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Native Son

The sudden resignation of Bob Boldt as CEO of the University of Texas Investment Management Co. was a long time in the making. Now his legacy and the future of the $20 billion endowment he managed are both in doubt.

Bob Boldt gave himself and his staff a little extra homework this spring: Define “hedge fund.”

That’s an odd-sounding assignment for the president and CEO of the University of Texas Investment Management Co. Utimco, after all, manages nearly $20 billion in endowment funds, most of it belonging to the University of Texas System, and has emerged as one of the U.S.’s preeminent investors in hedge funds since it first put money into the asset class in 1998. In addition to the $4.4 billion that Utimco has placed directly in hedge funds, Boldt has steered more than $1 billion of UT’s traditional equity allocation to managers that employ hedge-fund-like tools — short-selling, leverage and derivatives.

But Boldt, an ardent proponent of investing in alternatives, saw his spring assignment as a crucial step in a long-running campaign to convince his overseers at an increasingly squeamish university board of regents to give him and his staff the leeway they felt they needed. He hoped to allay any concerns on the part of the regents and Utimco board members that he was exceeding what arguably was an already high allocation to hedge funds.

“If we could not even get agreement on what a hedge fund is, how could we be implementing more complex strategies?” Boldt asks.

The Utimco staff completed its assignment in May, proposing a manager classification system that included a working definition of a hedge fund. At a May 25 meeting, the nine-person Utimco board, which directly oversaw Boldt’s work, failed to endorse the proposal. Boldt revised it and asked H. Scott Caven, the Utimco board chairman, to persuade the UT board of regents to support the classification system. (The board of regents has ultimate oversight for Utimco.) As the summer dragged on without final word from Caven, Boldt grew impatient. He began pestering him for an answer. Once he drove from Austin to Caven’s corporate office in Houston.

For Boldt the issue was not defining an asset class, but defining his mandate. And that mandate — and his freedom to operate — was growing increasingly uncertain because former Utimco chairman Woodley (Woody) Hunt, a key supporter, was about to step down from the board. “Bob had a choice on how hard he wanted to keep pushing the envelope and how close he wanted to run to the edge,” says Hunt. “Clearly, the risk went up when I wasn’t there anymore.”

Boldt, now 58, had arrived at Utimco four years earlier with grand plans for how to manage the university’s investment funds. A native son, he had grown up in San Antonio and attended the University of Texas at Austin, where he earned a BS in mechanical engineering and an MBA in finance. The Utimco job marked the culmination of a successful 29-year investment career split between Chicago and California that had included a stint at the California Public Employees’ Retirement System as senior investment officer for global public markets; while there he had persuaded its board of directors to start investing in hedge funds.

Running Utimco also gave Boldt a chance to apply his investment theories, among them that the only way to beat efficient markets is by employing aggressive active management strategies, at which hedge funds excel. For Boldt asset allocation is about building portfolios that are flexible enough to capture market opportunities wherever they might arise.

But from the start, Boldt faced enormous challenges in converting Utimco to his vision. The two boards had struggled in the past with infighting and differences of opinion that flared up again under Boldt’s watch. In particular, Boldt had to contend with Charles Miller, a Houston businessman who chaired the board of regents. Powerful and outspoken, Miller strongly objected to Boldt’s proposed asset allocation — which included boosting Utimco’s hedge fund allocation from 10 percent to 25 percent — and performance-based compensation plan for Utimco. Even after Miller resigned from the board in May 2004, Boldt faced resistance. The current chairman of the regents, James Huffines, voiced displeasure over the $2.7 million price tag to outfit Utimco’s swank new offices in the Frost Bank Tower, the tallest building in Austin. (Huffines and Caven did not return repeated calls for comment, but Utimco made them available just before deadline for fact-checking.)

Boldt’s situation was replete with ironies. Utimco had been created in 1996 in part to cut down on the kind of personality-driven infighting that Boldt faced. And the rationale for an independent management company was to encourage the type of sophisticated investment portfolio that Boldt built. But ultimately, Boldt’s investment agenda could not be separated from the politics, personalities and power struggles that come with large pools of public money.

Managing a major university endowment is particularly difficult. Endowment chiefs must navigate treacherous politics, which for public universities like Texas can stretch from campus to the governor’s mansion, even as they face increased pressure to deliver top investment returns. The cost of keeping talent has also increased, in large part because of the proliferation of hedge funds. As a result, many universities with big endowments have come to run their investments through semi-independent management companies that can pay their staffs better. Still, universities continue to suffer from high turnover. This year, Jack Meyer, the CEO of Harvard Management Co. in Boston, and Michael McCaffrey, CEO of Palo Alto, California–based Stanford Management Co., split from their universities to open their own investment management firms.

