In 1990, John Alexander Jr. arrived at Clemson University as a professor of investments and finance for both undergraduates and graduates. He also did research on investor expectations, market efficiency and corporate control, publishing his findings in the Journal of Finance, the Financial Analysts Journal and others. While Alexander was teaching, the South Carolina–based school had difficulty with the active management program in its endowment fund and turned to the professor for help. Starting in 1999, Alexander began to move the public equity portfolio to indexing, firing the active managers. Then he built investment models to actively allocate more assets across indexes.
“The same models I created in 2002 are used today,” says Alexander, 60, who became the school’s director of investment strategy in 2003 before assuming the CIO role in 2005, while continuing to teach. “I built them in-house, and they reside on my desk,” adds the CIO, who holds a Ph.D. in finance from Florida State University and an MBA from Stetson University, in DeLand, Florida. Alexander continues to allocate to increasingly more specialized exchange-traded funds, tracking 25 different asset classes. “Active management is being challenged by how finely indexes get sliced,” he explains. Alexander has 64 percent of the $550 million endowment in ETFs and index funds, 27 percent in hedge funds and private equity, and 9 percent in actively managed funds. As of June 30, 2015, it had an 11.1 percent annualized five-year return, compared with 6.3 percent for all foundations and endowments in the Wilshire Trust Universe Comparison Service.
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