Trustee Investment Strategy for Endowments and Foundations
Wiley Finance Series
1. Auflage Juni 2006
248 Seiten, Hardcover
Wiley & Sons Ltd
Kurzbeschreibung
This book shows the need for endowment fund trustees to define objectives and constraints clearly before determining appropriate investment strategy and provide lessons from past endowment fund experience. It explains investment return and risk from different asset classes in relation to endowment objectives and constraints; the impact of time and liquidity on investment returns; how much return can be expected and how much can be consumed now, or must be re-invested for the future. The text touches on all the key points of investment return and strategy, elaborate on some of them but, importantly, provide good references and appendices for in-depth follow-up.
Trustees are responsible for the stewardship of assets and for implementing the mission of their endowment or foundation. Almost invariably trustees delegate the management of those assets to agents who are investment professionals.
In this increasingly sophisticated and litigious financial world there can be a growing gap of comprehension, exacerbated by mathematics and jargon, between trustees who are responsible and agents who are accountable.
This book aims to fill that gap. The book draws on the author's own experience and research and that of generations of investment professionals and academics to explain the fundamentals of investment strategy.
Key features are therefore:
* Aimed at professional trustees
* An holistic approach to strategy
* Avoidance of jargon and mathematics
* Focus on principles underlying asset strategy
Preface.
Acknowledgments.
1. Introduction.
1.1 Endowment fund characteristics.
1.2 Constraints on endowments.
1.3 History rhymes.
1.4 The US endowment experience.
1.5 Structure of the book.
2. Language of Return.
2.1 Economic return.
2.2 Financial return.
2.3 'Other income' not return.
2.4 Income, capital and 'total return'.
2.5 Real and nominal return.
2.6 Absolute and relative return.
2.7 Arithmetic and geometric return.
2.8 Time-weighted return and money-weighted return.
3. Elements of Return.
3.1 Deriving return.
3.2 Risk-free return.
3.3 Premium for risk.
3.4 Equity risk premium.
3.5 The eighth wonder of the world.
3.6 Valuation change.
3.7 Drivers of return.
3.8 Scenario analysis.
4. Understanding Risk.
4.1 Description of risk.
4.2 Pascal's Wager.
4.3 Chance.
4.4 Co-movement and common factors.
4.5 The greek alphabet.
4.6 Confidence.
4.7 Consequences.
4.8 Endowment fund risk.
5. Spending Rules.
5.1 The endowment dilemma.
5.2 Micawber's rule.
5.3 Pattern of flows.
5.4 More scenario analysis.
5.5 Determining an operating rule.
6. Assets for Strategy.
6.1 Back to the future.
6.2 Investment approach.
6.3 Classification of assets.
6.4 Asset categories.
6.5 Equities.
6.6 Private equity.
6.7 Real estate.
6.8 Commodities.
6.9 Hedge funds.
7. Legal, Social and Ethical.
7.1 Quis custodiet ipses custodies?.
7.2 Tax matters.
7.3 Extra-financial issues.
7.4 Corporate governance.
7.5 Corporate social responsibility.
7.6 Socially responsible investment.
7.7 Program-related investment.
7.8 Global view.
7.9 Reality check.
8. Understanding Strategy.
8.1 Resource assessment.
8.2 Defining needs.
8.3 Quantifying needs.
8.4 Spending rule.
8.5 Operational assets.
8.6 Intergenerational assets.
8.7 Review.
9. Implementing Strategy.
9.1 Investment policy statement.
9.2 Trustees of an endowment.
9.3 Investment committee.
9.4 Investment staff.
9.5 Risk tolerance and control.
9.6 Operational asset management.
9.7 Intergenerational asset allocation.
9.8 Benchmarks and performance.
9.9 Consultants.
9.10 Selection of asset managers.
9.11 Costs.
9.12 Custody.
10. Synopsis.
References and Reading Matter.
Glossary.
Index.
