I had an interesting discussion with a Williams administrator yesterday with regard to
my concerns about the endowment. No one expects Chief Investment Officer Collette Chilton and the Investment Committee to work miracles. But they should be able to adhere to a set of best practices as exemplified by peer institutions. To be specific, consider The Boston Foundation (tBf), led by former Williams trustee Paul Grogan ’72, and Wellesley College. Both organizations do a fine job with resources similar to those of Williams. Which best practices should Williams emulate?
1) Quarterly reporting. Consider this webpage and pdf from tBf. Given that Chilton and her staff compile quarterly reports for the Investment Committee, there is no excuse for not sharing that information with the rest of us.
2) Manager transparency. Consider the explicit listing of Boston Foundation managers.
Note that there is not complete transparency here. In particular, we do not know which private equity and venture firms tBf invests in, much less which specific funds sponsored by those firms. That’s a complex issue which we can save for another day. But there is no excuse for Williams not to tell us which firms it uses to manage the standard equity and fixed income portions of the portfolio.
3) Clear asset allocation, benchmarks and category performance.
The Boston Foundation provides its asset allocation here. As discussed previously, Williams makes public its asset allocation policy, but we have little idea which benchmarks it uses to measure manager performance nor how well those managers have done, at least in aggregate. Consider the 2003 Report (pdf) from Wellesley.
There are two components to endowment returns. First, what categories were the funds allocated to? An endowment that is 75% in equities will perform very differently than one which allocates only 25% to equities. Second, which managers are selected within a given category? Two endowments can both allocate 50% to equities (as Williams does) but their performances can differ dramatically depending on which managers each selects. There is a case to be made that the performance data for a specific manager should be kept secret. But there is no excuse for not doing as Wellesley does above and reporting the aggregate performance of the managers within each specific category of the overall asset allocation.
Again, it would be one thing if reporting this information to the Williams community were a major burden to Chilton and her staff. Transparency is valuable, but not at any cost. However, every single piece of information (manager identity, asset allocation, benchmarks and relative performance, all on a quarterly basis) is already collected and reported to Morty, the Trustees and the Investment Committee.
Best practices require that Williams share that information with the rest of us.