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25 Years Later, Scott Malpass Is Still Notre Dame MVP

The Notre Dame endowment CIO has achieved a winning record overseeing the Catholic university’s $8.4 billion investment portfolio.

  • Frances Denmark

It was an unusual sight. On a Thursday morning, August 22, 2013, the investment officers of the University of Notre Dame endowment filed into a tiny log chapel on campus for a special prayer service. This was not the annual back-to-school Mass that occurs after the students return. Instead, Notre Dame’s chief investment officer, Scott Malpass, had chosen the oldest, most intimate chapel on campus — 57 are scattered across Notre Dame’s bucolic 1,200 acres — to celebrate a more personal milestone. “It was my 25th anniversary, and I wanted to do it there,” says Malpass, 51, who became CIO in August 1988, just after his 26th birthday.

The Log Chapel was a fitting site for the anniversary Mass, embodying both the founding of the university and its deep ties to Catholic mission tradition. Built in 1831 by Father Stephen Badin, a French missionary to Native Americans and the first Catholic priest to be ordained in the U.S., it was taken over in 1842 by Father Edward Sorin, the Congregation of Holy Cross priest who had come to South Bend, Indiana, to found a Catholic college. (The original cabin later burned to the ground and was rebuilt in 1906.) Badin and three successor missionary priests are buried under the chapel’s middle aisle.

Malpass was surrounded by some of his closest friends and colleagues. Notre Dame’s current president, Father John Jenkins, a 1976 graduate of the university, officiated at the Mass while Nicholas Chambers, an associate in the investment office’s public capital group, who had once trained in a boys’ choir in Houston, sang and operations associate Breighton Brown played the violin. Timothy Dolezal, an investment director on the private capital team and valedictorian of the Notre Dame class of 2002, acted as altar server.

At the request of Michael Donovan — Malpass’s deputy CIO, former roommate and fellow 1984 grad — Jenkins called the congregants to the altar during a reading of the Prayers of the Faithful. As Jenkins placed his hands on Malpass’s head, the team from the investment office surrounded him, joining in a prayer of thanks for his stewardship of the endowment. “It was a reflection of the affection people have for him and a sense of their common mission,” Jenkins says.

Malpass and Notre Dame have much to be thankful for. Over the past 25 years, the CIO has built an investment machine that has taken Notre Dame’s endowment from the 23rd largest in the U.S. to 12th — and made it tops among American Catholic universities. That growing endowment has helped transform the school into a top-rated research university. Some believe Malpass’s influence rivals that of the beloved Fighting Irish football team.

What Malpass has accomplished goes beyond recruiting and retaining a talented team, building a diversified portfolio and accessing top asset managers — the usual tasks of a university CIO. The legacy transcends his impressive longevity in office, a tenure rivaled only by Yale University CIO David Swensen. “We think we’re doing something special here,” Malpass says. “It’s in some ways a mystery and in some ways a miracle.”

It’s no mystery that Malpass has dedicated virtually his entire adult life to a single passion: his alma mater. That task has led Malpass to redefine the role of CIO well beyond the normal job description of asset management. His mission includes a devotion to his religious beliefs and to Notre Dame’s place in fostering a Catholic worldview. It encompasses his participation in education, a unique staff recruitment and development philosophy and a quest for investment excellence that has taken the university into new territory.

Malpass, who has never married, has created a tight Notre Dame–centric family that includes the investment office of professionals, nearly all alumni themselves; a coterie of students and alumni who look to him for knowledge, inspiration and mentoring; and a network of Wall Street–based trustees. Add to this a belief in consistency, stability and long time horizons that he applies to his staff, investment committee members, asset managers, investments and, not least, himself.

“You hear about the Harvard model and the Yale model,” says Malpass. “We’ve developed the Notre Dame model.”