Now Boldt is set to follow.

Utimco’s performance under Boldt was good. For the 12 months ended June 30, 2006, the permanent university fund, its biggest portfolio, was up 12.87 percent, above the 11.87 percent median for endowment funds with $1 billion or more in assets, according to the presentation materials for Utimco’s September board meeting. Utimco’s 15.43 percent three-year annualized return is in the top quartile for large endowments. But former regents chairman Miller questions whether pursuing so much innovation, as Boldt tried to do, really benefited the university.

“There is no upside to volatility,” says Miller. “If the fund does well, those returns just get substituted for money that the state would have spent on the university. The ones that benefit from taking more risk are the investment people, not the fund.”

After weeks of pestering his superiors, Boldt met with Caven and Huffines in the board of regents’ offices on the top floor of Ashbel Smith Hall, just a few blocks from Utimco, on a hot Wednesday afternoon in late August. At the meeting it became clear to Boldt that his vision for Utimco differed radically from that of the regents, who were uncomfortable with the speed at which he had been driving the investments. The debate over the definition of a hedge fund had been one way of applying the brakes.

Boldt had made it clear from the beginning that if the university wanted a Utimco CEO who merely executed the wishes of the board of regents, he was the wrong choice. Boldt handed in his resignation on September 1.

He had been in Austin a little longer then the average UT undergraduate.

BOB BOLDT IS SITTING in the Japanese-themed patio lobby of the San Jose Hotel, a popular haunt for musicians and other celebrities passing through Austin. For a financial executive who lives in the city’s wealthy suburb of Westlake, Boldt — dressed in a black long-sleeved shirt, matching trousers and a silver-buckled belt — does not look particularly out of place. Surrounded by towering bamboo, he talks about space travel and magic sauce.

“I’ve been thinking a lot about spaceship markets lately,” says Boldt, using the term he applies to markets that are outside the orbit of most traditional investments. “If you build a spaceship and travel to a different planet where they have a stock market, that would be a potential spaceship market.”

David Swensen, the longtime CIO of Yale University’s $15.2 billion endowment, is a space traveler, according to Boldt. Swensen’s ability to consistently post high returns has kept Yale at the top of the class among university endowment funds since the late 1980s. To Boldt’s way of thinking, when Swensen published Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment in 2000, many people thought he was offering the magic sauce for higher investment returns. The special ingredient was the investment of a big portion of the portfolio — up to 60 percent — in such alternatives as private equity and hedge funds.

“But that’s not the magic sauce,” says Boldt.

Like space travel, spaceship markets can be risky, but the potential benefits are huge. When Swensen began investing in hedge funds and private equity, both were relatively undiscovered frontiers. Over time, as more and more money moved into those areas, their returns diminished. Boldt says institutional investors must continually look for new markets and new opportunities. Shortly before he left Utimco, Boldt was trying to find hedge funds in China and other Asian countries that might fit his spaceship model.

Boldt has always had a keen interest in trying to figure things out. Growing up in a middle-class neighborhood in San Antonio, he loved rebuilding car engines. A fan of Ayn Rand novels, Boldt excelled in math and science during high school, inspiring him to go to the University of Texas to study engineering. But what fascinated him most about that field, and later about finance, was trying to understand the big picture. He didn’t want to design one small component — he wanted to design an entire car.

Boldt earned his MBA from the University of Texas in 1973. Because of his engineering background, Chicago-based Northern Trust Co. hired him as a research analyst to cover technology stocks. In 1976 he moved across town to the trust department of American National Bank, where he came under the tutelage of Rex Sinquefield, an early proponent of the efficient market hypothesis, which says that the prices of stocks largely reflect all the available information about them, making it difficult for an investor to outperform the market.

In 1981, Boldt and two colleagues, Hal Arbit and Jack Treynor, left American National to form their own money management firm, Concord Capital Management, with an investment approach based on the philosophy that only extremely aggressive active management could beat the market. Four years later they moved Concord to San Mateo, California, where at its peak in 1990 the firm managed $2.5 billion. Boldt left in 1993, following a disagreement with his partners over the firm’s direction, and eventually ended up in San Francisco managing large-cap growth portfolios for Boston-based Scudder, Stevens & Clark.

