UC investment team earns national recognition
"Institutional Investor" magazine recently recognized UC’s investment team
If you look in a thesaurus for synonyms to the term, endowment, you will find a weighty lodestone word: trust.
And the broader significance of the word, trust, and its varying connotations for reliability and integrity are also the bedrock foundation for any successful university endowment.
Trust, reliability and integrity aptly describe why UC’s investment team, which oversees and manages the University of Cincinnati’s $1.8 billion endowment, recently earned national recognition from Institutional Investor magazine on the basis of peer assessment and an online vote. The magazine, a trade publication for both private and public investors like universities, healthcare systems, charitable foundations, and retirement and pension systems, recognized Chief Investment Officer Karl Scheer with its “CIO of the Year Award,” an award that Scheer credits to the teamwork of his close-knit staff: Sam Ekis, investment director; Doreen Clark, investment operations coordinator and assistant to the CIO; as well as current interns Stephanie Perry and Sydney Rohrs.
An endowment is like a mighty oak
A story is told of an engineering student clambering into the massive wooden beams supporting the roof of Oxford University’s New College Hall to study the centuries-old joints that helped hold the building together. He discovered a beetle infestation that greatly threatened the structure, causing the college’s Fellows (trustees) to wonder where in the world they might find oak beams of such scale and quality, and how they would pay for it — and if there was no solution, what it would mean to this magnificent piece of England’s history.
Someone suggested they seek input from the heretofore unknown and seemingly anachronistic “college forester” who appeared on the school’s employment rolls. When summoned and presented with the dilemma, the forester expressed little surprise. He said his staff managed the various wooded lands owned by the university, and when New College was chartered in the late 14th century and its buildings erected, a grove of oak trees was planted with the knowledge that their wood was destined to replace the beams of the new edifice when it was inevitably compromised by beetles, which always happens with oak eventually. For 600 years, the edict to Oxford’s foresters was to protect those oaks; they were meant to someday provide replacement timber for New College Hall.
While UC isn’t nearly as old or steeped in history as Oxford University, similar principles undergird our own university endowment.
Peer recognition
In terms of size, the UC endowment ranks among the top 25 of public universities in the United States and ranked 79th among all U.S. and Canadian institutions, according to NACUBO (National Association of College and University Business Officers).
Moreover, the endowment team is also part of an informal leadership program dubbed “Big 10 Plus CIOs,” and it was a member of this “Big 10 Plus” group – Sam Gallo, who most recently served as chief investment officer at the University System of Maryland Foundation – who nominated Scheer and his team for recognition by Institutional Investor magazine.
Says Gallo, “I met the UC team 10 years ago because we are all part of what’s informally called the Big 10 Plus CIOs, which extends to those of us at large, often midwestern universities as well as the traditionally Big 10 institutions. We all respect each other. We all strongly support and learn from one another in helping our respective institutions continue to do great things. It’s important thing to appreciate that we all do well together. We really seek to cooperate. We don’t compete – except in football.”
Topics the select group explore and debate in both virtual and in-person conferences range from governance issues, operational best practices, venture capital investing and diversity in the industry, among many others.
He adds that UC’s Scheer as well as Ekis and Clark are widely recognized as a top-tier investment team that earns outstanding results thanks to their careful research, keen questions and insights, listening skills, candor, disciplined teamwork, institutional longevity and dedication to the university.
From the time that the current UC investment team first started coming together in 2011 when Scheer arrived at UC, it has nearly doubled UC’s endowment from $1 billion to $1.8 billion, a testament to the stature of the overall university as well as the professional strengths of the endowment management team. In fact, UC’s endowment returns are consistently above the median for the industry over 1-, 3-, 5- and 10-year periods. In fact, in the past 5- and 10-year periods, UC has outperformed roughly two thirds of other endowments, and in the past 3 years, UC has outperformed three quarters of other endowments.
States Gallo, “That’s on par with very good, even great results. To grow capital like that above and beyond the market rate takes a truly top-performing team. It takes trust in one another, a bluntly honest ongoing assessment of everything in the portfolio, strong vision and bone-deep dedication to excellence by everyone. And, that’s what I’ve truly come to appreciate about the UC team in the 10 years I’ve known them. They are what an investment team should be. UC is very lucky to have them.”
They are what an investment team should be.
Sam Gallo Recent chief investment officer, University System of Maryland Foundation
He adds that most people probably don’t realize how unusual is it to boast home-grown investment team leadership: “I don’t know another CIO that has such strong roots in the community, but I think those deep, local roots are part of the reason Karl and the UC team so clearly love their roles, their institution and the difference that they make in support of scholarships, faculty work and research and community service.”
UC Senior Vice President for Administration and Finance Pat Kowalski agrees, stating, “Karl is an exceptional CIO, but he’s an even better human being and person. The same goes for the team that reports to him.”
