The University of Notre Dame Endowment

Posted: 13 Feb 2010

See all articles by André Perold

André Perold

Harvard Business School - Finance Unit

Paul Michael Buser

Harvard Business School

Date Written: January 13, 2010

Abstract

The Endowment Model of Investing, which was based on creating high risk-adjusted performance through diversification, a long time-horizon, top-notch outside managers, and illiquid investments, had served Notre Dame and other large universities well over the past several decades. Scott Malpass, Notre Dame's Chief Investment Officer, was confident that this was a successful way to invest if implemented effectively, but he also saw the top university endowments experience 25% to 35% declines in portfolio value during the second half of 2008 that eviscerated the investment gains from the past several years. Notre Dame had weathered the crisis relatively well, but there were several key questions Malpass had to address. Should Notre Dame continue to make illiquid investments in the context of rising unfunded commitments relative to liquid funds? Was compensation adequate for the illiquidity of these types of investments? In relation to manager selection, how could the Notre Dame investment team continue to find the best managers to create alpha? To what extent would the performance of managers during the crisis be predictive of future performance in other portions of the economic cycle? How would the long-established industry terms of contract between clients and managers change going forward? Was there an opportunity for clients to negotiate better terms? These issues all needed to be addressed in the context of protecting the University's operating budget and supporting the mission of the institution.

Suggested Citation

Perold, André F. and Buser, Paul Michael, The University of Notre Dame Endowment (January 13, 2010). HBS Case No. 210-007, Harvard Business School Finance Unit, Available at SSRN: https://ssrn.com/abstract=1551892

André F. Perold (Contact Author)

Harvard Business School - Finance Unit ( email )

Boston, MA 02163
United States
617-495-6680 (Phone)
617-496-6592 (Fax)

Paul Michael Buser

Harvard Business School ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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