White Papers | February, 2012

By James L. Schroeder

Endowments & Foundations



DHR International periodically conducts a comprehensive survey and reports on compensation, people moves and general sector trends. Our Financial Services Practice has focused on researching, analyzing and reporting the quantifiable information pertaining to specialized sectors within the market vertical. The primary purpose of the study is to provide greater insight into compensation trends at the Chief Investment Officer level, asset allocation developments, investment performance and a summary of people moves across specialized sectors.

Data was compiled by using both primary and secondary sources. Primary sources included telephone and face-to-face interviews with prominent investment professionals within each of the respective organizations – Chief Investment Officers and Senior Portfolio Managers – as well as annual and quarterly reports. Secondary sources include third-party databases and news sources from online providers. Whilst endeavoring to provide a rigorous research process, complete sets of data could not always be provided for each section given the confidential nature of the information being obtained.

DHR International began compiling real-time data in May 2011, making subsequent amendments as changes to specific data points occurred, e.g. asset allocation or compensation changes. Fiscal Year is factored into our results as 1 July – 30 June, and is applicable to compensation and investment performance data. All financial values are in USD.

We surveyed and reported on a total of 118 endowments and foundations, representing a total market value of $420.9 billion. Assets under management range from $800m to $32 billion, with the median fund size of $3.5 billion. Seventy five percent of respondent had assets under management of $1-5 billion.

The study found marked difference in compensation, asset allocation and investment performance when compared by fund type and size. Average compensation for CIO’s is roughly equal between endowments and foundations, though endowments have a more extreme compensation range. The general trend also showed that compensation increases with fund size. However, fund size does not translate into significantly differing performance. Endowments & Foundations will be looking to increase their allocation to alternatives – Private Equity, Hedge Funds, Infrastructure and Commodities – and emerging markets in the coming years.



DHR International focused its efforts to interview and gather data on endowments and foundations across the US. For endowments, we endeavored to cover a variety of educational institutions, including public, regional, private, liberal arts and specialized universities. This 2011 survey examined compensation, asset allocation and investment performance for a total of 118 funds. This includes 74 endowments and 44 foundations with a collective market value of $420.9 billion.

The tables below break down the assets among respondents by fund type and assets under management:

Asset Size (Billions) Number of Funds Market Value (BIn)

  • < 1 3 2.5
  • 1-2 62 86.7
  • 2-5 28 91
  • 5-10 17 114.7
  • > 10 6 124

Type Number of Funds Market Value (Bln)

  • Endowments 74 278.2
  • Foundations 44 142.7



The latter half of 2011 was an active period by all accounts with, a larger degree of turnover resulting from retirements, abrupt departures, internal promotions and new opportunities arising within competitor institutions. During the course of the downturn, 2008-09 in particular, employed individuals were primarily focused on “weathering the storm” in order to ensure that they were sufficiently protected from layoffs. With increased economic confidence, we are seeing a rise in willingness to consider new options.
From an employer’s standpoint, the downturn in the markets forced organizations to evaluate their bottom line and make cuts where necessary. In the endowment and foundations sectors, there was an ever-present need to cut unproductive staff, and at the same time incentivize high performance employees. Despite relative insecurity in the market, the demand remained for investment professionals capable of generating steady returns through bull and bear markets. Endowments and foundations have generally paid employees better than public pension plans, with greater incentives through pay-for-performance structures. Moving forward, both types of institution will need to focus on performance-related pay in order to attract talent.

The median compensation for CIO’s at endowments and foundations remain closely correlated. Base salaries continue to be in the range of $200,000-$350,000, with total compensation ranging from $350,000-$800,000. Seventy percent of respondents have a base salary between $200,000 and $350,000 with their total compensation ranging from $350,000 to $800,000. The main difference between endowments and foundations is at the extremities. The lowest salaries for endowments and foundations were $200,000 and $220,000 respectively, but highest salaries were $4.75m and $2.8m respectively.

Furthermore, a greater percentage of endowment CIO’s were remunerated above $2m per annum than foundation CIO’s. The most significant finding shows that annual compensation increases based upon a fund’s assets under management, regardless of investment performance. Therefore, if two managers record equivalent investment performance, their annual compensation will be greatly determined by the sum total of the assets each manages.


DHR’s asset allocation survey focused on ten categories listed in the table below. The percentage breakdown represents weighted averages. As such, the portfolios of the largest funds had a greater influence on the results. 

Total Assets Breakdown Market Value (Blns) Total Assets (Median)

  • Total Assets 420.9 100%
  • Domestic Equity 78.7 18.7%
  • Domestic Fixed Income 55.1 13.1%
  • Global/International Equity 59.8 14.2%
  • Global International Fixed Income 1.7 0.4%
  • Emerging Markets Equity 4.6 1.1%
  • Private Equity 70.7 16.8%
  • Hedge Funds 83.3 19.8%
  • Real Estate 20.6 4.9%
  • Inflation Hedging/Other 38.7 9.2%
  • Cash 7.6 1.8%

The asset classes representing the largest allocations were hedge funds, domestic equity, private equity and global/international equity. Collectively these figures represent approximately 70% exposure to equity. Significant allocations also include domestic fixed income, inflation hedging and real asset type asset classes. Collectively these six asset classes represented almost 80% of the $420.9 billion surveyed. Investments in the remaining asset classes accounted a much smaller proportion of total assets.

