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Smaller university endowments: team characteristics, portfolio composition and performance

Smaller university endowments: team characteristics, portfolio composition and performance Purpose – The paper aims to help explain how certain smaller university endowments are able to provide investment results that are more typical of much larger endowments. Investment teams' characteristics and risk‐reward perceptions are examined in relation to portfolio composition and performance. Design/methodology/approach – This exploratory study uses a grounded‐theory approach consisting of 20 in‐depth interviews of financial officers at US colleges and universities with assets between $100 million and $200 million. Ten were conducted from the top performance quartile and ten from the bottom quartile. Interviews were transcribed and coded; afterward, emerging themes and constructs were identified. Objective investment performance over a ten‐year period was employed from a well‐known industry survey. Findings – Top‐performing endowments were described as having endowment teams with greater investment expertise, efficacy, decision‐making independence and learning commitment than teams from the low‐performing endowments. Teams from top‐performing endowments assessed alternative investments more favorably and made greater portfolio allocations to them as compared to teams from low‐performing endowments. Research limitations/implications – Because of the chosen research approach, the research results may not be generalizable. Practical implications – The paper includes implications for colleges and universities in the management of their endowments, and particularly in the selection of committee and other team members. Originality/value – The paper is original in exploring certain team characteristics and practices of institutional investment decision‐makers and their relationship to portfolio composition and performance. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Qualitative Research in Financial Markets Emerald Publishing

Smaller university endowments: team characteristics, portfolio composition and performance

Qualitative Research in Financial Markets , Volume 6 (1): 29 – Apr 11, 2014

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Publisher
Emerald Publishing
Copyright
Copyright © 2014 Emerald Group Publishing Limited. All rights reserved.
ISSN
1755-4179
DOI
10.1108/QRFM-07-2012-0021
Publisher site
See Article on Publisher Site

Abstract

Purpose – The paper aims to help explain how certain smaller university endowments are able to provide investment results that are more typical of much larger endowments. Investment teams' characteristics and risk‐reward perceptions are examined in relation to portfolio composition and performance. Design/methodology/approach – This exploratory study uses a grounded‐theory approach consisting of 20 in‐depth interviews of financial officers at US colleges and universities with assets between $100 million and $200 million. Ten were conducted from the top performance quartile and ten from the bottom quartile. Interviews were transcribed and coded; afterward, emerging themes and constructs were identified. Objective investment performance over a ten‐year period was employed from a well‐known industry survey. Findings – Top‐performing endowments were described as having endowment teams with greater investment expertise, efficacy, decision‐making independence and learning commitment than teams from the low‐performing endowments. Teams from top‐performing endowments assessed alternative investments more favorably and made greater portfolio allocations to them as compared to teams from low‐performing endowments. Research limitations/implications – Because of the chosen research approach, the research results may not be generalizable. Practical implications – The paper includes implications for colleges and universities in the management of their endowments, and particularly in the selection of committee and other team members. Originality/value – The paper is original in exploring certain team characteristics and practices of institutional investment decision‐makers and their relationship to portfolio composition and performance.

Journal

Qualitative Research in Financial MarketsEmerald Publishing

Published: Apr 11, 2014

Keywords: Portfolio diversification; Risk perception; University or college endowment; Investment performance; Learning commitment; Team efficacy and collective agency

References