Case Studies

An endowment had historically used an outside consultant to provide non-discretionary investment services. The volunteer investment committee gathered four times annually (eight hours total per year) to discuss investment, finance, and operational matters. During the investment portion of the agenda (approximately 45 minutes per meeting, or three hours per year), the investment committee was tasked with selecting new managers proposed by the consultant, addressing issues with existing managers, making asset allocation decisions, and reaching a consensus on their market outlook.

During economically volatile periods such as 2008-2009, the investment committee had been unable to act quickly given the quarterly meeting schedule and non-discretionary relationship with the consultant. The committee was comprised of investment and non-investment professionals; none had specific experience with manager due diligence and institutional multi-asset class portfolios. These collective issues raised concerns about the committee’s ability to effectively meet the long-term return goals of the endowment and manage through periods of high volatility.

In addition, the committee members believed that their ability to act as fiduciaries may be in question, an issue that could expose them to legal issues and personal liability. The endowment decided to move to a discretionary outsourced CIO relationship instead of a non-discretionary consultant. While the arrangement came at higher fees, the endowment believed the cost was justified, given that the outsourced CIO would act as a fiduciary and be able to provide ongoing oversight of the portfolio.

An endowment had a small internal investment team that had generated attractive returns in the past but was coming under increasing pressure due to its growing endowment size. The staff was tasked with managing a global, multi-asset class portfolio while dealing with additional responsibilities, such as risk management and reporting, that stretched resources.

Endowment leadership believed that continuing to meet its return goals would require a level of scale and quality among the investment team that would not be cost-efficient to build internally. The endowment initially decided to move to a lower-cost consultant in an effort to build resources and meet its return goals; however, this relationship ultimately did not generate the endowment’s desired results.

The endowment believed that moving to an outsourced CIO relationship would provide it with a greater level of investment resources at a reasonable cost, supporting its growth and meeting its return goals.

A foundation pledged to reduce exposure to fossil fuels across its multi-asset class portfolio. In addition, the foundation’s leadership sought to allocate a portion of its portfolio to impact investments aligned with the foundation’s mission—focused on advancing social change—without sacrificing long-term return objectives. Further, they required an OCIO provider to produce customized reporting providing transparency on various sustainability and impact metrics for the underlying investments. Foundation leadership recognized that an investment provider with the expertise and resources was needed to implement these objectives and requirements.

The foundation selected the Cerity Partners OCIO team based on our focus on working collaboratively with clients, combining innovative portfolio design, practical solutions, and investment expertise. The Cerity Partners OCIO team implemented a phased process to reduce fossil fuel exposure while increasing exposure to high-conviction impact investments and delivering ongoing impact reporting. The foundation’s fossil fuel divestment approach has been implemented, and the initial 10% target for impact investments has been met. It is on pace to meet an increased 20% target.