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Access here alternative investment news about Exclusive Q&A: Archibald E. Asawa, CIO At The Soka University Of America's $1.2B Endowment
Endowment Management

Exclusive Q&A: Archibald E. Asawa, CIO At The Soka University Of America's $1.2B Endowment

by trusted insight posted 4years ago 10727 views

Archibald E. Asawa joined Soka University of America in March 1998. He currently serves as the chief investment officer at the University's $1.2 billion endowment. He is also the vice president for finance & administration and chief financial officer at the University. Prior to Joining the University, Asawa served as a management consultant to Fortune 500 corporations, universities and public sector groups for over 12 years. Asawa received his BA in Economics from Yale University and attended the doctoral program in management at UCLA's Anderson Graduate School of Management. 

Mr. Asawa was named to Trusted Insight’s list of the
 Top 30 Ivy League Graduate Chief Investment Officers - Part 1. He graciously spoke with Trusted Insight on November 5, 2015. The following interview has been edited and condensed.

Trusted Insight: Tell me about Soka University of America endowment and how you came to be a part of it

Archibald E. Asawa: Soka University is a fairly new liberal arts institution. We began our undergraduate program in 2001 and currently have a little less than 500 students, and of which 40% are international students from outside of United States with over 50 different countries represented in our student body.  Our primary mission and goal is to produce global citizens committed to living a contributive life, who want to contribute back to society, work towards peace. Though we are fairly new, we are now ranked in the Top 50 Liberal Arts Colleges according to US News and World Report 2016 College Rankings, which also ranks Soka among the Top 4 Best Value Schools among Liberal Arts Colleges. 

The endowment is a result of our president. He was able to get several thousand donors who believe in our mission to contribute toward the endowment and as a result, the endowment now helps to provide hundreds of financial scholarships, and financial aid to both domestic and international students. I joined Soka in 1998, having come from the private sector, where I worked as a management consultant in the 1980s and 1990s. The President and I have known each other for quite some time, and he introduced me to the university.

Trusted Insight: What makes you want to work for a university endowment as opposed to other investment institutions?

Archibald E. Asawa: I also serve as the chief financial officer for the university, so it was one of those things that became part of my responsibility set. I moved into world of non-profit higher education from the private sector, so I already made the career decision out of the private sector into the non-profit world.  Why do this?  I feel that being able to work for an organization that has a specific mission that really seeks to help society, to give back to society, and raise the future leaders for peace, there’s a certain element of it that you just can’t quantify. It just feels good to be part of something special like this.

Trusted Insight: How different is it to make investment decisions in a university endowment versus in the corporate environment?

Archibald E. Asawa: I think actually there are no differences as we seek to responsibly maximize our returns while lowering volatility to generate income for our financial scholarships. As a result, we look to have a very diversified portfolio, similar to many other colleges and universities, following the model laid out by many of our colleagues, by utilizing a highly diversified portfolio both in private and public markets.  Our goal is to produce a good consistent return to support our operations without introducing too much volatility since the majority of our operating expenses are supported by the endowment. As a result, our portfolio tends to be more conservative than my peers but given our objectives, I’d say that there’s no difference if I was in a private sector. My investment objective, my fiduciary responsibility is to try to get the best return I can for our university given our risk profile.

Trusted Insight: As you mentioned before you also serve as CFO, vice president in addition to your role as CIO. How do you balance these responsibilities of different roles?

Archibald E. Asawa: Oh goodness, I try my best. Whenever I can, I am definitely working, whether in the airplane, or on the ground, I’m definitely putting in my hours to make sure that I am present at the university so that I’m able to oversee those areas of responsibilities that I have. In addition, I make it to a point to go out and visit my managers and attend as many investor meetings that I can so that I have done sufficient due diligence on the managers and funds to report back to my investment committee. So in terms of time management, it’s a challenge, but I do the best I can.       

Trusted Insight: Can you tell me more about your investment team?

Archibald E. Asawa: Actually, I’m still at the initial stage of development. In other words, it’s about half of my time, and about half of my controller’s time, with one full time accounting professional to handle fund reporting and flows. In terms of investment professionals, today I have a lot of the initial research and manager searches conducted by Cambridge Associates, but it’s not discretionary.  Cambridge will provide recommendations and a short list of managers to me, and then I will go out and visit to do my due diligence. I’m at the point though given our current AUM that I will look to hire 1-2 in-house staff in a few years, but I will take my time to make sure I hire the right personnel who are not only savvy and knowledgeable about the investment world, but understand working in an university setting.

Trusted Insight: Can you tell me a little bit more about your portfolio, which asset classes you invested in?

Archibald E. Asawa: At the broad level, we are about 75% of equity and 25% of fixed income. Within the equity space, I’d say about half are in the alternatives investment arena including hedge funds, private investments in venture capital, private equity, real estate, and energy, and the other half are in the public equity long-only positions, spread across U.S., and non-U.S. Developed, and Emerging and Frontier Markets, across the value and growth spectrum and across market capitalizations. Specifically regarding EM and Frontier, even though it has been a very unattractive asset class recently, I still am a believer in EM and frontier markets, so I’ve been maintaining my positions.  

