Since joining the Beverly Hills, California–based foundation in 1999, CFO Kristen O’Connor and the three-member board have stuck by their resolve to invest with a minimum of expense, avoiding what they deem to be costly hedge funds and private equity funds and allocating more than a third of their portfolio to indexed public equities. It also helped that they were brave enough to rebalance the portfolio back to equities during the financial crisis, resulting in a 27 percent gain in 2009.
At a roundtable discussion for the nine winners of the 2014 Institutional Investor U.S. Investment Management Awards, O’Connor shared the challenges of her role:
On where a small foundation should allocate its resources
“We have made a very conscious effort to think about who we are as an organization and to focus more on grant making in terms of our staffing, instead of staffing up to man a full-blown investment office.”
On keeping expensive alternative investments to a minimum
“It’s a pretty unusual approach for an organization of this size, but it’s worked well. But it makes for very boring cocktail party talk.”
On taking sides in the active versus passive investment debate
“I think there’s an important role for passively managed parts of the portfolio.”
O’Connor is Top Small Foundation Investor of the year. For more of her thinking, read the entire roundtable discussion.