Malpass’s “miracle” is built on hard numbers and hard work. In the quarter century since he became CIO, the portfolio has grown at an annualized trailing rate of 11.9 percent, compared with 9 percent for the median large fund in Wilshire’s Trust Universe Comparison Service. That performance has taken the fund from $453 million in 1988 to today’s $8.4 billion. In the same period the school's annual expenditures rose from 11 percent of the endowment to 25 percent and the total spend grew from $24 million to $286 million.

Jenkins, who has led Notre Dame since 2005, insists that financial aid is the critical factor in the university’s quarter century of growth. Since 1987 some 300 endowed professorships have been added; total annual student-aid packages have risen from $5 million in 1988 to $113 million today for a student body of 11,700 or so. Perhaps more significantly, Notre Dame’s median Scholastic Aptitude Test score has grown from 1,280 to 1,440.

John (Jack) Brennan recalls his first meeting with Malpass, while on a campus tour with his son in 2002. Brennan, chairman of Vanguard Group from 1996 to 2009, was a Dartmouth College graduate and trustee who knew little about Notre Dame. Rather than talking shop as one asset manager to another, Brennan says, Malpass, “without blinking an eye,” plunged into the topic of student financial aid. “He said, ‘A kid who might have wanted to go to Notre Dame 15 years ago now can because the endowment has grown ten times.’” Brennan, now Vanguard’s chairman emeritus, joined the Notre Dame board of trustees and investment committee in 2009; he is now vice chairman of the committee. His son graduated from Notre Dame in 2006, followed by two younger siblings.

“We’ve developed a brand as an investor,” says Malpass, noting his relationship with 178 asset managers and his distinctive long-term focus. “They use the term ‘partners’ for investment managers,” Brennan says, adding that the partners concept “is an unbelievably powerful force.”

These are not speculative investments. Today a full 45 percent of the Notre Dame portfolio is invested in private equity, real estate and other funds with ten-year lockups, and an additional 25 percent is in hedge funds with lockups that range from one to five years. But “long term” does not imply passivity. Peter Johnson, a linebacker on Notre Dame’s 1977 national championship team, went on to become director of institutional sales for San Diego–based Nicholas-Applegate Capital Management and sold Malpass one of his first investments in the late 1980s. But in 2000, Malpass terminated the then-$500 million mandate when Allianz acquired Nicholas-Applegate. “I tried everything to keep it,” says the now-retired Johnson, who still golfs with Malpass. “It ended up being a good decision for Notre Dame because Nicholas-Applegate struggled at Allianz.”

Over 25 years Malpass has hired 290 firms and terminated 180 of them.

Malpass’s tough love has proved profitable for Notre Dame. The venture capital portfolio, for example, has realized an annualized 30 percent internal rate of return since its 1980 inception. Michael Moritz, a partner at venture firm Sequoia Capital in Menlo Park, California, has been along from the start. “It says a lot about Notre Dame and Scott Malpass that we still have the relationship with the same individual today,” Moritz says. “It’s difficult in the universe of people in our lives at Sequoia to come up with even one or two names that fall into the same category as Scott.”

Moritz calls the CIO’s investment record “one of the astonishing achievements in the universe of investments. You could easily say, without hyperbole, that Scott is without doubt the Warren Buffett of the endowment universe.”

“All the endowment folks say, ‘We’re long-term investors,’” notes Donald Fehrs, a former Notre Dame senior investment officer and Cornell University CIO, and current principal at Evanston Capital Management. “But it’s one thing to say it, and it’s quite another thing to actually do it. To actually do it, you have to have a vision that you’re committed to one institution your entire life.” Most people start out committed, Fehrs adds, but something comes along to change that. “For Scott, everything lined up.”

“Anyone with his skill and ability to create a team, it’s highly unusual he would stay in one place,” says James (Jimmy) Dunne III, co-founder of New York investment bank Sandler O’Neill + Partners and a 1978 Notre Dame alum, trustee and investment committee member. “It has had an exponential effect on donors.” But, Dunne cautions, “the challenges are still there. We have as many challenges today as we had 25 years ago — maybe more.”

