Rockefeller Endowment Chief Beats Harvard, Yale; Sees Turmoil Ahead - Hedge Fund Alpha (formerly ValueWalk Premium)

Rockefeller Endowment Chief Beats Harvard, Yale; Sees Turmoil Ahead

Amy Falls had a great year — and that’s making her nervous.

Q2 2020 hedge fund letters, conferences and more


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Falls, chief investment officer at Rockefeller University’s $2.3 billion endowment, and her team posted an almost 11% gain in the fiscal year ending June 30, topping larger elite schools including Yale and Harvard.

With greater volatility in markets and imbalances in the economy, Falls is taking a more defensive approach since then by purchasing put options on the biggest tech exchange-traded fund and exploring macro hedge funds after paring the number of outside money managers the endowment hires.

Falls, who took over at the New York City-based biomedical research university in 2011, is taking these measures after the fund benefited from a 58% gain in its venture capital investments and a surge in such technology stocks as Zoom Video Communications Inc., which accounts for more than 4% of the endowment.

In excerpts from an interview with Bloomberg, Falls, 56, discusses the economy, finding the right managers, and diversity at endowments.

Q: How is election news informing your strategy?

A: There’s a lot of focusing on the headlines and not on the underlying fundamentals. I’m concerned because of the imbalances from the impact that Covid has already had on employment and income and fiscal balances and interest-rate policy. The election is important but it’s not a driver. The risk in the market is related to the imbalances that already exist and either person who wins will have to contend with that.

Q: Rockefeller University had one of the better endowment returns this year in higher education. Why are you so concerned about the future?

A: This was definitely a year of dispersion because of the pandemic. There were real winners and losers. I have a great manager who was among one of my worst performers this year but is still one of my favorites. He’s a long-short guy in London. He said, “My problem was I was long travel and short stay-at-home.” Who could have predicted the magnitude of the change? This year was unusual in that it really favored certain sectors. We have a decent amount of biotech and tech and that happened to be a real winner.

Q: What were some other factors that played a role in your returns?

A: We had some unusual payouts last year, so we had to make some aggressive decisions about where we wanted to be. I have a farm; pruning is critical. It’s rare you prune enough. We lost some things we didn’t care as much about — less of the energy space, for instance. Also some traditional multi-strat funds, we’ve pared down. We migrated from broad equity managers who would tend to have 50 to 100 stocks. We’ve really gotten rid of almost all of those managers and concentrated on much more concentrated equity managers with generally 20 to 25 stocks.

Read the full article here by Michael McDonald, Advisor Perspectives

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