Despite the recent challenges, I do feel that this asset class in a long term will do well. In the fixed income arena, I have allocations in both domestic and international fixed income, across developed and emerging markets, in government securities, credit, high yield, mortgage-backed securities, and other ABS.

Trusted Insight: What drives your investment decision-making? What are you looking for when you decide to invest in a particular manager?

Archibald E. Asawa: I guess that comes down to a number of factors. Obviously it isn’t just about return. It’s also about the integrity of the firm. Do I believe that they have a very strong infrastructure as well as the back office operations? The integrity and skill of the portfolio manager is very important to me. The process by which they make internal decisions on their investments, and how they manage risk is also very important to me. So those are definitely considerations. In general when I do look at investments, overall, I’m not looking for home runs. I try to find those firms that have been able to show consistent performance that take an appropriate level of risk, and don’t use a lot of leverage. I’m basically looking for singles and doubles. Ultimately, I think it always comes down to the integrity of the firm itself.

Trusted Insight: But in terms of venture capital firms, because they are at an early stage of development, how can you tell about their integrity?

Archibald E. Asawa: On the venture side, because of our size, it is challenging to get direct access to best venture capital firms. As we all know, the difference in performance between the first quartile manager and non-first quartile manager is significant. So historically, we have been using venture fund of funds to get access to these top quality venture capital firms, but given our current AUM size, we are now looking to make direct investments into quality venture capital firms.

Trusted Insight: You said you joined the endowment in 1990s, so how did the endowment grow or what are the changes of the portfolio after you took charge?

Archibald E. Asawa: Once again, the president is an amazing fundraiser, through his efforts, he was able to raise money and we have also been able to grow the endowment organically.

Trusted Insight: How was your experience at Yale? Does the Ivy League education play an important role for your success at your career?

Archibald E. Asawa: I would say that my experience at Yale was truly transformative. I thought that the opportunity to be able to attend and learn from the professors there as well as my fellow classmates was truly remarkable and something I will always cherish. I found that the professors at Yale truly helped extend and broaden my perspectives on several things. With regard to what I do today, I think any good liberal arts education will really help to develop the whole person, so as a result, I feel I have grown on so many different dimensions as a result of having gone there.

Trusted Insight: So do you think you could still be at where you are if you went to a different school?

Archibald E. Asawa: That’s a very interesting question. I’ve never had considered otherwise since it’s such a part of my identity. Perhaps, but I definitely think that having had that experience helped shape my opportunities as well as perspective throughout my career. Working as a management consultant was a decision that I made in the mid 80s between consulting versus investment banking, I’ve always enjoyed the intellectual challenge that consulting presented and trying to help companies function better and increase shareholder value was an enjoyable experience.  I truly believe that all those things could not been possible had I not have the opportunity to study at Yale.

Trusted Insight: You said that the experience at Yale is part of your identity, so how did that experience shape your value/character as an institutional investor?

Archibald E. Asawa: That’s a good question. I don’t think it directly shaped my attitude, because I didn’t really study investment when I was at Yale specifically. I did take classes in investment but my primary focus and major was in economics. I would say that in general, the experience taught me that through hard work and effort, in the end you are able to come to some better understanding or assessment of whether it is a good investment or not. To be successful at an institution like Yale, you have to work hard, so I think the training is more so in terms of being ready to put forth your full effort and analysis to any situation so that you can arrive at a good informed decision.

Trusted Insight: Can you tell us one of the most important lessons or interesting stories you had in Yale?

Archibald E. Asawa: I have an interesting anecdote. When I was an undergrad at Yale, it was during the same time that David Swensen had just come back from Wall Street. He was a graduate fellow at Berkeley College, one of the Yale’s residential colleges. At that time, the Berkeley College Master held wine tasting evenings, one for red wines and one for white wines, to educate us on a variety of wines (This was back when the drinking age in Connecticut was 18). My observation of David Swensen was that I realize that even then he was a true contrarian. When he heard about the wine-tasting evenings, he organized something completely different, so he introduced his own beer tasting night. Spending the evening with David Swensen learning and drinking different kinds of beers is something that I will always remember.  Upon reflection, I definitely saw him as a man who has his own path and saw things in different ways and I’ve always respected him for that.

Trusted Insight: What’s the #1 lesson you’ve learned during your career as an institutional investor?

Archibald E. Asawa: I guess the first lesson is, don’t be swayed by the short term, always take a long term view, and don’t jump or react to every little thing.

Trusted Insight: What have I failed to ask you that I should know about you, your Endowment in general?

Archibald E. Asawa: I think it is important to note that our portfolio and asset allocation are more on the conservative side because of fact that we are a small institution and heavily rely upon it for our operational needs and financial scholarships.  As a result, my investment review tends seek those investments with lower volatility and risk profiles, but better fit the needs of our institution with regard to our investment objectives.

 

To learn more about the top-tier institutional investors, check out Trusted Insight's list of Top 30 Ivy League Graduate Chief Investment Officers - Part 1.