Surveyed funds reported diversified investment portfolios, with a large proportion of non-correlated assets. Increasingly larger allocations to alternative investments, commodities, infrastructure and real estate provided enhanced returns through 2010-11. Despite suffering from significant losses in 2008-09, the endowment/foundation model is providing a benchmark for achieving “equity-like” returns, non-correlated to the US market cycle.



With approximately 20.3%, endowments had the highest allocation to hedge funds in 2011. This figure is closely followed by domestic equities (18.1%), private equity (16.1%), global/international equity (14.1%) and domestic fixed income (13.2%). Endowments also had the largest allocation to alternative asset classes in general, representing over 40% of their portfolio.

Endowments Asset Breakdown Market Value (Blns) Total Assets (Median)
Total Assets 278.2 100%

  • Domestic Equity 50.4 18.1%
  • Domestic Fixed Income 36.7 13.2%
  • Global/International Equity 39.2 14.1%
  • Global International Fixed Income 1.1 0.4%
  • Emerging Markets Equity 3.1 1.1%
  • Private Equity 44.8 16.1%
  • Hedge Funds 56.47 20.3%
  • Real Estate 14.5 5.2%
  • Inflation Hedging/Other 26.7 9.6%
  • Cash 5.3 1.9%



The average alternatives exposure for foundations was 38%, with 18.1% and 17.3% allocation to private equity and hedge fund respectively. Foundations also had an 8.2% exposure to infrastructure, commodities and other inflation hedging assets. Indications show that future years will provide greater allocation to asset classes that provide higher returns within low-risk parameters.

Foundations Asset Breakdown Market Value (Blns) Total Assets (Median)
Total Assets 142.7 100%

  • Domestic Equity 33.2 23.3%
  • Domestic Fixed Income 17.7 12.4%
  • Global/International Equity 20.8 14.6%
  • Global International Fixed Income 0.1 0.1%
  • Emerging Markets Equity 1.7 1.2%
  • Private Equity 25.8 18.1%
  • Hedge Funds 24.7 17.3%
  • Real Estate 4.6 3.2%
  • Inflation Hedging/Other 11.7 8.2%
  • Cash 2.3 1.6%


Our survey results showed that both endowments and foundations have sought out diverse investment opportunities, incorporating a blend of equity, fixed income, real estate, private equity, commodities, infrastructure and emerging market asset classes. Whilst continuing to incorporate domestic stocks and bonds as well as global/international equity and fixed income, the predominant focus of both types of funds rests on diversification away from traditional asset classes to alternative asset classes.

Many endowments and foundations are allocating 15-20% toward absolute return strategies, and reducing their fixed income exposure. CIO’s deduce that this type of strategy will lead to stabilized returns over the long-term given that absolute return strategies respond to all types of market conditions, while bonds do not participate equally in strong markets. Furthermore, commodities, infrastructure, emerging market equities and real estate have gained increased prominence in endowment and foundation portfolios.

Participation in private equity and venture capital investments has fluctuated very little over the past few years. Foundations generally have a higher allocation to private equity type investments; however the asset class remains an important allocation to both types of funds. Despite poor returns in recent years, private equity/venture capital is viewed as a critical component in the asset allocation for both endowments and foundations alike.


Endowments fared better than foundations in the past few years. Between 2009 and 2011, endowments out-performed foundations by an average of 65 basis points. Despite significant losses in FY 2009 (-19.1% on average), both endowments and foundations had erased the differential by FYE 2011 (19.8% and 19.1% respectively). However, with markets tumbling in Q$ 2011, performance once more receded into negative territory. Endowments managed to stymie losses due to a higher allocation to absolute return strategies, commodities and other real assets as well as lower allocations to domestic equities and private equity/venture capital. Despite significant losses in FY 2009, the last two years resulted in exceptional returns as the market grew in confidence. Yet, given the deteriorating situation in Europe and resultant figures closer to home, the FY 2012 has gotten off to a cumbersome start.

Recent years showed that funds with greater assets outperformed those with smaller funds when the markets were strong, but small funds fared better in weaker markets. Funds between $2-10 billion generally performed better whilst the market posted negative returns in 2009; however larger funds posted greater returns in the stronger markets of 2010 and 2011. Our results showed that funds with higher assets tended to have a higher allocation to hedge funds and other higher-yielding asset classes and hence could weather this more recent downturn better than funds with less diversification. In the long run, greater assets under management may well result in greater opportunities at home and overseas, allowing larger funds to gain increased prominence.



