Meredith Jenkins is the vice president and co-chief investment officer at Carnegie Corporation. Together, with Ms. Kim Lew, Jenkins manages the foundation’s $3.4 billion in assets under management. Jenkins joined Carnegie in 1999 as the foundation’s first investment associate in a newly created investment team and has worked her way to the foundation’s top investing position. Prior to Carnegie, she conducted buy side equity research at Sanford Bernstein. Jenkins holds a bachelor of art in English from the University of Virginia and an MBA from Harvard Business School.
Ms. Jenkins was recently named to Trusted Insight’s list of the Top 30 Chief Investment Officers at Foundations. She graciously spoke with Trusted Insight on November 4. The following interview has been edited and condensed for clarity.
Trusted Insight: Amongst positions at other firms, you worked your way through the ranks of the Carnegie Corporation. You were the first investment associate in 1999, senior investment associate in 2000, director of private equity in 2004, worked as special envoy in Hong Kong and now serve as co-chief investment officer. Tell me about your experience of working from the ground and coming to run this institution.
Meredith Jenkins: I was lucky to come here in the first six months to a year after they hired first CIO. It was a really interesting and unique opportunity to be somewhere at the very beginning. They had started to diversify the portfolio with an outside investment advisory group prior to hiring their first CIO.
In terms of hiring devoted investment staff, Ellen Shuman came in early 99. She had been at Yale before this and brought that perspective of endowment investing. There was a lot of opportunity to learn the portfolio with her. At that time there were three of us on the team, including Ellen. So it was Ellen, myself and a junior person right out of college.
We had an opportunity to learn about the existing managers in the portfolio, do some restructuring in some areas of the portfolio. She asked me to take a leadership role in building out the private equity portfolio. I really focused on that space from when I started until 2007 when I moved over to Hong Kong for family reasons. Then I was on the ground over there to help with diligence on a variety of stuff we had done over there.
I’ve been very luck in A) being here early on and getting to know the portfolio and helping with the build out and B) having the opportunity over the years to have a variety of different experiences. I feel very fortunate that I’ve been able to have all of that while at one place.
TI: You joined the investment team while it was in its embryonic stage. You watched the team evolve and grow over time, and now you run and Ms. Lew run the show. How did that experience shape you, your team now and your philosophy of building an investment team?
MJ: It still continues to be the case that we are a very small team. We’ve got seven investment professionals and a total of nine people who are doing everything. Perhaps it was even more acutely so back then with an even smaller team, but throughout, you really see the importance of team fit.
The way that impacts today is we take a lot of time when we do add someone to the team. We will take a lot of time interviewing candidates and thinking about whether they are the right fit. We involve everyone on the team, because everyone has to be comfortable with that fit. One person can mess up the whole dynamic on a team. That was something that I saw from my earliest days here.
Being on a small team in the early days, I saw how motivating it was to be involved in all stages of the process and have, in many ways, a broader mandate. In some ways, it could be frustrating because you didn’t feel like you were an expert in things, but when I look over the expanse of my career, it was ultimately a valuable experience. It helped increase my understanding of thinking about a portfolio, across a portfolio, instead of in one silo or one asset class.
The value of that also permeates through how we think about our team today and our wanting people to have cross-portfolio experience and to contribute to the conversation and diligence in areas of the portfolio that they may not know as well. Hopefully, over time they will learn to make cross portfolio trade-offs and understand where everything is coming from.
TI: You moved to Hong Kong for family reasons in 2007, but continued working for Carnegie as a special envoy. Without me prying into your personal life, can you tell me about that experience and how it informed you as an investor?
MJ: It was a wonderful experience. My husband had a job opportunity over there. We made the decision that we would move our family over there. Ellen, our CIO at the time, asked me to stay on, because we had started to do a fair amount of investing on that side of the world. We’d always done it on the public side, and we’d started, in the years around then, to do stuff on the private side.
She was really enthusiastic about having someone on the ground that could do the due diligence and be in the information flows there, hear about what the managers were interested in, hear what the back stories were on managers that may not necessarily make it all the way over here.
That is a big piece of my experience over there. You do hear different stuff on the ground, and you get a better understanding of people’s backgrounds. It is a smaller community over there. It is very dynamic and constantly changing, but a lot of people know each other from different phases of their careers. It was a really valuable experience in terms of making contacts over there that I feel like I can call on now.
