Three years ago, Morty/Trustees decided that Williams was going to emulate the Harvard/Yale model of endowment management, hire a high-priced chief investment officer, allow her to assemble a staff, and then let her make a decision. I offered thoughts on this plan two years ago.

Short version: Williams has done great by allowing a trustee committee guide the endowment into the best deals. Why mess with what works? Perhaps hiring a single professional to support that effort is a good idea. A new investment office, much less one located in Boston, is not.

Yale CIO David Swensen insists:

A lot of institutional investors think they are emulating Yale, but they are not. Most endowments use fund of funds and consultants, rather than making their own well-informed decisions. You can divide institutional investors into two camps: those who can hire high-quality, active-management investors and those who can’t. If you are going to invest in alternatives, you should be all in, and do it the way Yale does it — with 20 to 25 investment professionals who devote their careers to looking for investment opportunities. Or you belong at the other end, with a portfolio exclusively in index funds with low fees. If you’re not going to put together a team that can make high-quality decisions, your best alternative is passive investing. With a casual attempt to beat the market, you’re going to fail.

If someone looked at what we’re doing superficially and made superficial attempts to copy us, then I have little sympathy for them.

What would Swensen say about Williams? Tough to know. The Williams investment office in Boston has 7 people. But one of those is a secretary and two are junior analysts — both of whom seem to be brand new. Does the office explicitly hire these folks for one or two year positions? Neither is an alum, although at least one alum had this position last year.

So, we are down to 4 experienced professionals (Chilton, Donovan, Joeng and Wakeman). Does that sound like Swensen’s “20 to 25 investment professionals who devote their careers to looking for investment opportunities?” I don’t think so.

Again, this is not an anti-Chilton screed. I said two years ago that Chilton’s reputation was as a “solid professional” and I see no reason to change that judgment. Indeed, I was speaking to a (different) rich alum the other day who reported that he was “pleasantly surprised” by his interactions with Chilton.

But, whatever Chilton’s merits, there is no reason for the College to maintain a Boston investment office. We need to cut costs and that is a good place to start. I don’t want anyone to be fired. The College should just close the office and invite all employees to move to Williamstown. Some will, and some won’t.

There is a larger discussion to have about how Swensen’s vision applies to Williams, but that is a debate for another day.

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