Ford Foundation Deputy Leaves for Research Institute CIO Job

(December 6, 2013) – Mark Baumgartner, the Ford Foundation’s former head of asset allocation and risk, has accepted the CIO role at the Princeton-based Institute for Advanced Study.

He starts with the endowment in January, succeeding Ashvin Chhabra as CIO.

The $1 billion endowment is smaller than Ford’s $11 billion portfolio, but the private research institute offers Baumgartner a rare chance to pursue both of his specialties.

Before entering asset management, he completed a PhD in aerospace engineering at Princeton, and holds a bachelor’s degree in the same discipline from the University of Florida.

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“The similarity between engineering and finance is that both involve making decisions in the face of uncertainty—whether it be designing a wing or changing the asset allocation of a portfolio,” Baumgartner told aiCIO in a 2012 interview.

The Institute for Advanced Study supports fundamental research into the sciences and humanities—“the original, often speculative thinking that produces advances in knowledge that change the way we understand the world,” according to the organization.

“We are honored to have someone with Mark’s combination of strong investment experience and understanding of the Institute’s needs to guide our strategic growth,” said Robbert Dijkgraaf, a mathematical physicist and director of the institute.

Baumgartner spent nearly five years at the Ford Foundation working under CIO Eric Doppstadt. Prior to that, he had served as a managing director with Credit Suisse and Morgan Stanley’s global portfolio solutions unit.

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(December 6, 2013) — If institutional investors could give their funds a makeover, what should be at the top of the list? Hewitt EnnisKnupp’s (HEK) experts said they have three ideas in mind to successfully revamp and improve investment programs.

Brady O’Connell, partner in HEK’s client advisory group, said investors should take a closer look at their decision making process: “Knowing what you are good at, and—perhaps more importantly—not good at, may result in better investment decisions over the long term.”

More specifically, reviewing the investment manager hiring and firing process, and understanding behavioral biases could help reduce costs that may be difficult to measure, according to O’Connell. He said this could reveal more accurate and appropriate investment strategies for individual funds.

Another beneficial change would be to “eliminate the noise” to avoid making significant short-term changes, said John Flagel, another partner in HEK’s client advisory group.

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Institutional investors need to focus on reaching long-term goals and be able to “differentiate ‘noise’ from opportunity,” Flagel said. “We believe that medium-term asset allocation can take advantage of the observed inefficiency of markets.”

While the implementation is customized per client, Flagel said using a benchmark over a medium-term time horizon of one to three years would allow investors a clearer view of their goals.

O’Connell and Flagel’s colleague Staya Kumar, on the other hand, suggested looking at risk allocation rather than capital allocation when selecting active management.

“When deciding on the size of mandates for investment managers, focus on their contribution to risk and your conviction in the position,” Kumar said.

To ensure that risks being taken are steady and “commensurate with the expectations for value-add,” Kumar said, investors should formulate an active risk budgeting framework to construct and operate their portfolios.