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The Carletonian

Investment Office without any employees

<nesday, April 19, the Carleton College Investment Office sat empty.

Megan Gorman, the last employee in the office that oversees and manages Carleton’s $800 million endowment, left. Her departure follows four other employees who left earlier this year: Chief Investment Officer (CIO) Jason Matz, Director of Private Markets Andy Christensen and two junior staff members, David Ames ’11 and Julian Skotheim ’15.

The college is in the process of finding a new CIO, but failed to hire one before all office personnel left, according to President Steven Poskanzer.

The college endowment, which is in the top 10 for similarly-ranked liberal arts schools, supports financial aid, faculty salaries, the career center, building maintenance and general operations of the college, according to Joe Hargis, Associate Vice President for External Relations. These various funds provide roughly 30 percent of the college’s annual operating budget.

The search for a new CIO is likely to last until fall 2017, according to Vice President and Treasurer Fred Rogers ’72. Both he and President Poskanzer stress that this transition will not impact the endowment. “There are a variety of interim measures and safeguards in place to make sure that this staff turnover in the office will not have any kind of disruptive or negative impact on the endowment’s performance,” said Poskanzer.

One of these interim measures is that Xofficio LLC, a third-party consultancy, has been hired to manage much of the operational work that the Investment Office traditionally does, according to Rogers. Xofficio specializes in middle-office operations for institutional endowments. They do not handle any investment-related issues, focusing instead on “daily cash flow coordination and monthly performance reporting to web-based recordkeeping and ongoing support of investment management staff,” according to their website. The firm will offer operational support until the school finds suitable replacements for all vacant positions.

Additionally, the Business Office will assume some functions of the Investment Office this spring and summer. Comptroller Linda Thornton confirms that the Business Office will “provide transaction support for the investment portfolio during the transition of the Investment Office.”
This transaction support will predominantly consist of handling reporting and cash operations, but will not involve any investment management, noted Rogers.

Rogers said that Xofficio and the Business Office are “in transition now and will be fully up to speed in May.”

Carleton’s Investment Committee will assume control of investment management until a new team is assembled.

Under normal circumstances, the Investment Committee provides direction and institutional review for the Investment Office. “They review the many individual managers in the portfolio on an ongoing basis and search out and identify new managers for specific asset classes,” explained Hargis.

Given the unorthodox circumstances, however, the Investment Committee is picking up the task of direct asset management.
“The Investment Committee is forming subcommittees to be assigned to specific asset classes, and they will be meeting in early May to review the situation together,” said Rogers.

Not all components of the Investment Office’s work can be picked up by these short-term solutions.

For instance, the Investment Office traditionally provides internships for Carleton students interested in investment management.

Due to the structural constraints of this summer, though, the office will be unable to hire interns, said Andrea Kubinski, Recruiting Program Coordinator in the Career Office. The Business Office will also be unable to support a summer internship as a result of the transition, according to Thornton.

President Poskanzer stressed that this transition is “not all that unusual” in this field, although it is the first generational turnover that the Investment Office has seen since it was founded 13 years ago. Hargis added that it is “not surprising the two junior staff members also decided to move to new positions rather than wait for new leadership that might well want to build its own team.”

Even though the office sits empty now, the administration was adamant that every necessary step has been taken to ensure that the endowment will continue to perform until next fall, when new leadership is expected to be hired.

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