Back in Texas change was brewing at the UT endowment, whose performance had been foundering for several years. In 1993 the endowment’s investment returns finished in the bottom half of all public funds. Then-governor Ann Richards wanted something done about it. In January 1994, Richards, a Democrat, appointed Thomas Hicks to the UT board of regents.

“The governor said we had to do a better job,” says Hicks, co-founder of private equity group Hicks, Muse, Tate & Furst in Dallas. Although Hicks, a major Republican supporter, was chosen for his financial expertise, it didn’t take long for him to see that the problem was structural. The board of regents had too much influence over the management of the endowment. Every time there was a major change in the board, the investment staff would be given a new mandate.

“There was no institutional memory,” says Hicks, who concluded that a more independent investment body needed to be set up.

Thomas Ricks, then the university’s chief financial officer, was responsible for overseeing management of the endowment. He came up with the idea of forming an independent not-for-profit money management company, according to William Cunningham, chancellor of the University of Texas System at the time. In November 1994, Ricks, Cunningham and Hicks flew to Durham, North Carolina, to visit Duke Management Co., which had been managing the Duke University endowment since 1990. Impressed by the management structure and by the consistent investment returns that the management company achieved, the group came back to Texas determined to implement the same thing. Utimco would have a separate board, staffed with people who had a background in finance; it would report to the regents.

The formation of Utimco required the Texas legislature to change the constitution governing management of university funds and allow the board of regents to delegate authority. A bill to that effect was passed during the 1995 legislative session and was signed into law on May 23, 1995, by newly elected Republican governor George W. Bush.

Utimco opened for business on March 1, 1996. On the face of it, nothing had changed. Ricks, the president and CEO, and his team were still managing money out of the old Austin post office building. Hicks and Cunningham had used the months since Bush signed the legislation to put in place Utimco’s board. The nine-person group includes three members of the board of regents, the chancellor, one member nominated by the Texas A&M System (part of whose endowment is also managed by Utimco) and four members selected from the finance community.

Hicks became Utimco’s first chairman. From his perspective the key to the management company’s future success was that its board be sufficiently independent from the regents to take politics out of the investment process. With experienced investment professionals on the board, Utimco would also be able to pursue a more sophisticated investment strategy. Knowing what Swensen was achieving at Yale, the university was keen to invest more in alternatives, like private equity and hedge funds. For its 1996 fiscal year, Yale’s endowment returned 25.7 percent.

That same year, Boldt joined CalPERS. He was recruited by its new CIO, Sheryl Pressler, who had been one of Concord Capital’s biggest clients when she ran the pension fund at airplane manufacturer McDonnell Douglas. By 1999, Boldt was overseeing $156 billon in investments. He was best known for persuading the board of the biggest public pension plan in the U.S. to allocate $1 billion to hedge funds. Boldt then took the strategy one step further, suggesting to the board that CalPERS take equity stakes in some of the managers themselves. Managers that received private equity investments and capital commitments from CalPERS included Arrowstreet Capital and ABRY Partners, both based in the Boston area.

At Utimco, Ricks was also investing in hedge funds. In August 1998 he made his first three commitments, to funds run by Dallas-based Maverick Capital, San Francisco’s Farallon Capital Management and Perry Partners in New York. But the bulk of Utimco’s alternative investments were in private equity. That became a source of controversy in March 1999 when the Houston Chronicle ran a front-page story accusing Hicks of using his position at Utimco for his own benefit and to help raise money for governor Bush’s presidential campaign. The article listed managers that had been given Utimco capital and had made donations to Bush.

Cunningham, Hicks and former Utimco chairman Hunt all insist now, as they did then, that there was absolutely no connection between the campaign contributions and Utimco. Hicks remains furious about the allegations. He says he helped set up Utimco to remove the politics from the endowment. Hicks left the Utimco board in April 1999 after his term expired.

Miller was appointed to the board of regents in February 1999. In May of that year, he temporarily joined the Utimco board as well to sort out, he says, some of the oversight and disclosure issues that had led to the allegations associated with the private equity portfolio. Miller became chairman of the board of regents in April 2001.

A few weeks before Miller took over as chairman, Ricks resigned from Utimco to become CIO of the Samueli Foundation in Newport Beach, California. According to those familiar with the situation, Ricks thought that Miller’s increased role on the board of regents could restrict his ability to invest in private equity. (Ricks did not return calls seeking comment.) Utimco created a search committee and hired executive recruiter Heidrick & Struggles to begin looking for a new CEO.

