The College’s endowment has decreased from $1.9 billion to $1.8 billion, a drop of approximately 5 percent in the last fiscal year, spanning June 30, 2007 to June 30, 2008. The endowment, affected by gifts to the College, the College’s investment return and College spending, was at $1.6 billion in 2006.
The drop in the endowment can be partially attributed to recessionary economic conditions. During the last fiscal year, the Dow Jones Industrial Average dropped over 16 percent, housing prices dropped almost 16 percent and the cost of oil doubled.
In 2007, the Investment Committee of the Board of Trustees adopted an investment policy which involved investments in equity-related asset classes, venture capital, real estate and fixed income.
“We continue to invest the portfolio with guidance and oversight from the Investment Committee in all types of markets,” said Collette Chilton, the College’s Chief Investment Officer, regarding the investment office’s strategy for dealing with the struggling economy. In order to mitigate the effects of such crises as Bear Stearns’ sale, Chilton said the investment office continually monitors risk in the portfolio, meets regularly with all of the firms who manage money for the College and pays close attention to the relationships its money managers have with all brokerage firms and other types of service providers.
Despite the frenzied state of the investment office in light of this weekend’s bankruptcy of Lehman Brothers and the sale of Merrill Lynch, among other major developments, Chilton’s outlook on the endowment remains positive. “Over ten years, the endowment return has exceeded 12 percent,” Chilton said. “Each of the asset classes in the portfolio have contributed to performance at different points in time during different market cycles.”
In the summer of 2006, the Board of Trustees decided to move the College’s investment office from Williamstown, Mass. to Boston, Mass. Despite the office’s move, it remains in close contact with the school with Chilton maintaining an office in Hopkins Hall. Chilton takes part in all of the weekly senior staff meetings with President Schapiro in person or via phone.
This summer marked the inaugural year of the investment office’s summer internship program. Beginning with a structured training program in June, the interns – Rick Devlin ’09 and Caitlin McGugan ’09 – spent about nine weeks working full-time with the investment office, after which they “spent the summer learning all aspects of endowment investment management,” Chilton said. “The interns had the opportunity to see all parts of the investment program for the College.”
Devlin thought the internship was a great learning opportunity. “I got a broad overview of all asset classes, from emerging markets and hedge funds to real assets,” he said.”We had to the chance to meet with managers from each of these asset classes.”
Chilton said the program was such a great success that the investment office plans to provide internships again next summer and will be on campus in the fall to conduct information sessions. The investment office also hopes to host a Winter Study course in January.