Board of Governors changes university investment strategies


Rebecca Turnbull

Perella Weinberg Partner Asset Manager Trey Thompson discusses investment strategy options with the Board of Governors Friday in the fourth floor conference room of the Applied Engineering Complex.

Marshall University’s Board of Governors  will make changes to investment practices for the university.

Chief Financial Officer Mary Ellen Heuton said university investments are shifting from three pools of investment: long-, mid- and short-term, to two pools of investment to create lower risk.

Heuton said this shift will allow the University Investment Committee to efficiently tie into budget projections, choose target allocations for endowments and operations and protect financial reserves.

To better determine the management of these changing university investments, the board met Friday to hear a presentation by the Perella Weinberg financial services firm and discuss whether to invest university funds in utilizing the firm.

Partner asset manager Trey Thompson delivered the presentation on behalf of the Perella Weinberg firm, which is headquartered in New York and has been in business for about 10 years.

Thompson said the firm’s managers will provide necessary resources to help Marshall University better manage current investment issues.

“The investment landscape has become much more complex in just the last 10 or 15 years,” Thompson said. “And I think the bar for diligence on these managers and complexity of those investment strategies has made it difficult for even fairly large institutions to manage that with an in-house staff, or even with a very talented investment committee.”

Perella Weinberg has served the Marshall University Foundation as the outsourced chief investment officer since 2012.

Thompson said Perella Weinberg’s ongoing connection with the Foundation makes the opportunities presented to the board more personal.

“This is a relationship that’s one of my favorites,” Thompson said. “The Foundation of the university supported us four years ago when we were a much younger business and we have a lot of loyalty and appreciation for that.”

Marshall University Foundation CEO Ronald Area said he has been pleased with how Perella Weinberg explained investment issues that went “way over [their] heads” until they understood.

“What impressed me was that they knew more about our investments we did,” Area said. “I mean, they really did their homework on it. They have been so good to work with in terms of communicating; not a monthly basis, but on a weekly basis.”

Area said the firm has been able to consistently keep the Marshall Foundation in the “sweet spot” for returns every year, rather than at the top or bottom of the return range.

Area also said the Investment Committee will continue to review the firm to determine when they might need to move to a different firm in changing financial climates.

Some meeting participants and board members expressed concerns about whether or not to invest in Perella Weinberg, particularly whether or not investing in index funds would be more beneficial to the board than investing in an outside firm.

Board member Dale Lowther said investing in the outside firm would greatly decrease liability for the university.

Heuton said changing university investments to a different manager would help to further safeguard financial reserves, ensure long-term capital protection against investments and draw return for some expenses.

Thompson said because the Board does not have an explicit payout per year, unlike the Marshall Foundation’s yearly 8 percent expected return, they have more flexibility in choosing investment options that will meet the needs of the university even during challenging financial situations.

“We try to preserve capital,” Thompson said. “We think of our portfolios as being ‘all weather.’ So when times are tough, your portfolio is going to lose money, but it won’t lose money as the global stock markets will. The opposite is true as well.”

Perella Weinberg currently services 26 clients. Thompson said the firm would like to increase to no more than 35 to 40 clients total,  because fewer clients allows the firm to be more “selective” and allows investment managers to be more “hands-on” with each client.

Board member Christie Kinsey said she believes the firm’s small clientele is indicative of its potential ability to give Marshall University the financial attention it needs.

Thompson said managers from Perella Weinberg would be working closely with the board’s University Investment Committee to determine investment strategies.

Marshall University Foundation CFO Scott Anderson said the Investment Committee needs to continue defining the $6 million of assets, the individual investment pools and the financial expectations of the university if they are to decide to work with Perella Weinberg.

“The only way we can be successful in this endeavor is to start out with the kinds of expectations and knowing what the risks are, what the return expectations are and then Trey and his team can have a clear set of marching orders to know what they’re being measured against,” Anderson said.

Heuton is a member of the Investment Committee and said the committee has been passive about investment practices in the past, but they are looking to become more active.

Heuton went before the board to advocate for a resolution allowing thecCommittee to finalize and approve the “Investment Management Agency Agreement” as well as authorize the initial asset allocation for the university and medical school investment pools.

The board passed the resolution to delegate these responsibilities to the Investment Committee.

Marshall University president Jerry Gilbert said Perella Weinberg’s presentation and the Board’s analysis of investment strategies fostered a very necessary and “fruitful” discussion.

“I think it’s going to be a great synergistic effect to have the Foundation funds along with the university funds and the medical school funds in the Perella Weinberg investment firm, which I think is going to do a fabulous job for us,” Gilbert said.

The board also went into executive session to discuss personnel and legislative issues.

The next meeting of the Board of Governors will be April 27.

Rebecca Turnbull can be contacted at [email protected]