Investing for Education
When Pamela Peedin interviewed for the job of chief investment officer at Boston University last April, she was excited by a $1 billion portfolio that "had all the marks of gutsy and contrarian and passionate investors," she says. "Their alternative strategies—hedge funds, real estate, venture capital, private equity, and emerging markets—suggested they had gone far and wide to find eclectic, interesting ways of investing."
And when the investment committee looked at her, they found something rare: a person who brought a commitment to educational institutions in addition to a talent for investing. It took less than three weeks for the committee to offer her the job.
Peedin's appreciation for education started in Baltimore, where her father, a car salesman, and her mother, a secretary, sacrificed financially to send her to the private Bryn Mawr School. After majoring in psychology at Dartmouth, she worked at boarding schools in Maryland and Massachusetts, first teaching French and then moving into financial aid and admissions. Watching financial consultants dispense advice, she was struck by how they missed the point about educational nonprofits. "To talk about ‘cost centers' is anathema to what schools are all about."
Peedin came to Tuck to gain the financial acumen to head up a school but was redirected by the intellectual challenge of investments. "I love the dynamic nature of markets, the many complex issues that shape stock-market movements and company outcomes," she says.
Cambridge Associates, an investment research and consulting firm that works with endowed nonprofits, was a natural fit for her first job. "I was pleasantly surprised," she says, "that gender wasn't an issue in dealing with typically male-dominated investment committees. Instead, my involvement and influence was and continues to be a function of my expanding knowledge and increasing strength of conviction."
In nine years at Cambridge Associates—during which she rose to become managing director—she worked with investment committees and guided the portfolios of dozens of nonprofits, including universities, independent schools, foundations, and arts organizations. And she watched the investment landscape become markedly more complex. "Alternatives were coming into broad use even by small institutions," she says. "For investment committees, it became much less about hiring your next-door neighbor who had an interesting fund and much more about exploring the globe to find differentiated niche strategies. Many committees came to rely more heavily on outside resources to perform a higher level of due diligence and monitor these less transparent types of funds."
Then she got that call from a recruiter. BU, after 30 years of having its portfolio managed by committee, was hiring a CIO. During the interview process, Peedin says, "I became really enamored of the relatively new leadership of President Robert Brown and his extraordinary vision of making the school—which is the fourth largest private university in the nation, based on enrollment—a cutting-edge research institution inextricably woven into the life of its city."
Peedin received the CIO contract in the mail on her 40th birthday, which "took my mind off that milestone marker." Unlike some Wall Street–based university CIOs, she works on campus, on the same floor as BU's top administrators, which allows her to sit in on senior-management meetings. Says Peedin, "Understanding how endowment spending impacts the operating budget makes me all the more motivated to steward these assets."