An avid golfer with an 11 handicap, Malpass likes to tell stories about his early years in Augusta, Georgia, home of that golfing shrine Augusta National and its Masters tournament. His father, Charles, one of 12 children, was a lieutenant at nearby Fort Gordon when Scott was born, in July 1962. His mother, Judy, a nurse, grew up in Erie, Pennsylvania, where the family eventually settled and where his father became head of materials management at a branch of Johnson Controls.

The second oldest of five sports-loving siblings raised in an observant Catholic home, Malpass is a very big man who played football and baseball in high school. In his senior year he was recruited to play football by a number of prestigious schools, though not by Notre Dame. He headed to South Bend anyway, following an uncle who had graduated five years earlier. He’d grown interested in Notre Dame, he says, watching the football team on TV on Saturday afternoons. Although he never played for Notre Dame, as a junior and senior he put his love of sports — and his burgeoning leadership skills — to work as co–athletic commissioner, with Donovan, in charge of his dormitory’s sports.

When Malpass graduated with a BS in biology in 1984, he, like many new grads, was unsure of his next move. He’d had enough of long stretches in the lab. Instead, he returned to Notre Dame for an MBA in what was then a small business program. He arrived with only $20 in his pocket, in need of a place to live and a job. Father Richard Zang, then CIO and rector of the graduate dorm, hired Malpass as assistant rector. That summer Zang also helped Malpass obtain an internship in the pension consulting group at Irving Trust Co. in New York. He accepted a full-time job there after receiving his MBA in 1986.

Malpass’s Wall Street career was short-lived. The stock market imploded on October 19, 1987. At about that time, Robert Wil­mouth, chairman of the Notre Dame endowment investment committee, a former president of Crocker National Bank and founder, chairman and CEO of the National Futures Association, decided the Notre Dame endowment needed more professional management than a priest like Father Zang could offer.

Word of this opportunity reached Malpass, who had been a dorm mate with Wilmouth’s son Thomas at Notre Dame. He left on the next plane to Chicago for an interview.

Wilmouth wanted a Notre Dame grad who believed in long-term investing and was willing to seek new opportunities for a portfolio that was a standard 70-30 mix of stocks and bonds. “If we wanted to become a top university, we had to have a great endowment,” Wilmouth says. “Father [Theodore] Hesburgh [then the university president] said, ‘We need to grow it to $1 billion, or we’re not going to be in the top tier.’”

On August 1, 1988, Malpass was hired effectively as CIO but given the title assistant investment officer. He swelled the investment office from three to four, including an accountant and secretary. The following spring Zang left after 18 years as CIO, passing the mantle to Malpass. Resources were tight: a one-room office and no computer. But with his new CIO in place, Wilmouth, who chaired the investment committee from 1978 to 1995, began to build out the operation.

Wilmouth, now 85, believes he will be best remembered for hiring Malpass. Others agree. “I don’t know who selected him, but whoever it was had a wonderful eye and was clearly a discerning judge,” says Sequoia Capital’s Moritz. “It was a spectacular selection.”

Like Malpass, Notre Dame’s trustees believe the consistency that comes with longevity has been an important factor in the success of the endowment and a key element of the Notre Dame model. In fact, there have only been three university presidents in 60 years and two investment committee chairmen — Wilmouth and John (Jay) Jordan II of private equity firm Jordan Co. — in 35 years. “I can’t overstate how valuable continuity and long-term perspective are,” Vanguard’s Brennan says. “It gives you confidence they’re going to make good decisions. It’s $8 billion, and you want to make sure it’s as productive as it can be.”

Brennan admits that such longevity “may not be best practice from a governance viewpoint, but successful long-term leadership is a competitive advantage.” Notre Dame’s trustees are elected to successive three-year terms. The governance and nominating committee makes recommendations to the full board. Mandatory retirement is age 70. The one exception: the investment committee. “The way we look at governance is that we’re the only committee that doesn’t rotate. Because the investment world is so complicated, we need to have expertise in investments,” Jordan says. “The continuity of the relationship with Scott and his team is extremely important.”

