Share this:
10/06/2004 07:00:00

Caltech Reconfigures Its Investment Leadership

PASADENA, Calif. — Answering the unanswerable is at the heart of what the California Institute of Technology does. How did the universe begin? Can things be built atom by atom? What is consciousness?

Financially supporting the scientists and students who strive to answer such questions is the responsibility of Caltech's Investment Committee, which, as the name implies, is responsible for deciding how the Institute invests its endowment. Now three new financial advisers have agreed to join the committee: Jeremy Grantham of Grantham, Mayo, Van Otterloo & Co. (GMO) in Boston; Howard Marks of Oaktree Capital Management in Los Angeles; and Richard Perry of Perry Capital in New York. In addition, the size of the committee is being reduced to 11 members from its current membership of 22.

"In light of the growing complexity of our investment portfolio and a challenging market environment, I thought we should consider adopting a similar investment committee 'formula' as some of our peer institutions," says Sandra Ell, Caltech's treasurer and chief investment officer. The change originated as a result of a "white paper" written by Ell. The paper examined Caltech's overall investment strategies compared to the strategies of four of its peer institutions--Harvard, Princeton, Stanford, and Yale.

The biggest difference, she says, was in the size and makeup of the Investment Committee. "In talking to my colleagues at these other institutions, they noted that in contrast to their committees, Caltech's committee was roughly double the size," she says. And, while committee members have a wealth of expertise, ranging from executives and former executives of major U.S. corporations, to successful entrepreneurs and venture capitalists, Ell says it was felt that a smaller committee that also included members with professional investment experience would prove beneficial.

Ell and Investment Committee chairman Eli Broad chose the three new non-trustee and non-voting members because all come with excellent credentials as investment strategists:

Jeremy Grantham cofounded GMO in 1977, and is the firm's chairman of the board. Privately held, GMO manages $65 billion in client assets, focusing on U.S. and international stocks, fixed income securities, absolute return, and asset allocation.

Howard Marks is the cofounder and chairman of Oaktree Capital Management in Los Angeles. The company manages $28 billion in client assets, and is dedicated to alternative and inefficient markets, such as high yield and convertible bonds, distressed debt, private equity, real estate, mezzanine finance, and emerging markets.

Richard Perry is a founding member of Perry Capital in New York and its managing director. As an investment management firm, Perry Capital has assets totaling $9 billion, and focuses on domestic and international equity and debt markets.

"Caltech's mission is to wrestle with the critical issues of our times, and whether it's the cosmos or nanoscience, health or energy, mathematics or human values, we are at the forefront," says David Baltimore, Caltech's president. "Supporting our scientists is at our core, and is the reason for our current, $1.4 billion financial campaign. In this critical time, it's crucial that we invest our money wisely, so I'm pleased that these three financial stars will help us in this ongoing effort."

Like the other members of Caltech's investment committee, the newest members receive no compensation other than reimbursement for travel. Non-trustee members can serve up to three-year terms with a maximum of two consecutive terms. Board of Trustee member Eli Broad continues to serve as the committee's chairman.

"Over the past three years we have significantly repositioned the $1.3 billion endowment and believe it should outperform our benchmarks and peer institutions with less risk than we previously incurred," says Broad. "The addition of these three distinguished advisors further strengthens our governance and oversight of the endowment, and we're delighted that they have joined the committee."


MEDIA CONTACT: Mark Wheeler (626) 395-8733

Visit the Caltech media relations web site:

Written by Marcus Woo