An endowment had historically used an outside consultant to provide non-discretionary investment services. The volunteer investment committee gathered four times per year (eight hours total per year) to discuss investment, finance, and operational matters. During the investment portion of the agenda (approximately 45 minutes per meeting, or 3 hours per year), the investment committee was tasked with selecting new managers proposed by the consultant, addressing issues with existing managers, making asset allocation decisions, and reaching a consensus on their market outlook.
During volatile periods such as 2008-2009, the investment committee had been unable to act quickly given the quarterly meeting schedule and non-discretionary relationship with the consultant. The committee was comprised of both investment and non-investment professionals, none of whom had specific experience with manager due diligence and institutional multi-asset class portfolios. These collective issues raised concerns about the ability of the committee to effectively meet the long-term return goals of the endowment and to manage through periods of high volatility.
In addition, the committee members believed that their ability to act as fiduciaries may be in question, an issue that could expose them to legal issues and personal liability. The endowment made the decision to move to a discretionary outsourced CIO instead of the non-discretionary consultant. While the outsourced CIO was more expensive, the endowment believed the cost was justified given that the outsourced CIO would act as a fiduciary and be able to provide daily oversight of the portfolio.
A foundation had a small internal investment team that had generated attractive returns in the past but was coming under increasing pressure from a variety of factors. Practical limitations on compensation meant that retaining talented investment staff had become increasingly difficult, and the foundation had experienced turnover as a result. Staff was tasked with managing a global, multi-asset class portfolio while dealing with additional responsibilities, such as risk management and reporting, that stretched resources.
The foundation was also dealing with increased costs related to due diligence: staff was traveling regularly to meet with current and prospective managers, and the foundation utilized third parties for operational due diligence, background checks, and legal reviews. Foundation leadership believed that continuing to meet its return goals would require a level of scale and quality among the investment team that would not be cost-efficient to build internally.
The foundation believed an outsourced CIO relationship would provide them a greater level of investment resources, including internal operational due diligence, legal, and risk management personnel, at a cost that made sense.
A foundation made the decision to remove exposure to fossil fuels across its multi-asset class portfolio. In addition, the foundation’s leadership sought to allocate a portion of its portfolio to impact investments aligned with the foundation’s mission focused on sustainable development – without sacrificing long-term return objectives. Further, they required an OCIO provider to produce customized reporting providing transparency on various sustainability and impact metrics for the underlying investments. Foundation leadership recognized it needed an investment provider with the expertise and resources necessary to implement these objectives and requirements.
The Foundation selected Agility OCIO based on Agility’s focus on working collaboratively with clients, combining innovative portfolio design, practical solutions, and investment expertise. Agility implemented a phased process to reduce fossil fuel exposure while increasing exposure to high conviction impact investments and delivering ongoing impact reporting. The foundation’s fossil fuel divestment approach is fully implemented, and Agility has met the initial 10% target for impact investments, and is on pace to meet an increased 20% target.