“The question of [board] rotation is a very vexed one because market cycles do not last only two to five years,” says John Griswold, executive director at the Commonfund Institute, the educational arm of the Wilton, Connecticut, asset manager specializing in nonprofit institutions. Most boards have a limit of two three-year terms, he says. Griswold acknowledges the need for longevity in investment oversight, adding that investment committees traditionally have the longest-serving members.

Early on, Malpass felt the need to articulate a vision for the investment office and turned to Catholic tradition. He recalls: “Twenty-five years ago I had to build a new kind of strategic plan for the office: ‘Today’s stewards for tomorrow’s leaders.’” The idea was borrowed from bodies that oversee the financial assets of religious orders. By the mid-1990s the motto was firmly in place.

Malpass must also work within the social responsibility guidelines of the U.S. Conference of Catholic Bishops, which proscribes taking stakes in companies that it believes threaten the sanctity of life (makers of contraceptives and abortifacients), sell pornography or certain weapons (personnel land mines), or harm the environment. “We’re not on a witch hunt,” Malpass says. “Our donors want us to earn a competitive return but in a way that reflects our position as a Catholic university.”

Mark Krcmaric, COO of the Notre Dame investment office and a 1980 graduate whose three children also attended the university, describes the design of the office, now 38-strong, as complete and without silos: “The investment team has multiple touch points with all of our managers. Part of that is our culture.” To get there, Malpass added investment accounting and internal legal and operations roles to the office. “Internal lawyers understand what’s important to Notre Dame,” says Krcmaric, who joined in 1998 and has joint MBA-JD degrees from Indiana University.

Over time Malpass has extended his reach. In 1995 he, finance professor Frank Reilly and John Affleck-Graves, a finance professor who now serves as Notre Dame’s executive vice president, started the Applied Investment Management class, in which students run a live portfolio that now has $8 million in long-only U.S. equity. They accept 25 top students each semester. The class travels to Boston, Chicago and New York to meet asset managers.

Seven current members of the investment team were once Malpass students in that class. “As a teacher, Scott cares deeply about them in a one-on-one way,” says Affleck-Graves, an ex officio trustee and member of the investment committee. “There’s not a student that Scott doesn’t spend time with and hear his history. That’s what’s so special. He cares about them as individuals.”

A second course, Global Portfolio Management, is team-taught by Malpass and endowment directors who present modules on different asset classes: equity, private equity, hedge funds. Attorneys Krcmaric and Stephanie Pries, director of investment legal affairs, also teach at Notre Dame’s law school. A Princeton University grad, Pries is the only nonalum on the senior team, but she comes close: Her husband, Notre Dame associate economics professor Michael Pries, received his bachelor’s degree from the university.

There’s room for only one alpha dog in the investment office, and Malpass is it. He wants his staff to find meaning in their work. This may include a religious dimension, such as private capital head Dolezal’s role as server at monthly investment office Masses, or more-professional matters, like channeling investment director Rick Buhrman’s interest in building communities in East Africa into emerging-markets investing. It also can mean taking a risk on a young person, as Wilmouth gambled on him. Sequoia’s Moritz sees that as a key to the CIO’s success. “It’s so tempting to hire more-experienced people and bolt them together and hope you can build a team,” he says. “It requires far more patience and time to develop [young people].”

Affleck-Graves agrees: “He has the great skill at allowing them to be themselves. He guides in a very subtle way and allows them to grow with confidence.”

Malpass does not hide the fact that he favors stability. “We’re not looking for jobs; we’re not going anywhere; we’re in it for the long term,” he explains.

Over the past two decades, only three senior investment directors have left. Mark Yusko departed in 1998 after five years to become CIO at the University of North Carolina before starting his own asset management firm, Morgan Creek Capital Management. Former Notre Dame finance professor Fehrs, who joined the investment office in 1995, left at the end of 1998 to take the CIO job at his alma mater, Cornell. Jonathan Gentry, hired in 1990, was recruited by the Kresge Foundation in 2005.

