Quinnipiac University is “beating the biggest names in higher education at investing with the help of an unlikely force: the stock picker.” This according to a recent article in The Wall Street Journal.
Of the U.S. schools ranked by the National Association of College and University Business Officers and Commonfund, Quinnipiac’s returns—6.1% annualized for the ten years ended June 30, 2017—ranked in the top 10%. John Lahey and Mark Varholak, the administrators overseeing the $530 million fund, said that they have “steered clear of the crush of investors into index funds and big private-equity bets.” Instead, they say, the strong returns have come from investing 70% of the fund’s money with stock pickers and “sticking with them.”
The article reports that unlike some of its peers, Quinnipiac “doesn’t rely on its endowment for any operating needs and plans not to spend from the pool until it hits $1 billion.”
William Spears, founder of wealth manager Spears Abacus and chair of Quinnipiac’s investment committee, said, “It’s my job to resist the proliferation that ends up with mediocrity.” According to the article, “the university never felt the pressure to copy the model pioneered by Yale investment chief David Swensen that pushed many college endowments to invest heavily in alternative and illiquid strategies such as private equity and venture capital.” Of the university’s total assets, 80% can be converted to cash within 30 days.
But Mr. Lahey understands that the fund has reaped the benefit of a long bull market and that uncertainty lies ahead. “It isn’t clear,” the article concludes, “if the college will be better protected than others in another downturn. And the university concedes Yale beat out Quinnipiac in the last decade: 6.6% to 6.1%.”