets approaching $200 million across an operating fund
and a retirement fund, Cambridge Associates has been providing total portfolio oversight. The hospital came to Cambridge Associates with an operating fund portfolio that had 80% in equity and 20% in cash and fixed income. Following a comprehensive investment planning review, Cambridge Associates recommended that the hospital shift to a 55% equity/45% fixed income structure with an increased allocation to hedge funds to reduce volatility while maintaining equity-like exposure. The current equity allocation aims for stable growth with relatively low volatility in order to meet operational needs and covenants. Within the retirement fund, Cambridge Associates implemented a partial liability hedge by extending the duration of the fixed income portfolio to more closely match that of the pension’s liability.
For a $600 million New England women’s college, Cambridge is acting as
the outsourced investment office, advising the college across all asset classes. The college enjoys support from a strong investment committee but has a limited dedicated internal staff. After a detailed assessment of the “make” versus “buy” decision, the college decided to outsource to Cambridge Associates. The college has been a client since 1982 and converted from a traditional consulting relationship to an outsourced relationship in 2005.
For a $2.5 billion foundation seeking an outsourced investment office,
Cambridge Associates serves as the outsourced chief investment officer on a discretionary basis. With a team of 17 consultants, analysts and administrative support professionals, Cambridge Associates monitors the portfolio daily. Cambridge Associates had a robust traditional consulting relationship with the foundation over many years, but was hired to oversee the portfolio on a day-to-day basis to assist the trustees when the CIO and investment staff decided to leave to start a commercial investment enterprise.