Some schools view their locations as a liability in recruiting or retaining top investment staff. Not Malpass, who has turned Notre Dame’s cloistered campus in north-central Indiana into an asset, sequestered from financial centers yet accessible to them if the need arises. “People are happy to come, but we can filter out a lot of noise because we’re in South Bend,” notes deputy CIO Donovan, a graduate of Harvard Business School and the UCLA School of Law. “It’s 90 miles to Chicago if we really want to meet them. In a nice way, it makes it easier to do what we’re doing.” His conclusion: “We get to work in the world of Wall Street but live in South Bend.”

A visitor to the University of Notre Dame du Lac (its founding name, meaning Our Lady of the Lake) is struck at once by a campus steeped in Catholic tradition. Nearly all of the buildings, old and new, are designed in “collegiate Gothic” style, cloaked in yellow brick, with arched windows and doorways. The imposing Basilica of the Sacred Heart bears a 12-foot cross atop a spire and the largest collection of stained glass in the world. A giant mosaic affectionately nicknamed “Touchdown Jesus” (originally conceived as “Christ and the Saints of Learning”) adorns the side of the Hesburgh Library that faces the football stadium.

Despite his small-city base, Malpass has ventured further afield than many of his peers. His belief in emerging markets is one of the hallmarks of his investment style. “To a kid from Erie, Pennsylvania, travel was get in the station wagon and go to Pittsburgh for a Pirates game,” he jokes. Early jaunts to Japan and Hong Kong for Irving Trust whetted his appetite for overseas investments. “No question that resulted in me wanting a more global portfolio,” he says.

The endowment had a 10 percent allocation to international investments when he took over, and he made his first emerging-­markets investment in 1992 with a U.S.-based firm pursuing a pan–­emerging markets approach. The current 18 percent emerging-markets allocation is spread among all teams and asset classes. This number is nearly three times the size of the 6.6 percent average public equity emerging-­markets holdings of endowments and foundations with more than $1 billion in assets, according to Commonfund, which doesn’t track private equity investments in emerging markets.

In spite of his enthusiasm, Malpass has been characteristically disciplined in his commitments. He began visiting China in 1989 but didn’t make an investment there until 2003, through a private equity fund at a Hong Kong–based firm doing deals throughout Asia. The first public equity manager, hired in 2007 and based in Beijing, consists primarily of Chinese nationals. The CIO’s teams visit emerging markets four to five times a year and develop relationships with both public and private equity managers. Sub-Saharan Africa is a more recent focus, and current priorities include Ghana, Kenya, Nigeria, South Africa and Uganda. Notre Dame has approximately $100 million, or about 7 percent of the total emerging-markets portfolio, invested in Africa.

“It’s a lot of wear and tear,” deputy CIO Donovan says of the knowledge-building process in countries the team thinks will have increasing relevance. “We can’t invest in China, Africa and Brazil sitting in South Bend.”

Buhrman, who was hired in 2006 and oversees the public capital team, believes people are mistaken in thinking Notre Dame is bullish on emerging markets. “The way I frame it, it isn’t that we want to make more bets on emerging markets,” the 2001 grad says. “We feel answering the emerging-­markets question successfully will be a precursor of success for institutional investors.”

Notre Dame believes investing with the right people is more important than pinning down the right region or countries. Malpass’s team works to identify exceptional investors and establish partnerships rather than, say, taking a view on the Chinese stock market. Their on-site due diligence involves meeting with investors across asset classes, including successful local private investors who don’t manage outside capital. They also seek out government officials, economists, strategists, business leaders and anyone who can help them understand local economic and market dynamics. Malpass has taken trustees on group trips to Brazil, China and Singapore. Sandler O’Neill’s Dunne recalls a trip to São Paulo and Rio de Janeiro on which they met with Arminio Fraga, founding partner of hedge fund firm Gávea Investimentos, chairman of the board of securities, commodities and derivatives exchange BM&FBovespa, and a former Finance minister and president of Brazil’s central bank.