Boldt left CalPERS in the spring of 2000,

having overseen the start of its hedge fund investment program. CIO Pressler had departed three months earlier, and Boldt says he declined to be considered as a candidate to replace her. He wanted a break from dealing with the politics associated with running a public fund. He took off seven months before landing back in San Francisco at Pivotal Asset Management, a hedge fund and venture capital firm specializing in technology.

His timing could not have been worse. The bursting of the Nasdaq market bubble had left technology stocks in free-fall, taking down many of Pivotal’s investments. Utimco also suffered from the collapse of tech stocks. Its venture-capital-heavy private equity portfolio took a beating. For its 2001 fiscal year, ended August 31, the main endowment fund dropped 11 percent. And Utimco was having problems finding a CEO.

Boldt had been considering returning to his native Texas, so when Utimco came knocking after a friend of his had recommended him, he was interested — but on his terms.

“If they wanted a caretaker person to run Utimco and just take direction from the board of regents, I was not their guy,” Boldt says. “I was hired to come in and make Utimco a competitive investment management organization, and I have a very clear picture of what that is.”

Boldt’s ambition appealed to Woody Hunt, who had joined the Utimco board in September 1999 and was vice chairman of the board of regents. Hunt was anxious to have his institution rank among the top five large university endowments in terms of investment performance, and he realized that having a strong CEO was necessary to make Utimco truly competitive. Performance had been improving under Ricks, but the problems along the way had checked its progress. “If we wanted to bring on Bob, we had to be prepared to meet the oversight challenge he represented,” says Hunt. “Bob was going to attempt to close the competitive gap at a much faster rate than his predecessor.”

Boldt was hired as CEO of Utimco in February 2002. Straightaway he started pushing for change, and almost immediately ran into opposition from regents chairman Miller.

“When Bob Boldt came on board, he didn’t have much of a successful record of managing money,” says Miller, now chairman of Meridian National, a private investment partnership based in Houston.

Miller’s skepticism initially had little impact on Boldt, who quickly began making changes at Utimco. He restructured the U.S. equity portfolio, replacing several managers that had been underperforming. He also began to diversify Utimco’s then $1 billion hedge fund portfolio, about a third of which was invested in Maverick Capital.

Among Boldt’s early initiatives was a plan to invest $175 million with New York–based Protégé Partners, a newly formed fund-of-funds firm specializing in emerging managers. Utimco was to be Protégé’s first major investor and would allow the firm to use its name for fundraising and other activities in return for a cut of the profits. But when Boldt presented the Protégé proposal to the Utimco board in December 2002, it was initially turned down because of questions about how the investment would be structured. He resubmitted the proposal the following February; this time the board gave it the go-ahead. The investment has proved to be one of Utimco’s most successful, with Protégé’s fund posting annualized returns of 11.32 percent for the four-year period through March 2006 (the most current figures released by Utimco).

For his investment in Protégé, Boldt needed to get approval from only the Utimco board. But for what he saw as the two cornerstones of his vision — an asset allocation policy that committed 25 percent or more to hedge funds and a new, performance-based compensation program — Boldt needed the approval of the board of regents as well. Under Miller, however, the regents were reluctant to sign off on either proposal. The board, which typically votes unanimously, could not agree on the asset allocation policy. And the new pay package could not be approved until the asset allocation was set, because compensation would be tied to performance.

“Charles and I were not in agreement,” says Hunt, who wanted the more aggressive portfolio favored by Boldt. The more conservative Miller wanted to keep the minimum fixed-income allocation at 10 percent or more (Boldt wanted to reduce it to 5 percent). Miller thought the compensation program was too short-term-oriented.

“What that does is create an incentive to take too much risk with other people’s money,” he says.

On December 19, 2003, the new asset allocation was finally approved, by a 5-2 decision, with Miller siding with the minority. Hunt, Huffines and Caven voted in favor of the new investment targets, which included 25 percent in hedge funds, 15 percent in private equity, 5 percent in commodities, 15 percent in fixed income and 40 percent in traditional equities.

At the same meeting the regents agreed to continue with Miller’s proposal to create a working group to carry out an extensive operational review of Utimco, its relationship to UT and the board of regents, and the services the investment manager provided. The working group would include an outside consultant and law firm and academics at UT Austin. Huffines made it clear that the compensation initiatives that Boldt badly wanted would not get the go-ahead until the review was under way.