TI: Let’s talk about education. You are a Harvard graduate, a school known for producing private equity minds. You later went on to be the head of private equity for Carnegie. Surely that’s no coincidence. What is your investment philosophy, and how has that train of thought been informed by your time at Harvard?
MJ: In terms of its impact on investment philosophy, it was less that Harvard formed my investment philosophy and more that it gave me perspective on the different investment philosophies that are out there and the different models. It gave me great exposure to different investment firms that I might not have otherwise known or heard of.
I was fortunate I was in a class that Andre Perold taught. Each class was literally a case study on a different type of investment or a different manager. That was probably one of my most valuable classes.
In terms of forming my investment philosophy and where I feel comfortable when I think about a portfolio, my work experience at Sanford Bernstein did a lot of that. I am much more comfortable in value, fundamental research, fundamental in-depth due diligence and more of a value bias. I do look back more to that work experience than Harvard.
TI: You hold the title of co-chief investment officer at Carnegie. Tell me about your dynamic with Ms. Lew and how that works with the rest of the team.
MJ: It’s really great. As someone had once said to me: There’s a lot of not investing that’s part of being a chief investment officer. That part of the job can be overwhelming, and it can be lonely in a lot of ways -- managing teams, managing your board, managing the placement of your team with the larger context of the organization that you are in. It has been really nice to have someone else to share that burden with, so that neither of us gets overburdened by it. We share and trade ideas on how to deal with this.
On the investing side, we really try not to duplicate effort too much. We have a structure of primary-secondary. I am primary on about half of the portfolio and Kim’s on the other half; vise versa on the secondary. We really push that out to the rest of the organization.
The primary is really the person who’s got the primary responsibility on the managers in their portion of the portfolio, and ultimately the buck stops at that person in terms of decision making on those particular managers. Although, in reality, our process is more collaborative, and it’s never come down to one or two people pushing through a controversial decision because they have primary responsibility. The secondary plays a really important devil’s advocate role in making sure we are not missing something and flushing out the whole case on an investment. It makes our whole process much richer.
TI: Tell me about your investment team at Carnegie Foundation and what sets you apart from other foundations.
MJ: The co-CIO structure I think does. It’s worked so well for Kim and I and the way we’ve pushed it out to the rest of the organization. I think that differentiates us.
I think the other stuff is more debatable. I’m sure there are other teams that feel they are differentiated by this as well, but I feel we are differentiated by the level of research that we do on our managers. We focus on being really good partners to our managers. Once we’ve done our due diligence and we feel that a manager meets our investment case as an opportunity for the portfolio, we do think about it as they are executing every day for us. The quality of the partnership is just as important to us as what they are doing on the investment side.
TI: What do you look for in a manager?
MJ: We look for curiosity. We look for a manager who does in-depth due diligence and is able to differentiate themselves in terms of their knowledge and understanding of the investments that they hold, no matter what part of the portfolio it is.
We look for managers that are good partners. That’s something that shows up in the terms that they offer to their investors, the way that they think when they lose money, how they make that up to their investors, the transparency of the relationship.
We also tend to love managers that are looking at less efficient spaces and have really found a niche for themselves. We think it’s in some ways easier for managers to differentiate themselves in these less-trodden, less competitive spaces. It’s easier for us to diligence both the space and the manager when it’s a little bit smaller and slightly esoteric. Those are all things we tend to look for.
TI: It’s a tough market right now. What’s your outlook for both public and private markets headed into 2016 and beyond?
MJ: The public markets and real estate feel kind of late cycle-ish. I don’t know when that cycle breaks, and I don’t know what’s going to be the cause of it, whether it’s going to be interest rates or something else. People focused so much on interest rates, and lo and behold everything that happened with the currency in China in August was what did it, and people seemed blindsided.
I don’t know what it will be that will get people anxious next, but it does feel very late cycle. Perhaps not as bad as it was before August. We have gotten a little bit of a reprieve on valuations, but I don’t feel like we are at a point where you want to double down, particularly in real estate or public developed markets.
I do think emerging markets are becoming really interesting. I am a bit more of a contrarian. They have had a really tough year. They were kind of mediocre before that. Not nearly as bad as this year. Over the last few years they have been mediocre. I think there are some interesting opportunities there.
I think there’s interesting opportunities in the energy space. You have to tread carefully and pick your partners well, but there will be interesting opportunities that come about there as well. On the margin we are starting to see more interesting stuff there. I think that could potentially play out much longer, given the change in dynamics of the industry from the shale revolution.
TI: What trends have you identified foundation investing over the years?
