OC investment grows with careful decisions

Consider the endowment in safe keeping. With the invisible hand of capitalism guiding its growth, what could go wrong? The Oberlin investments office, which is responsible for handling the endowment, monitors the performance of over $359 million invested dollars.

Bernard Gordon, the director of the investments office, described the investing strategy of the college as being very diverse. "Each investment in itself represents a small portion of the portfolio," Gordon said. "There are always things that do very well and things that do poorly."

The college hires investment management firms to invest the endowment and sets up guidelines for the managers who invest the money. The guidelines primarily dictate restrictions on how money is divided into investments and the status of the investments in which the money is invested.

"We don't do any direct investments," Gordon said.

Gordon said the College's guidelines for the investment managers do not include socially responsible investing. He said the divestment from South Africa in the 1980s was the only example of socially-conscious investing he remembered. The Board of Trustees voted in 1994 to reinvest in South Africa. He said he didn't know of any other colleges that include social restrictions in their investment guidelines.

President Nancy Dye said of social responsibility in investing, "I think it always should be considered. How far you go with that is a different matter. [There are so] many issues of social responsibility that it makes this a complicated matter." Dye said there is a committee on social responsibility in investing that is beginning to meet.

Approximately 30 percent of the endowment is invested in domestic stocks, followed by 25 percent in international stocks and 20 percent in bonds. The remaining 25 percent is divided between hedge funds and alternative investments.

About 30 management firms, which all specialize in a type of investment, are hired by the college. One management firm, for example, specializes in large and mid-size domestic stocks.

"Hedge funds is one of the most misunderstood terms around," Gordon said. "It is essentially an investment fund that is typically organized as a partnership. [There are] a wide variety of investment strategies to capture significant returns and generally at a reduced risk."

Some of the alternative investments include oil and gas investments, venture capital and small amounts of real-estate.

The domestic investment manager uses the S&P 500 index as the guide for its benchmarks, or the expected level of return.

Gordon said beating the benchmark is the goal for the investments management firm. Over the past years, the firms have regularly beat the benchmark. In 1970, the endowment was $70 million. By 1980, it had grown to $93 million and by 1990 it was up to $229 million. Today, the endowment is $359 million.

Charles Martin Hall's gift in the early 1900s is the largest in the endowment. A considerable bulk of the endowment is the remnants of what he gave.

The more the endowment grows, Gordon said, the more it can provide income to the operating budget.

"We have a long-term investment strategy," Gordon said. "The money has been given to the College and we want it to be around for a very long time." By investing in stocks and bonds, the endowment is secure, but not wholly dependent on a fluctuating market.