Large educational endowment management practices: a comparative analysis

Management practices at investment management companies serving the largest endowments at institutions of higher education differ markedly from such practices at institutions with smaller endowments. Moreover, they differ from management practices in place for other, similarly-sized endowments outside of higher education, because of the unique circumstances of higher education. These management practices include the overall organization of the investment companies, portfolio composition management, and the creation and enforcement of investment and spending policies and strategies. In this multiple site case study, the research examined three such investment management companies: the University of Texas Investment Management Company, Duke University Management Company, and Harvard Management Company. The study found considerable variation in the management practices among the three companies, especially with respect to the extent to which funds were managed internally or externally. Further, the three investment management companies are organizationally and physically separated from the educational institutions they serve; this raises interesting questions about whether such structural separation is appropriate for both private and public universities, given the differing degree of external involvement in institutional affairs.