Michigan State Hires Hedge Fund Manager to Oversee Endowment

Former alumnus Philip Zecher is running the schools $2.3 billion investments, and other colleges are following suit.

Instead of interviewing hedge funds, universities are starting their very own with experienced investors at the helm. This is the trend that was recently illustrated when Michigan State University hired former hedge fund manager and alumnus Philip Zecher as its first chief investment officer last week. His mission is to grow his alma maters $2.3 billion endowment.

Leading a team of three staffers, Zecher brings an impressive pedigree to his job. Not only was he partner and chief risk officer of hedge fund EQA Partners, he holds a doctorate in nuclear physics. The Stamford, Connecticut-based currency fund shut down operations in 2012.

MSU is not the only college system looking to start its own endowment office with an internal CIO. Bloomberg reports that the University of Nebraska also launched investment chief positions instead of hiring outside investment firms.

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Most of them have come to the conclusion that just makes much more sense to create your own investment management office with your own CIO, Charles Skorina, an executive recruiter told Bloomberg. It gives you the opportunity to capture an edge which you cant do easily with a consulting firm.

Endowments are big business for the buyside. Stanford University’s endowment, for example, saw an increase of 4 percent in the past fiscal year to $22.2 billion. This was modest compared to the previous year when the endowment experienced 14.8 percent growth. Earlier this month, Rutgers announced that its endowment had finally crossed over the $1 billion mark.

Michigan States endowment climbed 800 percent since 2000, according to university claims.

We had been managing this in a very traditional sense, Zecher told Bloomberg. The size and complexity of the endowment got much bigger and the markets are more complicated.

The Michigan State board of trustees approved Zechers appointment as CIO on Friday, December 18. The endowment team will work with Cambridge Associates, a buyside consulting firm, to submit recommendations to the committee overseeing the university fund.