To beat Wall Street, start with a smart – and fun – professor
How do you top the endowment returns of Harvard and Yale?
For Alice Handy ’70, CEO of one of the top institutional money management firms in the U.S., it comes down to asking the right questions, looking behind the numbers and having the confidence not to follow the crowd.
Handy’s company, Investure LLC, manages close to $12 billion for 14 private liberal arts colleges and philanthropic foundations. Her 10-year returns are in the top quartile of data compiled by the National Association of College and University Business Officers (NACUBO).
An example: NACUBO estimates endowment returns nationally averaged 15.8 percent in 2013-14. One of Investure’s clients, Middlebury College, had returns of 16.5 percent. Harvard’s were 15.4 percent.
For Handy, it all started with her Connecticut College education – and her favorite professor, Ruby Turner Morris.
“My degree in economics and the self-confidence that Ruby Turner Morris instilled in all of her students set me up for success. She was flamboyant, fun and smart. She made economics come alive,” Handy says.
Handy formed Investure in 2003, pioneering the full-service outsourcing of investing for smaller institutions that have traditionally managed their endowments with board committees or modest in-house staffs. She looks for clients who are like-minded when it comes to investment philosophies; they include the Commonwealth Fund, the Henry Luce Foundation, the Houston Endowment, the Edna McConnell Clark Foundation, Colonial Williamsburg, the Skillman Foundation, the Carnegie Endowment for International Peace, and Smith, Middlebury, Barnard, Trinity, Tulsa and Dickinson colleges.
Investure gained national attention in 2011 when Bloomberg Business News reported that it had “vanquished” Harvard and Yale. Smith College, Handy’s first client, had earned 16.3 percent on its $1.2 billion endowment in 2009-10. Harvard had earned just 11 percent on $27.6 billion and Yale was reporting 8.9 percent on $16.7 billion.
It wasn’t a fluke, Bloomberg said. Investure had beaten Harvard over five years, too, 7.3 percent to 4.7 percent.
“It wasn’t just me,” Handy insists. “I have a wonderful staff.” Her team, which now numbers 35, took a close look at values early in 2007 when the stock market was near its height. Handy questioned how long it could continue. U.S. equities seemed fully valued and real estate seemed overpriced.
So Investure bet against the U.S. market. The strategy paid off when Wall Street began a precipitous decline that October.
Handy, the granddaughter of a Cape Cod cranberry farmer and daughter of a chemist, started Investure in Charlottesville, Va., after 29 years managing the endowment of the University of Virginia. Her first job out of College was at Travelers Insurance in Hartford, where she began as a bond portfolio manager.
The work is challenging but rewarding. “The investment world is a constant learning experience – new approaches, new products and new people. You are privileged to work with very bright and engaging colleagues,” Handy says.
What’s her investment advice for her fellow Camels?
“We have had such unexpectedly outstanding markets over the past five years, I suspect we are due for a breather – more modest returns – until the economy catches up with the markets,” Handy says.
“We all need to keep a long-term focus, be disciplined about keeping our portfolios simple and understandable, and then go along for the ride.”