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Notre Dame was staggered but not down. Because all investment committee members are also trustees, the board keeps close tabs on the endowment. It helped that Malpass had served as vice president of finance, in addition to CIO, from 1996 through 2003 and hired both the controller and vice president of finance, who still serve today. The result: The investment and finance offices remain close, which is important when a school needs to monitor its cash position.

Unlike other universities, which cut back on building projects and staff during the crisis, Notre Dame’s conservative policies allowed it to continue construction and hiring; unlike Harvard, Princeton and Yale, the university did not need to issue taxable debt to access cash.

Malpass and his team are still shaken by the crisis. “It amazes me how few investors saw it coming, despite all the brilliant minds that work in investments,” Donovan says. In the fall of 2008, Malpass and his staff performed a full-scale review of liquidity, to be prepared for further market drops. The total portfolio was given an explicit liquidity target, an exposure that would enable rebalancing from a market shock or sudden opportunity. “We didn’t get out over our skis where we had to sell or borrow,” says investment director Michael Cook, head of the real-assets portfolio. “If capital calls had accelerated past distributions, we would have had to do things we didn’t want to do.” Adds executive vice president Affleck-Graves: “It was the most traumatic time on the committee. Changes were made.”

William James, a 1992 graduate who joined the investment office five years later to oversee fixed income, energy, commodities and timber, then picked up manager selection in multistrategy, distressed and credit hedge funds, received another new job — risk manager — in 2011. James had been exploring hedging opportunities and had formulated a credit default swap strategy. “Risk management is a lot about anticipating things,” he says. “The role of a risk manager has evolved to being a strategist.” He analyzes which countries have the most debt or most-unstable political systems, then asks what the opportunities are inside the risks.

More recently, Buhrman and investment director Paul Buser have begun a project dubbed R&D to learn how to identify top managers early in the game. Meeting with hedge fund managers and prospects over the years gave the public capital team the idea. “We want to improve our pattern recognition of investments that can sustain themselves over decades,” Buhrman says. The pair meet with hedge fund managers to talk about their investment frameworks. “We’re creating a narrative, a flight simulation, of a fund,” Buhrman says.

Like any R&D project, this one might not necessarily bear fruit, but Malpass’s long-term philosophy gets it on the agenda. “As a CIO I love the fact that we’re understanding why they’re good,” he says. “It’s very transferable. They’re not going to give us all their secrets, but they’re pretty transparent.”

For his part, Malpass is not going anywhere. He’s still relatively young, and there’s lots to do. He’s currently focused on early identification of risks and opportunities. He’s questioning how much time to spend on macroeconomic research given economic uncertainty. He wants more touch points and more international research. “We want to understand how policy is developed, what the scenarios are,” he says. “We need to make time to do this. It isn’t something we were obsessed by ten years ago.” The possibilities of bad outcomes are greater now. Even people who think about policy at the highest level don’t know what’s going to happen.

The investment office is putting together more metrics and dashboards to monitor leverage. As he watches leverage rise and bubbles form, Malpass searches for ways to protect the endowment he’s spent decades amassing. He may start to do more hedging because over the next three to five years it’s going to be hard to unwind the massive pile of U.S. debt. Despite 25 years of world-class investing, he confesses to his limitations and returns to fundamental disciplines: “All I can do is have a balanced, well-diversified portfolio with good partners.”

That’s the Malpass way. • •

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