A Specialized Approach
Investment Policy/Governance Review
We believe that a carefully crafted investment policy statement is the cornerstone of a comprehensive plan that addresses both investment guidelines and governance principals. We work closely with our clients to build an investment policy statement that not only addresses their specific goals and risk parameters, but also clearly articulates the organization’s principals of autonomy and authority. Our role is to stimulate discussion and help committees build consensus.
Benchmarking
An endowment should think about its returns in three components: annual payout rate, inflation and the “excess return” above and beyond the sum of payout plus inflation (the base return) that will allow the endowment to grow on a real basis. Likewise, endowment performance should be measured against both relative and absolute performance benchmarks.
Asset Allocation & Portfolio Construction
Asset allocation policy is driven by both strategic and tactical factors. We generally recommend fairly broad allocation bands to allow a committee periodic tactical allocations that may fall on either end of the allocation range.
Once asset allocation guidelines are established, we bring specific manager recommendations to the committee. We seek out managers that have a demonstrated ability to produce strong risk-adjusted returns over several market cycles. Our investment professionals have extensive experience evaluating alternative investments including hedge funds, private equity, real estate and various inflation protection strategies.
Reporting, Communication & Client Service
We understand that strong client partnerships require not only solid investment performance, but also consolidated reporting and outstanding communication and service. Therefore, your Massey Quick team will provide support to both the investment committee and the office of finance. Our current clients have become accustomed to counting on us for portfolio performance measurement reports, audit support and portfolio accounting.
Case Studies
The following case studies, based on actual client relationships, are offered to illustrate the benefits that Massey Quick’s customized approach can provide.
Cost Compression and Endowment Management
A successful foundation had a long-standing relationship with a large investment bank. The portfolio had grown in size over the years, but was still invested in a series of mutual funds including those with front-end loads. The account was custodied at a local bank that charged a custody fee based on the dollar amount of assets in the account and transaction charges for each purchase, sale, and cash movement. The chief financial officer was referred to us by a peer at another institution that had retained Massey Quick several years earlier.
Lack of Attention from an Investment Consultant
A prominent liberal arts college hired a “name brand” consultant to assist the investment committee in the endowment management process. Over a five-year period, the college was assigned less experienced relationship managers representatives of the consultant began to attend quarterly investment committee meetings by conference call, rather than in person. The committee didn’t feel “connected” with their investment managers and were concerned about fulfilling their fiduciary responsibilities. Massey Quick was invited to submit an RFP and was hired after a series of meetings with the Board and the Committee.