Malpass doesn’t believe that many institutional investors make that kind of commitment. Though he acknowledges investors can do fine investing in emerging-markets index funds, more involvement is needed to excel. Although emerging-markets investments are currently in a consolidation period, he says, “we want to be a leader. I can see us pushing 25 percent in emerging markets at some point in the next ten years.” Further out, when the endowment grows to between $10 billion and $15 billion, he says, he may establish an overseas office.

Today, of the endowment’s 27.5 percent allocation to 50 private equity firms, 34 percent goes to non-U.S. firms: 14 percent in Europe, 20 percent in Asia and the rest of the world. Half are in buyouts; the other half are split evenly between growth equity and venture capital. Over 25 years Notre Dame has made 353 discrete private fund investments.

Malpass launched the hedge fund portfolio in 1990 with a distressed-debt fund. By 1997 he had separated public and private investments, assigning staff to one or the other. In the early 2000s the investment team added long-short equity and global multistrategy funds. In the market downturn of 2002 and 2003, the CIO shifted 10 percent of the endowment into distressed hedge funds. At the time, he says, “they were all still in one bucket, where we viewed them in a similar way. That changed when the team started to bifurcate the hedge fund portfolio in 2003 by placing equity long-short into the public equity group and marketable alternatives in its own portfolio.”

Malpass is a highly visible figure at Notre Dame — unusually so for a CIO. He has made the campus central to his office’s recruitment and development, which begin with regular evening visits to residence halls where he teaches students about the investment office while they munch on pizza. When upperclassmen vie for internships or take Malpass’s investment courses, the bond deepens. “They are unbelievably integrated into the university,” Brennan says. “He’s a rock star on the Notre Dame campus.”

Malpass loves to teach and has instituted an annual exercise to memorialize investment lessons. Once a year he holds an off-site meeting with his staff. In preparation, each of the asset class teams prepares a list of things they’ve learned that year, both good and bad, from due-diligence mistakes to misjudging a money manager’s skills. The CIO says the assignment teaches that “you have to get your butt kicked a few times.”

A good part of Malpass’s time is spent counseling graduates, a few of whom become hiring candidates. In 2001, to help grads get to Wall Street, the CIO connected Notre Dame’s student-run Wall Street Club to the alumni-led Wall Street Leadership Committee. He even takes calls from grads on Wall Street seeking career advice. “He clearly derives psychic income from being such a vital part of Notre Dame,” Sequoia’s Moritz says.

“It’s implicit that in working for him your best interests will always be first,” says Buhrman, who after graduation took a job in equity research at Fidelity Investments, only to realize it was a mistake. He went on to earn a degree in Christian apologetics at the University of Oxford and an MBA at Harvard before answering Malpass’s call. “Scott said, ‘Come back here for the rest of your career,’” Buhrman says. “My interests in teaching, philosophy and theology all fit quite well with what happens in Notre Dame.” He adds, “The total cultivation of the self, more than most employers would define it, is critical to how he sees us as successful investors.”

But even Malpass has suffered through rough patches. Notre Dame scored big in 2000, achieving a 57.9 percent return, the highest ever for a U.S. university. The bursting of the dot-com bubble, however, provided a humbling lesson. Notre Dame saw its endowment slide from $3.5 billion in 2000 to $2.9 billion at the end of June 2002. At that point, the trustees decreed that any new building had to have 100 percent of its costs committed and 75 percent of that money in the bank.

Then came the financial crisis. In 2008 the then-$7 billion Notre Dame portfolio had small allocations of fixed income and U.S. equities, both 7.5 percent, with 12.5 percent in non-U.S. equities. Hedge funds made up 30 percent of the portfolio (split between marketable alternatives and long-short equity funds), private equity 22.5 percent and real assets 20 percent. By the end of the fiscal year, on June 30, 2009, the endowment had fallen by 20.8 percent, from $7 billion to $5.5 billion.

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. • •