He adds, “As a person privileged to know Karl as a colleague, it would maybe be easy for me to simply focus only on Karl’s core responsibility of maximizing returns. And he and his team clearly already do that. What humbles and inspires me about Karl and his team is their personal engagement with students and with faculty and staff. Neither he nor his staff have to connect as they do with campus and campus partners. It’s what they choose to do because of the who that they are. They always want to more fully appreciate the big picture of the university, its mission and how to better serve in their roles. Karl, Doreen and Sam are the very embodiments of trust, care and respect for one another and those around them.”
UC innovation: Mentoring, research and relationship building
In the same vein, both peers and members of UC’s investment team point to authentic questioning, listening and debate as essential ingredients to their success.
That extends to the office’s interns, who are part of a recent and ongoing effort to provide real-world investment experience to university students. The office works with six interns each year. The effort helps UC students gain experience and network and will, in the longer term, help to diversify the fields of investment and finance and build a network of UC alumni in industry.
Among the first interns was Grishma Patel, who earned accounting and finance degrees from UC’s Carl H. Lindner College of Business in December 2018.
She recalls her UC internships as ones of constant growth and development. That includes the very first time she met Scheer in a University Hall elevator.
The university's CIO Karl Scheer credits his youth spent as a competitive swimmer, from elementary school to his All American college years, for providing him an education in humility and honest self assessment: “I like to say that swimming keeps you grounded. When you’re in the pool, you’re face down in the water a lot, so there really are no distractions from what’s essentially a great view of the concrete bottom of a pool. You’re not wearing padding or even a uniform. So, there are no equipment advantages, just a bare-knuckles race against a time clock that never lies. In other words, everything is about the essentials, and that includes the need to be both honest with yourself and honestly yourself.”
“When I first met him, I literally did an elevator pitch like they teach us in business school,” she recollects, adding, “The elevator doors opened, and there’s this big, tall guy, about 6-foot-6 inches I thought at the time. We introduced ourselves because Karl will strike up a conversation with anyone, anywhere, at any time. Even though I was a bit shy at the time, I briefly encapsulated my majors, studies and ongoing work. Karl then gave me his card and invited me to visit the investment office.”
Patel visited the office and soon had her next internship lined up. And that internship, plus a previous one with the UC Office of Internal Audit, led Patel to her current role as a financial analyst in the UC Office of Planning, Design + Construction following a post-graduation stint working as an auditor for The Kroger Co. after graduation.
“My time in the investment office really stands out because Suite 250 (University Hall location of the investment team) is not an office. It’s genuinely a family, and I’m still part of that family even today,” she states, adding, “From the first, Doreen, Sam and Karl saw value in what I could bring to the mission, and I had a full voice to weigh in when we would gather in the huddle space near the front door to discuss what we thought of a particular manager or specific fund.”
UC's investment team works with six interns each year. The effort helps UC students gain experience and network and will, in the longer term, help to diversify the fields of investment and finance and build a network of UC alumni in industry. Among the first interns was Grishma Patel, who went on to earn accounting and finance degrees in 2018.
After the experience and industry contacts she gained thanks to her internships, Patel says she could have gone into almost any accounting or finance specialty, whether hedge fund, consultancy, audit or other role thanks to the wide-ranging experience, expertise and supportive network she gained.
“But most of all,” she underscores that at the investment office and elsewhere, “I gained confidence in myself. I know I can succeed in what I want to do. I’m capable of managing a meeting, problem solving with a client, meeting with high-level executives as well as research or analysis tasks and strategies. And when I recall how I used to be a shy person, that personal growth really stands out for me and why I’m really glad I chose the university for both my education and work opportunities. I’m a Cincinnati native, and I fully appreciate was a great asset we have in UC with its strong co-op and mentoring emphasis.”
I’m a Cincinnati native, and I fully appreciate was a great asset we have in UC with its strong co-op and mentoring emphasis.
Grishma Patel Former student intern and current employee
Doreen Clark, investment operations coordinator and assistant to the CIO; states, “A lot of people just don’t go to the extent we do to accomplish and nail down details.”
In addition to such training and mentoring, research and industry relationship building are just as key to the endowment team’s success. According to team member Doreen Clark, “A lot of people just don’t go to the extent we do to accomplish and nail down details.”
Ekis agrees, “We have to burrow and sift, network and connect in order to find the best fund managers because they don’t tend to advertise.”
That research is paired with relationship-building. It’s Ekis who often takes a lead in building relationships between the university with fund managers. He explains, “Everything I do seeks to communicate that Karl, Doreen and I are good partners at a great institution doing important work. Small things matter to people and to our partners, and we definitely take care of the small details as well as the big picture.”