In April 2004, Boldt came before the Utimco board with a radical new proposal. He wanted to change the way the $3.6 billion in operating funds was invested. These operating funds consisted of the short-term assets of the 15 institutions that make up the UT system. The chief business officer of each institution managed that money, choosing from a list of options that offered low returns and high liquidity.

Boldt’s bold suggestion was to take a portion of this money and invest it alongside the endowment in alternatives, but to structure the new fund in such a way that the various entities could still get immediate access to their capital. Boldt proposed that the endowment itself guarantee a return over LIBOR in exchange for the opportunity to invest the funds more aggressively. The board, however, was uncomfortable with the structure, which would leave the endowment at risk of having to dig into its own pockets if Boldt failed to beat his bogey. Instead, the board eventually opted to pool the operating funds and invest them in a manner more similar to that of the permanent endowment.

Meanwhile, the working group had prepared a 386-page report. The study covered old ground on such issues as disclosure and transparency, and expressed concerns about risk. Among its many recommendations were the appointment of UT personnel to supervise Utimco and more direct involvement by the regents in the selection of the Utimco board and staff. What was most clear from the working group report was that Utimco was going to have to answer more to the board of regents. Tom Hicks’s vision of a semiautonomous company was no more.

The news was not all bad for Boldt. Just after the regents approved the working group recommendations, on May 12, 2004, Miller announced his resignation, seven months before the end of his term. After his departure, with Huffines as the new chairman, the regents finally signed off on Boldt’s pay plan, linking compensation to performance and ensuring Utimco’s investment personnel could be paid at a competitive level. The maximum Utimco could now pay its CEO was about $3 million. For 2004, Boldt received $1.1 million in salary and bonus.

Utimco’s performance was improving. For 2004 the permanent university fund was up 20.05 percent, placing in the 94th percentile for all institutions with $1 billion or more in assets. For 2005 the fund was up 13.52 percent, good enough to finish in the 93rd percentile.

But Boldt was still dogged by controversy. Last year, still keen to improve the quality of life for his investment professionals, he convinced his boards that Utimco needed offices befitting its stature as a preeminent money management company. Boldt negotiated the lease on 29,000 square feet of space on the 27th and 28th floors of the new Frost Bank Tower in downtown Austin. The price — $8 million over 11 years — was a bargain, he says.

Utimco’s new digs, which the then-44-person staff moved into in November 2005, would certainly suit any big New York City hedge fund manager. They boast wall-to-ceiling windows with a panoramic view of of the capital. The entryway, which is covered with a $15,000 Tibetan rug of dark, plush wool, leads into a cavernous reception area with a marble floor and faux limestone trim adorning the walls. The CEO’s office is equally opulent, with cherry-stained mesquite floors and blue-tinted glass on the walls. Boldt displayed his own decorator’s touch, hanging a stuffed longhorn head, named Big Ol’ Alpha, on his office wall.

The cost of all this did not sit well with the chairman of the board of regents and some UT staff. Huffines was openly critical of the $2.7 million in construction and decorating costs associated with the move, of which $1.2 million was to be paid by Utimco.

Without Miller’s recalcitrance, Boldt continued to innovate. Worried about geopolitical uncertainty entering 2006, Boldt set up a “costless” collar, using put and call options to protect the endowment against a big drop in the equity markets. The collar is costless because the expense of buying the puts is offset by the money Utimco receives for selling the calls. Although the derivatives strategy has been a slight drag on Utimco’s 2006 performance, Boldt likens it to homeowners insurance; he says the protection it provides in the case of a disaster is worth any small performance drag.

At the same time, Boldt was introducing managers with hedge fund pedigrees and strategies into Utimco’s traditional equity portfolio. In December 2005 he received approval from the Utimco board to invest in two funds being offered by London-based hedge fund manager Lansdowne Partners. Utimco put $100 million in a European long-only strategy and $200 million in a new long-short emerging-markets equities portfolio, for which the management company would be the seed investor. Utimco later made a $100 million commitment to a U.K. long-short fund as part of its hedge fund allocation and added $350 million to its earlier investments, bringing the total commitment to Lansdowne to $750 million. As with its investment in Protégé, Utimco structured the seeding agreement so that it would share in the profits. Utimco wasn’t the only one interested in Lansdowne; in October, Morgan Stanley purchased a minority stake in the hedge fund firm.

