Sam Gallo, Chief Investment Officer of the University System of Maryland Foundation, discusses how investing in hedge funds, allows university endowments to best support students, hold down tuition costs, and fund educational opportunities.
Key Takeaways
- The University of Maryland invests more than $100 million in hedge funds, directly for the benefit of thousands of students.
- The University System of Maryland Foundation prepares people for their next, and oftentimes first, jobs coming out of college.
- Hedge funds manage risk and volatility so that the University System of Maryland Foundation’s portfolio succeeds, meaning its students succeed.
Transcript:
[00.05-00.11]: My name is Sam Gallo, and I’m the Chief Investment Officer of the University System of Maryland Foundation.
[00.12-00.30]: The University System of Maryland Foundation serves twenty-three different higher-ed institutions in the state of Maryland, inclusive of eleven USM institutions and then a variety of other community colleges, as well as affiliated higher-ed institutions in the state of Maryland.
[00.30-00.38]: The Foundation provides funds for scholarships, professorships, research, and facilities and maintenance.
[00.38-00.49]: We help launch a lot of the economic activity that happens in the state of Maryland by preparing people for their next job, oftentimes their first job.
[00.49-01.00]: Hedge funds and private capital play a very important role in our portfolio. They’re in-tune with markets, they see where market risks exist as well as where opportunities may lie.
[01.00-01.15]: We use them to help balance out that volatility so that our trajectory is smooth and steady and hopefully on the upward path to achieve the returns that we need to achieve to provide scholarships, professorships, research, and facilities and maintenance funding.
[01.16-01.30]: An endowment is supposed to be a perpetual vehicle. When we invest our capital, we’re thinking of both the spending that needs to be done today, this year, but we’re also thinking about ten years from now, and fifteen years from now.
[01.30-01.42]: So, when you understand that concept, it would be absolutely devastating to our university and any university to not have good risk controls inside their endowment.
[01.43-01.49]: If we were not able to invest in hedge funds, we would be losing a critical tool of risk management.
[01.50-01.58]: Having more risk inside of a portfolio just means that we’re risking not being able to send more students to college.
[01.59-02.00]: When hedge funds in our portfolio succeed, students succeed, society succeeds.
