Investment Policy at the Hewlett Foundation (2005)
Posted: 14 Jun 2006
Date Written: January 26, 2006
SUBJECT AREAS: Asset allocation, Asset management, Charities, Foundations, Hedge Funds, Diversification, Investment management, Investments, Real estate investment, Risk management
CASE SETTINGS: California; Non-profit institutions
This case presents opportunities for students to discuss the design of asset allocation policies for long-term investors, the design and implementation of return overlay (or "alpha transport") strategies, evaluation of performance and risk exposure of hedge fund strategies, portfolio diversification, and investments in non-liquid assets. In early January 2005, Laurance Hoagland Jr., VP and CIO of the William and Flora Hewlett Foundation (HF), and his investment team met to finish their recommendations to the HF Investment Committee for a new asset allocation policy for the foundation's investment portfolio. If the proposal was approved, HF would adopt a new asset allocation policy that included a substantial reduction in the overall exposure of the investment portfolio to domestic public equities and a significant increase in the allocation to absolute return strategies and TIPS. Hoagland and this team also needed to decide on a complementary recommendation to the HF Investment Committee to pledge approximately 5% of the total value of the portfolio to Sirius V, the latest fund at Sirius Investments, which specialized in global distressed real estate investments.
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