The Williams College Investment Report 2009 is available. I believe that this is the first year that the College has issued a separate report. Normally, the only investment related information that is made public comes in the annual A Report From Williams. This version is much more detailed. Kudos to Williams for preparing this report and for making it public.

Normally, I would wait for the Record to write an article about the endowment’s performance and then criticize it. But let’s be more pro-active and constructive! Here are the questions that the Record reporters should ask Chief Investment Officer Collete Chilton and/or Investment Committee Chair Michael Eisenson ’77. (For expert commentary from the faculty, the Record should also reach out to professors with finance knowledge/experience: Caprio, Gentry, Kuttner, Rai and Savaser, among others.)

I will put the proposed questions in bold and then associated background/commentary in [italics].

Q: The endowment dropped 18.4% last year. It is impossible to understand performance without reference to a benchmark. What does the College use as a benchmark for the endowment and how was the benchmark’s performance? [So far, Williams has refused to release any information with regard to the benchmark that it uses for the endowment. That is ridiculous. There is no way for anyone to know if Chilton and her staff are doing a good job if there is not some benchmark to compare their results with. Every mutual fund in the US is required by the SEC to provide performance relative to a benchmark.]

Q: The College’s letter to the Senate Finance Committee reported that:

Some members of the Investment Office are eligible for bonuses based on the return on our investments, though the office is so new that we have not completed the first year of returns on which bonuses would be computed. So, in the past ten years no such bonuses have been paid.

How many people in the Investment Office are eligible for bonuses? What is the formula used to award those bonuses? How much money, if any, in total bonuses was paid out last year? [See here for more background. The College will try to claim that releasing this information would violate the privacy rights of College employees. But note that the questions do not ask for the specific amounts given to named individuals. We just want to know how many and how much in total. Privacy concerns do not prevent Williams from releasing this data.]

See below for more questions.

Q: If the College decided to stop paying performance bonuses, would you work less hard? Would anyone on your staff? [As I rant about at length here, there is no reason for the College to pay bonuses. It is just absurd. Perhaps the only thing that can be said in favor of them is that, during the bull market, bonuses might have been helpful in recruiting. But the bull market is over! Every person in the Investment Office is ecstatic to have the job that they have, especially as they watch Harvard lay off 1/4 of the employees in its investment office. Bonuses were probably never necessary. They certainly aren’t necessary now.]

Q: The Investment Report includes a “Word about Expenses,” but provides no details. What was the total spending by the Investment Office last year? [My guess would be $2 to $3 million.]

Q: How did the different categories of the endowment perform relative to their individual benchmarks? [It would be one thing if no other endowment released this information. But they do! Recall my discussion of Wellesley from last year. From Yale’s 2008 endowment report (pdf), we have:


From Harvard in 2009 (pdf):


Are Williams alumni and students such country bumpkins that we don’t deserve the same information as our peers at Wellesley, Yale and Harvard? Note that the College already prepares this information; it is impossible to manage the endowment without it.]

More questions here and here.

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