Risk Management Group Luncheon Profiles University Endowment
COO of University Office of Investments Gives Insight into School
Barbara Passey
Issue date: 5/12/05 Section: GSB News
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Making tough decisions on the operational, administrative and risk management infrastructure of the investments for the University of Chicago endowment are all part of the job for Joanna Rupp, a GSB grad and Chief Operating Officer for the University's Office of Investments. On Wednesday, 27 April, she discussed her role and responsibilities at the Risk Management Group's Luncheon Series, with lunch provided by Reuters America. "We approach investing from a broad perspective; in contrast to solely looking at quantitative aspects of risk management," she began, "We're managing approximately $5 billion for the University, of which $3.9 billion belongs to the endowment." Then, she discussed how the group is structured. She explained how they are not a separate investment company, in contrast to other university endowments. While fixed income is managed in-house, by her office, all other investments are handled externally. The external managers are overseen by University investment managers. She gave examples of types of external management, such as private equity managers and alternative asset managers involved in investing in, for example, real estate, oil and gas, or timber. "These are specialists. We make sure that we know who they are and how they manage risk. We do not want any surprises."
Beyond the day to day responsibilities, Rupp also maintains a close watch on corporate governance, portfolio construction, and employment incentives. "Each and every one of these aspects is very important. Corporate governance rules every action. If the top decision is made to diversify out of hedge funds, we follow that mandate. Likewise, we utilize portfolio optimization techniques to ensure our positions are not highly correlated. "She emphasized the importance also of ensuring that employment incentives, both external and in-house, are aligned with the investment objectives of the university. She works to keep the investing style efficient and flexible within its constraints. "Within certain parameters," she noted, "we keep an eye open and cash available for opportunistic investments."
Beyond the day to day responsibilities, Rupp also maintains a close watch on corporate governance, portfolio construction, and employment incentives. "Each and every one of these aspects is very important. Corporate governance rules every action. If the top decision is made to diversify out of hedge funds, we follow that mandate. Likewise, we utilize portfolio optimization techniques to ensure our positions are not highly correlated. "She emphasized the importance also of ensuring that employment incentives, both external and in-house, are aligned with the investment objectives of the university. She works to keep the investing style efficient and flexible within its constraints. "Within certain parameters," she noted, "we keep an eye open and cash available for opportunistic investments."