During the course of our research we asked participating CIO’s and Senior Portfolio Managers about likely asset allocation trends in the near future. In particular, we were keen to ascertain the allocation changes regarding the asset classes discussed thus far. Our research uncovered the following asset allocation considerations for the coming three years:

Our findings highlighted that investors turned negative towards sovereign debt – primarily as a result of concerns over the Eurozone – and also towards core equity classes. The outlook over the next three years is likely to be one of diversification from core asset classes into alternatives, with real estate, infrastructure, private equity and hedge funds attracting the strongest interest. Despite stagnation in fixed income asset classes, anticipated increases in allocation to alternatives is likely to come from equities.

Entry into emerging market equities is also likely to increase steadily over the next three years. As equities in the domestic and global markets yield lesser returns, funds will likely access the potential of harnessing greater risk-adjusted returns through investments in emerging markets, in particular BRIC countries as well as peripheral Asia-Pacific and South American countries.

Respondents indicated plans to make changes to their risk management approach, increasing the sophistication of their internal decision making and governance processes. Across endowments and foundations, investors are seeking greater transparency. Larger institutions are trending towards separately managed accounts, but nearly all respondents want greater accountability from external managers.


Jonathan Glidden joined Delta Airlines as Managing Director for Pensions. He previously held the Director of Manager Research and Portfolio Construction designation at Wilmington Trust.

Karl Scheer joined University of Cincinnati as Chief Investment Officer. He previously held a senior manager role at Summer Hill Capital Partners, a low-profile multi-family office controlled by the Farmer family of Cincinnati.

Trent May joined Koch Industries as Chief Investment Officer for the family office and foundation. He previously held the CIO designation for Wyoming Retirement System.

John Devir joined PIMCo as Executive Vice President for the Credit Analysis team. The move comes as controversial following Mr. Devir’s acceptance of a Managing Director position within Harvard Management Co. which he subsequently turned down. Mr. Devir was previously Head of Equity Strategies for Barclays Capital.

Du Chai joined Horsley Bridge Partners as Managing Director. He previously held a Managing Director designation for Private Investments and Real Assets at Northwestern University.

John Regan left Cornell University to start Permanens Capital Advisors. He previously held a Senior Investment Officer designation within the endowment.

Michael Reist was promoted by Phillips Academy endowment as Chief Investment Officer. He previously held the Director of Investments designation at the endowment.

Ken Frier stepped down as Chief Investment Officer of Stanford Management Co. He joined SMCo in August 2010 from Hewlett-Packard Co.

Allison Kendrick Thacker joined Rice Management Co. as Chief Executive Officer and Chief Investment Officer. She previously held a Managing Director designation within RS Investments.

Meredith Jenkins and Kim Lew were promoted to Co-Chief Investment Officers of the Carnegie Corporation Foundation. They replace D. Ellen Schuman who resigned for personal reasons.

Satu Parikh joined Harvard Management Co. as Head of Commodities. He previously held the President and Head of Trading with RBS Sempra Commodities.

Lisa Mazzocco joined USC endowment as Chief Investment Officer. She previously held the CIO designation within the Los Angeles County ERA Pension Fund.

Mansco Perry III joined Macalester College as Chief Investment Officer. He previously held the CIO designation within the Maryland State Retirement Agency.

Michael Barry joined Georgetown University as Chief Investment Officer. He previously held the CIO designation within the University System of Maryland Foundation.

Rosalind Hewsenian was promoted to Chief Investment Officer of the Leona M. and Harry B. Helmsley Charitable Trust in New York. She was previously Deputy CIO, and replaces Linda Strumpf.

Michael Abbott stepped down as Chief Investment Officer of Cornell University. A.J.
Edwards, Senior Investment Officer, steps in a Interim Chief Investment Officer.

Lisa Danzig joined Post Rock Advisors as Managing Director. She previously held the CIO designation within the Rockefeller University endowment.

Daniel Arlandson joined University of Minnesota Foundation Investment Advisors as an Investment Manager. He previously held a Senior Investment Associate designation at Jeffrey Slocum & Co.

James Cuno joined J. Paul Getty Trust as President and Chief Executive Officer. He previously held the President designation for the Art Institute of Chicago.

Clarrissa Hunnewell joined Boston University as Chief Investment Officer. She previously held a Managing Director role within Cambridge Associates.

Nicholas Warren joined Brandeis University as Chief Investment Officer. He previously held a Managing Director role within Cambridge Associates.

Pamela Peedin joined Dartmouth University as Chief Investment Officer. She previously held the CIO designation at Boston University.

Rene Canazin joined Harvard Management Co. as Managing Director and Senior Portfolio Manager for Debt Markets. He previously held a Managing Director and Head of U.S. Credit and Global High Yield Trading at Barclays Capital.

Amy Falls joined Rockefeller University as Chief Investment Officer. She previously held the CIO designation within the Phillips Academy endowment.

Sid Browne stepped down as Chief Investment Officer of Yeshiva University.