When it comes to investing for the Broad Art Foundation and the Eli and Edythe Broad Foundation, CIO Peter Adamson collaborates closely with philanthropist and founder Eli Broad, whose healthy appetite for risk shapes his investment strategy.
Adamson, 47, who began working with Broad in 2001 after spending six years as an investment adviser to members of the wealthy Bass family in Fort Worth, Texas, now oversees $2.1 billion in assets for Broad’s two foundations; he also manages investments for the Broad family office. Given Broad’s knowledge of the capital markets and bold entrepreneurial flair, the foundation has long given Adamson the freedom to take advantage of tactical market opportunities, which helped drive the outstanding performance of the foundations’ endowments. In 2009 they posted gains of 24.8 percent; over the past three years, they have delivered an annualized return of 1.8 percent; and over the past five years, 8.8 percent. “We do tend to make bigger tactical shifts based on which assets we think are overpriced, which we think are good value and what the risks are, at a macro level,” Adamson says.
Currently, the foundations have about 15 percent of their funds invested in hard assets, mostly gold. Adamson believes it’s a good hedge against the risk of currency depreciation in the U.S. Considering how financial crises often lead to sovereign debt problems, he decided not to go long other major currencies against the dollar — he had no confidence in either the euro or the British pound — so he opted for gold. It’s just one example of Adamson’s ability to assess risk at a macro level and implement tactical allocation strategies.
With the ability to take a top-down view and make short-term moves, Adamson admits, his approach differs slightly from his peers’. But for the Broad family and foundations, it has proven resilient.
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