(May 13, 2012) — David Russ has joined Constituent Capital Management — an outsourced chief investment officer firm — as its first CIO.
Having enjoyed a brief tenure at Credit Suisse as a chief investment strategist to its asset management division, aiCIO readers may also recognise him from his time at the endowment fund at Dartmouth College as its CIO.
Constituent Capital Management describes itself as the “next generation of the endowment model”, according to a blurb aiCIO found under the sponsor section of the program for the AGB National Conference on Trusteeship.
“We work with our investment partners to create customized portfolios, providing both comprehensive, multi-asset class portfolio solutions and tailored access to specific investment opportunities,” the blurb continues.
aiCIO looks forward to hearing more about Constituent Capital Management in due course.
Russ has certainly racked up a significant amount of experience ahead of his appointment at the Boston-based Constituent Capital Management, first reported by FoundationEndowment.com.
He began his career in investment management as a security investment specialist for the Bay Area Transit District in Oakland, before going on to spend six years managing investments for Stanford University.
From there, he spent several years in investment management for Pacific Telesis Group in San Francisco before returning to higher education, first as the managing director of public markets for the University of Texas Investment Management Company and then as treasurer of the regents and vice president for investments for the University of California system. He then joined Dartmouth College in 2005.
Readers will remember the Dartmouth endowment fund came under scrutiny for the alleged actions of its investment partners after a complaint claimed mismanagement and conflicts of interest at the college’s $3.4 billion fund.
The allegations came from a whistleblower letter, allegedly sent by a group of former and current faculty and school employees known as “The Friends of Eleazar Wheelock“.
The letter was sent to several government officials, including New Hampshire Attorney General Michael Delaney.
“Over a period of seven years The College engaged Lehman Brothers in six ‘interest rate swaps’ totalling $550 million dollars. The current value of these ‘swaps’ is now in excess of $200 million,” the letter, obtained by college newspaper daily The Dartmouth, alleged.
It continued: “For over a decade we have been witnessing the quiet takeover of this great College by a cabal of external, wealthy alumni/ae of the college.”
At the time, Dartmouth College spokesman Justin Anderson defended the management of the college’s endowment, saying: “The implication in the letter that these investments are improper is completely false. The investments are explicitly legal and entirely proper.”
Although the state attorney general’s office decided an investigation wasn’t required, the situation highlights a thorny problem for college endowments.
Trustees’ connections can prove profitable for the universities, offering access to top-performing hedge funds and private equity firms that may not be open to other investors, but if they’re not careful they can be accused of conflicts of interest. At the time of the whistleblower’s letter, six of Dartmouth’s funds had ties to the board of trustees.
Outsourced CIOs are big business, but choosing the right one can be a difficult process. In January, aiCIO produced a guide to outsourced CIOs — you can read more on that here.