Chief Investment Officer Collette Chilton is probably not EphBlog’s biggest fan.

From 2007:

And why is the investment office in Boston in the first place?

Note the charmingly naive coverage of this topic from the Record.

Chilton will commute between her offices in Williamstown and Boston. “Investment does not occur here at Williamstown,” Chilton said, “and so we need to have an office at a financial capital, which in this case is Boston.” She will be on campus Mondays and Tuesdays on a regular basis. “So far it’s been easy,” she said, “but then again, it’s not snowing yet.”

This is highly misleading. When you control an endowment of $1.5 billion, you are the client, you are the one with the power, you are the one that other people travel to meet. Investment managers, whether from the worlds of private equity, hedge funds, venture capital or any other field, will gladly come to Williamstown (or anywhere else) for a chance to manage a portion of that money. The reason that Chilton does not move to Williamstown is, almost certainly, because she and her family prefer to live in Weston. Nothing wrong with Weston, of course, but if Chilton does not care enough about Williams to move to Williamstown, what possible loyalty will she feel toward the College? Why wouldn’t she just take another job when a better offer comes along?

President Schapiro also played a part in this deception.

Eager to get started, Collette will disengage as quickly as possible from her current responsibilities and take up this new position sometime in October. As is typical with such positions, she’ll be based in a financial capital, in her case Boston, and have an office in Hopkins Hall, where she’ll spend significant time.

“I consider this a once-in-a-lifetime opportunity to be involved in the entrepreneurial start up of a new operation,” she said in accepting the position. “And Williams is such a fantastic school; I look forward to becoming part of the college community.”

First, it goes without saying that it is impossible to be a “part of the college community” if you live in Boston. But the key weasel phrase is “typical with such positions.” If the Record wanted to make trouble, it would investigate the truth of this statement. Find a set of positions like Chilton’s (CIO of a large endowment) and investigate how many of these individuals are located in a “financial capital” away from the institution for which they work.

Let me help. The article later mentions Paula Volent, vice president for investments at Bowdoin (and a protege of Swensen). She manages $670 million from that famous “financial capital,” Brunswick, Maine. Peter Shea does the same for Amherst from sunny central Massachusetts. Thomas Kannam is somehow able to manage Wesleyan’s $600 million endowment from Middletown, Connecticut. My, but the list of financial capitals in New England is larger than I imagined! And, of course, David Swensen himself does fine living in New Haven. Turns out that, if you control the money, people come to you.

If we can’t trust Morty/Chilton to be transparent with us about why she wants to work in Boston, why should we trust them to be honest about anything else?

From 2009:

According to the College’s Form 990, Chief Investment Officer Collete Chilton’s total compensation was $726,556 in FY 2008 and $686,053 in FY 2007.

The Record should do an article about Chilton’s compensation. Don’t the editors believe in muckraking anymore? I bet that some of the more left-wing Williams professors would provide good quotes, either on or off the record. Don’t think that there is anything suspect going on here? Perhaps you failed to read the College’s letter to the Senate Finance Committee.

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.

In other words, the College worries that Chilton and other (how many?) investment professionals won’t work hard enough even though Williams is paying them hundreds of thousands of dollars per year. So, in addition to all that guaranteed money, we need to pay them extra bonuses or else they’ll —- what exactly? Spend all day at the movies?

Other fun posts include here, here and this five part series.

But credit where credit is due. The performance of the Williams endowment over the last decade has been outstanding.

Thanks to an Eph with Bloomberg access for sharing the data.

Apologies that this is tough to read. Key point is that, over the last decade, the Williams endowment has compounded at 8%, which is the second highest in its peer group of small college endowments and, roughly, 2% per year better than the average performance. How much richer is Williams because of this outperformance? Good question! My rough guess is that, if the value of the endowment has averaged about $2 billion over this period, 2% outperformance, compounded over 10 years generated about $400 million in additional wealth.

Perhaps former trustee chair Mike Eisenson ’77 — the Eph most clearly responsible for the creation of the investment office and (probably?) the person with the most say in the hiring of Chilton — is smarter than me, at least when it comes to money? Perhaps Collette Chilton knows what she is doing? Perhaps I should stick to blogging? Perish the thought!

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