Sam Ekis, investment director, was once meeting with a successful but selective fund manager when he happened to make casual conversation that referenced the movie “Office Space” and its iconic red Swingline stapler. That hit a chord with the fund managers, who were also fans of the film. He and Clark followed up by sending a thank you note, UC materials and, of course a red Swingline stapler. That small touch helped the UC team to stand out in a crowded field and to eventually participate in that successful fund. Says Ekis, “We are only being authentically ourselves, but, importantly, we take the time to do so.".
For instance, once, when meeting with a successful but selective fund manager, Ekis happened to make casual conversation that referenced the movie “Office Space” and its iconic red Swingline stapler. That hit a chord with the fund managers, who were also fans of the film. He and Clark followed up by sending a thank you note, UC materials and, of course a red Swingline stapler. That small touch helped the UC team to stand out in a crowded field and to eventually participate in that successful fund.
Says Ekis, “We are only being authentically ourselves, but, importantly, we take the time to do so.”
And that is the very essence of the endowment team, according to Scheer, who credits his youth spent as a competitive swimmer, from elementary school to his All American college years, for providing him an education in humility and honest self assessment: “I like to say that swimming keeps you grounded. When you’re in the pool, you’re face down in the water a lot, so there really are no distractions from what’s essentially a great view of the concrete bottom of a pool. You’re not wearing padding or even a uniform. So, there are no equipment advantages, just a bare-knuckles race against a time clock that never lies. In other words, everything is about the essentials, and that includes the need to be both honest with yourself and honestly yourself.”
How an endowment works
By its very nature, an endowment is designed to last in perpetuity, each year providing support for scholarships, service and research.
One example is the Lange Fund, first established in 1984 thanks to a $200,000 donation by Lilli Baerman Lange to honor her husband Willy Lange, a one-time university faculty member and researcher who had earned his doctorate at the University of Berlin, where he had studied with faculty including well known scholars Wilhelm Traube and Albert Einstein. In Cincinnati, Willy Lange enjoyed a 25-year career at Procter & Gamble Co., heading the chemistry department before joining UC’s faculty ranks.
Since that time, that $200,000 donation has funded more than $660,000 in scholarships thanks to investment management that more than doubled that principle and thus increased the usable interest earned, the yield then used to fund the scholarships. Importantly, this interest yield is designed to be steady and predictable year over year in order to best serve the needs of the students who rely upon it.
In a previous publication, staff at UC’s Foundation and Alumni Affairs staff provided the following anecdote that well illustrates the foresight and functions an endowment should serve over the long term:
A story is told of an engineering student clambering into the massive wooden beams supporting the roof of Oxford University’s New College Hall to study the centuries-old joints that helped hold the building together. He discovered a beetle infestation that greatly threatened the structure, causing the college’s Fellows (trustees) to wonder where in the world they might find oak beams of such scale and quality, and how they would pay for it — and if there was no solution, what it would mean to this magnificent piece of England’s history.
Someone suggested they seek input from the heretofore unknown and seemingly anachronistic “college forester” who appeared on the school’s employment rolls. When summoned and presented with the dilemma, the forester expressed little surprise. He said his staff managed the various wooded lands owned by the university, and when New College was chartered in the late 14th century and its buildings erected, a grove of oak trees was planted with the knowledge that their wood was destined to replace the beams of the new edifice when it was inevitably compromised by beetles, which always happens with oak eventually. For 600 years, the edict to Oxford’s foresters was to protect those oaks; they were meant to someday provide replacement timber for New College Hall.
While UC isn’t nearly as old or steeped in history as Oxford University, similar principles undergird our own university endowment. Said Scheer, “A donor may give $1 million that could immediately be used and used up to provide 22 scholarships; however, if placed in the endowment, the gift can grow in perpetuity to fund many more than that over time. My goal is to continuously grow the endowment’s buying power over time.”
Parts of UC’s endowment date back more than a century while some were just established last year. These are not discretionary funds. The various parts of the endowment – more than 2,000 – were established by donors to meet very specific goals and must be used towards said goals. Importantly, use of endowment dollars free up other funds that the university can spend on needs and goals considered most appropriate across the enterprise at any given time and reduces taxpayer contribution to university budgets.
Related Stories
Uplifting stories help #UCtheGood
July 16, 2020
UC Marketing + Communications gathers recent uplifting stories to help the community focus on the good during coronavirus pandemic.
Just in: UC tops 50,000 students
August 21, 2023
The University of Cincinnati is anticipating a record fall enrollment with a projected 50,500 students. The growth represents a 5.39% increase and reflects the university's core values around academic excellence, access and inclusion, and affordability.
UC Day of Giving a success
April 28, 2021
University of Cincinnati Day of Giving’s 24-hour challenge was a tremendous success this year, raising $2,219,197 with 3,232 gifts. The fourth annual UC Day of Giving raised its most money to date with alumni, donors, students, faculty and staff joining together to support UC and UC Health.