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Exclusive Q&A: Amy Falls, CIO At Rockefeller University’s $2B Endowment

by trusted insight posted 6years ago 12796 views
Since 2011, Amy Falls has served as the Chief Investment Officer and Vice President for Investments at Rockefeller University, overseeing its $2 billion endowment. Rockefeller is a world-renowned center for scientific research and graduate education, which has produced 24 Nobel Prize winners since it was founded by John D. Rockefeller in 1901. Previously, Amy served for six years as the Chief Investment Officer at Andover (Phillips Academy), where the endowment generated top quartile results from 2007 to 2010. In 2013, she was appointed to the Ford Foundation’s Board of Trustees. She also serves on the Board of Phillips Academy and on the Investment Committee of the Peterson Institute of International Economics. Amy’s holds a bachelor of arts in history from Georgetown University and a master’s in international development from the Kennedy School of Government at Harvard University.

Ms. Falls was recently named on Trusted Insight’s ranked list of The Top 30 Most Influential Women In University Endowments. She graciously spoke with Trusted Insight on September 3. The following interview has been edited and condensed.

Trusted Insight: Were you surprised when you heard that you were nominated as one of the top 30 women in university endowment investing?

Amy Falls: I was laughing, wondering “Are there 30 women in university endowment investing?”

Trusted Insight: Actually, women appear to be better represented in endowment investing than other areas of finance. Do you have any ideas about why you think that might be?

Amy Falls: I think there are a lot of great women in endowments for a number of reasons: Women are good long-term fiduciaries. There’s actually been a scientific study correlating high levels of risk taking with high levels of testosterone. Also, I think the number of women in any given field builds on itself when there are women role models. Endowment management is very results oriented and that helps with the work/life balance. It’s very clear what you need to do and how you need to do it. This makes it easier to prioritize; you have control over your time.

Trusted Insight: Did you have women role models that influenced your career?

Amy Falls: Yes. Paula Volent [senior vice president for investments] at Bowdoin College and Jane Mendillo [president and CIO from 2008-2014] at Harvard Management Company. They are great women, great endowment managers.

Trusted Insight: When you were CIO at Andover the endowment did well despite the 2008 crisis. How did you manage that?

Amy Falls: We were down 15 points, the average was down 18 or 19 points. We still lost money, but we lost less money. We really stuck to our asset allocation targets. It takes discipline. So when the market seemed like it was highly valued we raised cash; we had 4-5% of the endowment in cash prior to the crisis and this gave us the flexibility to steadily rebalance. Then we benefited when the market recovered. When things are falling people panic and sell; when things are rising people panic and buy. You have to stick to your targets despite that, except when you see the valuation is excessive in one way or another. Also, I always worked very closely with my investment committee and we always thought in terms of what if’s: What will we do if the market does X? We stay close and have collaborative communications. These strong relationships show when there is a crisis because we’ve built trust. You have to work a lot to keep everyone involved and fully energized. The committee isn’t paid and they all have other jobs.

Trusted Insight: What was the size of Rockefeller’s endowment when you became CIO and what is it now?

Amy Falls: The endowment started at $1.8 billion, and now it is just over $2 billion.

Trusted Insight: How were your returns last year?

Amy Falls: We did pretty well at 6.7% return, which looks to be the upper level of our peer group. This was achieved in the context of taking risk out of the portfolio while raising cash; 10% of our endowment is now cash, so we can redeploy capital at a better time. I’m particularly happy given that we reduced risk all year.

Trusted Insight: What is Rockefeller’s guiding investment philosophy?

Amy Falls: Find managers that you like, set asset allocation policies and stick to your targets. Keep an eye on valuation so you’re aware when markets are not appropriately evaluating risk.

Trusted Insight: What are your biggest concerns about the global economy?

Amy Falls: U.S. interest rates and government interest rates in general, the notion that there might be a really significant correction, emerging markets, the enormous sell off this week.

Trusted Insight: What is the most exciting thing going on at Rockefeller now?

Amy Falls: Well, it’s all exciting. There’s a revolution in biomedical research now and in the kinds of treatment for some of the worst diseases like cancer, autism, Alzheimer's. Because of the reduction in the cost of DNA sequencing we’re at the dawn of a new age. It’s thrilling to be close to the research. I can’t think of an area where there’s more transformational change happening. 
RU doesn’t have a lot of bureaucracy; it has a flat organizational structure. So, the endowment is able to fund the cost of labs, which allows the scientists to take more risks and just focus on their research. They can take risks because the endowment is able to be very supportive of the labs and lab heads. This allows for risk taking, collaboration and a long-term focus, which is unusual these days when the focus is always on things being short term and easy. That’s why we have so many Nobel Prize winners.

Trusted Insight: I was surprised to learn that you have an organic farm up in Maine – Triple Chick Farm. Is there a way you can relate being a farmer to being a CIO?

Amy Falls: The farm is very similar to investing work, there are so many parallels. In both cases you husband resources, for lack of a better word. So to make agricultural land produce you think of risk management in your planting. It’s very similar to reducing risk in assets: in farming your asset is soil, you manage it to maximize returns.

Trusted Insight: What are you most proud of in your life and/or in your career?

Amy Falls: Other than my three beautiful girls I’m most proud of being able to support the kind of work that institutions like Rockefeller, Andover and the Ford Foundation are doing. It’s such a gift to be able to use your trade -- finance -- on behalf of people who are doing good in the world, ‘science for the benefit of humanity’, to use Rockefeller’s phrase. I’m proud and humbled to be able to do that.

To learn more about the powerful females of institutional investing, check out Trusted Insight's list of The Top 30 Most Influential Women In University Endowment Investing.