Hello everyone, I had a question for those who know anything about working at a university investment office, investing with the school endowments.
I was offered an interview as an investment analyst and do not know what to expect from the
basic finance and other problem solving exam that I need to take as a requirement of the interview process.
It also includes some basic Excel problems, but I don’t to what extent…
Can anyone give some possible suggestions?
Endowments invest through “manager of manager” unless they’re big enough to run short-term cash and maybe passive equities themselves.
Talk about asset allocation, real rate of return, spending requirement, downside protection. Know the Yale endowment model. Basic knowledge of investing in hedge funds, private equity, absolute return fixed income. Maybe socially responsible investing.
Should know how to calculate time weighted rate of return, standard deviation, correlation, information ratio, sharpe ratio, maybe portfolio attribution, maybe VAR. You can find a ton of this stuff on cfa level 3 so check the forum.
Anyways, there probably isn’t a lot of room for advancement and pay will be lower than what you expect but its a cushy 9-5 job. Make friends with the investment committee, your career will depend on it. Maybe 20yrs from now you can become a CIO at an endowment and make 200-500k working 9-5, an expense account, and maybe even a pension. Work another 10-15yrs and you should be able to retire comfortably.
Probably should expect some general questions about your opinions on the market, inflation, what investments you think will do well and why, etc. Keep thinking in terms of fund of funds, which is how most endowments are run… so if they ask you what you think will do well, think of a type of hedge fund strategy rather then a specific sector. Depending on the size of the endowment (that’s what she said), you may be able to find some useful information (maybe an annual report, largest holdings, background info on investment officers/committees).
Ask some questions of them so you understand how inflation might affect their target return and spending policies… also, how they measure inflation… ask if they use HEPI (Higher Ed Price Index, which is generally slightly higher than CPI).
I work for a university endowment and can attest that the pay sucks, but the work-life trade off is nice. There is almost no stress or pressure, in fact you may get bored. I would probably be bored out of my mind if I didn’t get to teach economics to undergrades as an adjunct during work hours.
Forgot to mention - look over a due diligence checklist so you can talk a bit about manager selection. Level 3 covers this
Good suggestions from others…here are a couple more things you may want to read to get yourself up to speed quickly on the industry, not to mention things that you should read seriously if you’re genuinely interested in a career in this area
David Swensen – Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment
www.amazon.com/Pioneering-Portfolio-Management-Unconventional-Institutional/dp/1416544690/
www.fundfire.com --> good way to stay current on overall industry. You can get a trial subscription for a couple weeks just by registering your e-mail address.