Utimco’s bold moves raised objections from Mark Yudof, a onetime supporter of Boldt who was appointed chancellor in August 2002. Yudof was concerned about the increasing complexity of Utimco’s investments. During a March 2006 Utimco board meeting, Yudof said that at every meeting the Utimco staff were seeking additional discretion to add things like short-selling and negative cash balances that would increase the leverage — and the risk — in UT’s portfolios. “[Yudof] does not agree with these efforts and is concerned about their cumulative impact on Utimco investment strategies,” according to the minutes from the meeting. Boldt was moving too fast.

LOCATED IN THE WOODED HILLS on the western edge of Austin, Barton Creek Resort & Spa is a haven for golfers, who are attracted to the manicured greens and sweeping fairways of its four championship courses. For Boldt, who has a 6 golf handicap, Barton Creek was also the perfect setting for the annual retreat of the Utimco board of directors and some UT staff at the end of May. Board members arrived from all over Texas — Caven came in from Houston, Hunt from El Paso — for two days of work and recreation. The theme Boldt chose for the meeting: Utimco in 2015.

The CEO invited a few special guests to speak at the meeting. One was Raymond Dalio, president and CIO of Bridgewater Associates, a $150 billion quantitative investment management firm in Westport, Connecticut, that manages more than $20 billion in hedge funds. Dalio has a reputation for being on the cutting edge of portfolio construction. Before the retreat, board members had been given two articles he had written, including one titled “Post-Modern Portfolio Theory.” At the meeting, Dalio explained that institutional investors should think of their portfolios in terms of alpha and beta, rather than by asset classes like stocks and bonds or even hedge funds. By constructing a portfolio according to alpha and beta sources, Dalio said, an investor could reduce volatility while increasing returns. Taking it one step further, he added, an investor could use leverage to increase overall returns without going beyond the original volatility of the portfolio.

The implications of Dalio’s talk were obvious for all in attendance. In fact, Dalio and Boldt had already begun discussing ways Utimco could leverage its $19 billion portfolio to enhance returns.

“It was clear we would be moving to a new ground,” says Hunt. “It was also clear that it would require approval from the board of regents.”

But Boldt needed to get the regents comfortable with his definition of a hedge fund before he could even think of taking Dalio’s ideas to them. And as spring slipped into summer and still there was no progress on the manager classification issue, Boldt grew increasingly frustrated.

Boldt should have seen the writing on the wall when Hunt stepped down from the board of regents and the board of Utimco in July. As a memento, Caven presented Hunt with a framed photograph of Charles Miller.

“It was a joke,” says Hunt. “A way of reminding everyone of the number of issues that we had.”

But with Hunt’s departure and Boldt’s resignation, Utimco looks to be moving toward the kind of conservative organization that Miller favored. Huffines has made it clear he wants the investment management company to work more closely with the board of regents. At the annual joint meeting between the regents and the Utimco board, six weeks before Boldt’s departure, Huffines articulated his vision.

“I would point out that the need for investment oversight has never been greater than it is today,” he said. “[The] increasing complexity of our $20 billion investment portfolio hints at the need for us to be industry leaders in policy, compliance and risk management.” Never once in his speech did Huffines mention returns.

For Tom Hicks, Utimco’s first chairman, reducing the autonomy goes against everything he and the company’s co-founders had in mind a decade ago. “I think it would be a mistake for the board of regents to assume greater oversight over Utimco,” he says. “Political appointees typically don’t have the investment management experience or the institutional experience to provide long-term consistency of investment policy, and that is ultimately going to have a detrimental effect on returns.”

Cunningham, now a professor at UT’s Red McCombs School of Business, says he has largely kept his distance from Utimco since stepping down as chancellor in May 2000. But though he was impressed with Utimco’s investment performance under Boldt, from his perspective as a corporate governance expert, the CEO’s departure is proof that the Utimco model works.

“The board decided it wanted a different CEO,” he says. “I think we were ahead of the curve in creating Utimco, and we probably still are.”

Increasingly, universities that set up semi-independent management companies like Utimco are grappling with the question of what happens after the talent running their funds walks out the door. Although Utimco struggled after the departure of its first CEO, Ricks, the transition at Harvard has been smooth since former Pacific Investment Management Co. emerging-markets specialist Mohamed El-Erian was hired to replace Jack Meyer.

For Boldt, the future likely lies away from academia. He is currently talking with a number of organizations about his plans to set up a business that would run money for institutional investors and high-net-worth individuals based on the same vision that guided him at Utimco.