Let’s spend five days reviewing the latest annual report (pdf) from the Investment Office. Greatest hits commentary on related topics include here, here, here and here. Today is Day 1.

Let’s begin with the good news. First, the Williams Investment Office, led by CIO Collette Chilton, has done a solid job over the last decade, as EphBlog predicted in 2007.

How competent is Chilton herself? Informed commentary welcome! I have spoken with people who have run money for her and the consensus opinion is that she is a solid professional. She has experience selecting and monitoring investment managers

More importantly, she avoided the temptation of the Harvard model and has not tried to manage any of the money directly. Returns have been solid:


As long as the College’s endowment is somewhere in the middle of the pack when it comes to trailing 10 year returns, alumni should not complain about performance. (We will have many other things to complain about over the next four days.)

Second, the future of the endowment seems assured in that Managing Director Abigail Wattley ’05 will make a wonderful successor to Chilton someday (hopefully) soon. Recall my advice from 10 years ago:

The biggest risk issue in any asset management situation is the option value to the asset manager. Will Chilton take on the appropriate amount of risk, consist with her guidance from Morty and the trustees? I hope so. But doing so might not be in her best financial interest. Imagine, instead, that she “shoots for the moon,” that she levers up the endowment and invests in the riskiest stuff available. If she is lucky, she (and the College) will win big. Then the fawning profiles from the New York Times will roll in and she will have the option of starting her own hedge fund and (trying to) generate serious personal wealth. Heads, she wins.

And, if it’s tails — if those risky bets don’t pay off, if our endowment performs poorly — Williams loses. Chilton, probably, keeps her job. She blames factors beyond her control. And, it will be hard for anyone to know what really happened.

Yale, smartly, hedges this risk by hiring someone like David Swensen, someone whose commitment to the success of the institution is beyond question. Williams could have followed suit, could have selected an Eph Swensen, a younger graduate with finance experience and a deep connection to the College, someone already living in the Williamstown area or eager to move there. Someone committed to Williams for life, and not just until a better job comes along, until the commute to Williamstown becomes too annoying. Such candidates were available. Instead, the College chose Chilton. I hope it works out.

It has worked out. I may have overplayed the risk of Chilton pulling a Meyer. And, certainly, given Meyer’s implosion at Convexity among other changes, there are many fewer opportunities for successful endowment CIOs outside of the CIO market. But there is no doubt that Chilton has done a wonderful job of selecting and then mentoring Wattley, someone who is universally praised by the Investment Committee Ephs I have talked to. Wattley is married to Kevin Kingman ’05 and is as committed to the long term success of Williams as anyone. With luck, she will be managing the endowment for decades to come.

Third, although I would still prefer that the Investment Office were located in Williamstown, Chilton (and Wattley?) have done a great job in involving students and recent graduates in the office via (at least) three mechanisms.

  1. Full-Time Investment Analyst Program: A two-year position open to graduating seniors
  2. Summer Analyst Program: Summer positions open to rising juniors and seniors
  3. Winter Study Program: A winter study class open to sophomores and juniors

I have spoken to Ephs in all three programs, all of which are well-done. (One suggested improvement is that Chilton/Wattley ought to encourage younger Ephs to network more in the Boston financial community.) If Williams (like Middlebury or Smith) were to outsource the management of its endowment to a place like Investure, these programs would not be possible.

See! EphBlog can praise the praiseworthy! Relative to its peers, the Williams Investment Office in general and Collette Chilton specifically is just as competent and professional as, for example, the Wiliams English Department or Career Center. Kudos to Chilton and to the Trustees who selected her. Stand by for four days of (constructive!) criticism starting tomorrow.

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