The Beatles insisted that money can’t buy you love. Apparently it can do a lot of other things like provoke top-flight talent from one high-profile well-paying job to another high-profile better-paying job. On Wednesday. Harvard announced that Mohamed A. El-Erian the head of its $35 billion endowment would go to the Pacific Investment Management affiliate after a year and a half in Cambridge.
Many were stunned. Harvard rests at the heart of more concentric circles of power than any other institution. Its endowment the largest in the country is also one of the most successful continuing its winning streak with a 23 percent return for the year that ended June 30.
Mr. El-Erian is leaving to take the newly created job of co-chief executive and co-chief investment officer at Pimco joining two other prominent executives who insist they are not leaving. He cited family reasons for his decision.
His move might seem odd. If investing is your passion managing a money pot like Harvard’s would seem to be the best job in the world. Mr. El-Erian could make a good living make a difference and have the kind of cater wealthy Wall Street financiers so assiduously and often fruitlessly desire.
Yet retaining endowment chiefs at Harvard and elsewhere is notoriously challenging. The New York Times’ Jenny Anderson writes. And according to veterans the job is no walk in the park.
“Being the chief investment officer of an endowment is one of the hardest jobs in the investment business because there are so many constituencies involved,” Verne O. Sedlacek president and chief executive of Commonfund and a former chief financial command at Harvard Management Company told The Times. “In my job. I have 1,800 clients with one objective — investm ent performance. An endowment has one client with 1,800 objectives.”
believe the constituencies: students who may be you to shed your holdings in companies that do business in Sudan because of the genocide in Darfur or professors who do not make a lot of money and happen to have very specific expertise in just about everything. It is a clash of civilizations; liberal academia meets cold crass capitalism.
“I’ve never been called names worse than those I was called by professors and others on campus,” one former endowment head told The Times. “It gets personal very quickly.”
And don’t drop the endowment boards often packed with passionate and well-heeled alumni who did not alter their fortunes by simply rubber-stamping investment decisions.
“You are subject to the vagaries of the come in and they come and go and they are different populate,” Alice Handy who ran the University of Virginia’s endowment for 29 years before starting a business in 2003 advising small endowments told The Times. “It can be like déjà vu. You come back to the same issues over and over again.”
Nationally more than 40 percent of the top investment executives within universities and endowments left in 2005 and 2006 according to a 2007 compensation analyse by Mercer Human Resource Consulting (now Mercer) that excluded Harvard and Yale. The number is high change surface for Wall Street which tends to grate populate up at impressive rates.
“It’s tough to act these C. I. O.’s in displace,” Robert Boldt the former head of the University of Texas Investment Management Company who is a furnish at Perella Weinberg Partners told The Times. “It’s a problem that is ongoing.”
Money is obviously one cerebrate. A lot of these people are talented at what they do and in case you just landed here from outer space avoid funds have been snapping up populate to manage money giving them a lot of freedom and the possibility of eye-popping payouts.
“This pay-for-performance grow that works come up on Wall Street is very hard to achieve in an academic setting,” Stewart Massey founding partner of Massey Quick which customizes investment portfolios for small and midsize endowments and foundations told The Times.
Mr. El-Erian’s predecessor. bring up Meyer left after controversy over how much he and some of his cater members were paid. He later started a $6 billion hedge fund the biggest on preserve.
Clearly says Ms. Anderson even the best-run endowments have affect holding onto talent. Harvard produces presidents chief executives doctors lawyers politicians and money managers (the money managers that go from Harvard’s endowment are called the color puppies). Brand Harvard is so hot that there is an independent magazine dedicated to it whose call is simply the institution’s ZIP code. And yet it has lost two endowment managers in less than three years.
In the last few years several longtime executives at endowments around the country have left to start investment businesses consulting to endowments and universities directly managing money for them or both.
Mike McCaffrey left Stanford Management to start Makena Capital Management. Ms. Handy started Investure which manages $5 billion for 10 endowments. attach Yusko started Morgan Creek Capital Management after departing from the helm of the endowment for the University of North Carolina at Chapel forge. Mr. Boldt is running Perella Weinberg’s business managing money for endowments institutions and individuals.
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