FUND MANAGEMENT IN THE PUBLIC AND NONPROFIT SECTORS

Course Objective

• This course is designed to provide endowments, and foundations with a basic understanding of institutional investment management.
•  With the key concepts covered in this course (portfolio construction, the risk and return characteristics of major asset classes, due diligence, investment decision making, and fiduciary responsibility),
• understand the operations of an institution’s investment pool as well as evaluate investment
• governance policy issues.

►Target Audience

• Finance professionals
• Fund manager
• Commercial managers
• Divisional managers

►Course Outline

Lecture 1

• Overview of investing
• Typology of assets: real, financial, derivative
• Characteristics of assets (Historical returns, volatility, correlation)
  • Public equities (geography of issuance, market capitalization, growth versus value, emerging versus developed markets)
  • Fixed income (Treasuries, TIPS, corporate, mortgages, asset backed securities); understanding and measuring credit risk and interest rate risk
  • Cash equivalents
• Key financial concepts:  present value, future value, compound interest, measuring rates of return.

Lecture 2

• Characteristics of assets (Continued)
  • Real estate, real assets, commodities
  • Gold
  • Currency management
  • Options
  • Private equity
  • Hedge funds

Lecture 3

• Overview of the institutional investing environment
  • Investors:  sovereign wealth funds, public and corporate pension plans, endowments, foundations, family offices
  • Consultants:  general and specialized asset classes
  • Investment managers:  banks, specialized firms, partnerships
  • Internal investment staff
  • Custodian banks

Lecture 4

• The role of investment assets in the operation of endowments and foundations; spending levels
• Fiduciary obligation:  the prudent person and prudent investor standards
• Documenting the investment policy: elements of an investment policy statement
• Behavioral finance:  overview of cognitive issues that affect the investment process
• Alignment of interest:  managing conflicts of interest and agency risk

Lecture 5

• Regulatory environment:  state not-for-profit corporation laws; financial market regulators; SEC, IRS, ERISA
• Taxation
• The investment horizon: spend down, perpetuity, funding specific liabilities
• Intergenerational equity
• Defining investment objectives through the investment policy statement