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Exclusive Q&A: Deborah Kuenstner, CIO At Wellesley College's $1.8B Endowment

by trusted insight posted 6years ago 10472 views
Endowment Management
Deborah Kuenstner began her career as the Chief Investment Officer of her alma mater, Wellesley College, in Wellesley, Massachusetts, on February 1, 2009, after having served as the CIO of Brandeis University since 2007. At Brandeis, Ms. Kuenstner took the endowment’s management in-house, building the office from the ground up. Prior to Brandeis, she was the managing director of research at Fidelity Investments and a CIO for Putnam Investments with $40 billion in assets under management. Ms. Kuenstner's undergraduate degree is in economics, from Wellesley, graduating in 1980. She also holds a master’s degree in business administration (MBA) from New York University. 

Ms. Kuenstner 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 about her experience as a chief investment officer and the world of university endowment investing on September 4. The following interview has been edited and condensed.

Trusted Insight: What trends have you identified endowment investing while serving as the CIO of Wellesley?

Deborah Kuenstner: We think about risk differently than we did before the financial crisis – liquidity wasn’t high on our list of concerns. Now we’re thinking, "Is the liquidity going to be there when we need it?" Not that endowments are abandoning illiquid asset classes in the least.

Trusted Insight:  What is your investment philosophy?

Debbie Kuenstner:  We have a strong value bias that it’s harder to make money going in when prices are high rather than low, even with our growth investments. We also have a lot of venture capital because we have access to great managers. 

Trusted Insight: Have there been any investments you’ve made that have surprised you? Outperformed or underperformed your expectations?

Debbie Kuenstner: If any CIO tells you they’ve never been surprised by an investment, they’re lying. Even if you made money on the investment it could still be a mistake. Hedging is a perfect example: if you buy something and the hedge doesn’t happen, is it a good thing or a bad thing? It can be difficult to judge a good investment from a bad investment. The question is, did you make a reasonable judgment? With the position you bet, could you lose the ranch?

Trusted Insight: How do you feel about investing in emerging markets?

Debbie Kuenstner: I started as a long-only international equity investor so the idea you can lump Korea and Argentina together in one asset class – emerging markets – doesn’t make sense. We look for regions that have growth potential and identify whether public equity, private equity or debt makes the most sense to invest in. 

Trusted Insight: Many of the women Trusted Insight has interviewed expressed some degree of surprise about there even being 30 women in endowment investing. Did you have a similar reaction?

Debbie Kuenstner: No, I know a lot of women in endowment investing. There probably are more women in endowment investing than other areas of finance.

Trusted Insight: What is the most exciting thing going on at Wellesley right now that the endowment is helping to fund?

Debbie Kuenstner: I’m an alum, so I think pretty much everything is exciting. I guess the two biggest things are financial aid and faculty salaries: a third of the money generated from our endowment is used for scholarships and 25% is used for faculty salaries. Wellesley has excellent teachers and has been extremely generous giving students access through financial aid.

Trusted Insight: What do you enjoy the most about being CIO of Wellesley College?

Debbie Kuenstner: It’s always different. It’s not that I have a short attention span. You have to think, how should my portfolio be positioned not just for today but over the next 3, 5, 10 years.

Trusted Insight: What do you think the biggest challenge to the world’s economy will be over that course of time?
Debbie Kuenstner: I think a big challenge will be how will the world economy create a growing pot of wealth.

Trusted Insight: What differentiates you from other female CIOs at university endowments?

Debbie Kuenstner: One thing that’s maybe a little different is the fact that I’m a CIO at my own college. It’s not that common; it gives you a little extra motivation.

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.