MJ: Foundations have, in one sense, the luxury of being long-term investors. But I would differentiate them slightly from endowments in that they’re not getting new capital in. We have to be more thoughtful about liquidity. We can’t go out and raise money. We can’t raise bonds. We have more restrictions on the liquidity. We do have to be thoughtful on liquidity.
It’s yes, on the one hand we can be long-term investors and we can do stuff that is a little more illiquid. We can take a longer-term view, but we do have to be sensitive to the liquidity concerns.
A number of our peers have been doing interesting stuff with impact investing. Either coordinating it in some way with what they do on their program side or just trying to think about it in an interesting way. It’s still very early days on a lot of it, but there’s interesting stuff going on that we’d like to learn about and stay on top of.
TI: What challenges does your foundation face that are unique to the foundation industry?
MJ: Liquidity is a huge issue. Liquidity and having to pay out 5%. The endowments don’t have a number that they have to pay out. We have to pay out 5%. If you think about it, that’s 7.5-8% nominal that you’ve got to earn, and you’re not going to get any money in. That’s a pretty high bogie. That’s by far the biggest challenge.
Another challenge is keeping our teams happy from a compensation perspective. You have to think about the larger context of what everyone else is paid at the foundation and what compensation looks like across the board and what is reasonable. Much of this compensation data is publically available. You have to think about what looks reasonable in the context of the work you are trying to do at the larger foundation level.
TI: Putting this all together: The foundation has no incoming cash flow, it much pay out 5% annually, but the investment team is aiming for a long-term view. In near-term volatility and uncertainty, such as we are experiencing now, how does the portfolio evolve to meet those competing requirements?
MJ: On the margin, we are thinking more about emerging markets, thinking more about energy related opportunities. We are never anyone who swings the portfolio form quarter to quarter or month to month.
We move relatively slowly, but on the margins when we see valuation dislocations, we try to keep a bit of flexibility in the portfolio from a liquidity perspective so that we can take advantage of those on the margin. You won’t see us go “Let’s put 20% of the portfolio in energy.” It’s more of a slow move. It drives where the team spends their time.
TI: What’s the number #1 lesson you’ve learned during your career as an institutional investor?
MJ: The importance of getting a broad experience. This is changing, but when I started in the industry, at the junior levels it was much more silo-ed. I did private equity. You would do private equity or real assets or public equity or whatever.
Having the opportunity to go to Hong Kong and be in a position where I needed to look across the portfolio to work with everyone and think about opportunities be it public, private or real estate, was some of the most valuable experience of my career. To the extent that people can search out opportunities for that or ask for them and figure out ways to get them, I would recommend that.
To learn more about the investors powering the world's top foundations, check out Trusted Insight's list of The Top 30 Most Influential Women In University Endowment Investing.
Ms. Jenkins was recently named to Trusted Insight’s list of the Top 30 Chief Investment Officers at Foundations. She graciously spoke with Trusted Insight on November 4. The following interview has been edited and condensed for clarity.
Trusted Insight: Amongst positions at other firms, you worked your way through the ranks of the Carnegie Corporation. You were the first investment associate in 1999, senior investment associate in 2000, director of private equity in 2004, worked as special envoy in Hong Kong and now serve as co-chief investment officer. Tell me about your experience of working from the ground and coming to run this institution.
Meredith Jenkins: I was lucky to come here in the first six months to a year after they hired first CIO. It was a really interesting and unique opportunity to be somewhere at the very beginning. They had started to diversify the portfolio with an outside investment advisory group prior to hiring their first CIO.
In terms of hiring devoted investment staff, Ellen Shuman came in early 99. She had been at Yale before this and brought that perspective of endowment investing. There was a lot of opportunity to learn the portfolio with her. At that time there were three of us on the team, including Ellen. So it was Ellen, myself and a junior person right out of college.
We had an opportunity to learn about the existing managers in the portfolio, do some restructuring in some areas of the portfolio. She asked me to take a leadership role in building out the private equity portfolio. I really focused on that space from when I started until 2007 when I moved over to Hong Kong for family reasons. Then I was on the ground over there to help with diligence on a variety of stuff we had done over there.
I’ve been very luck in A) being here early on and getting to know the portfolio and helping with the build out and B) having the opportunity over the years to have a variety of different experiences. I feel very fortunate that I’ve been able to have all of that while at one place.
TI: You joined the investment team while it was in its embryonic stage. You watched the team evolve and grow over time, and now you run and Ms. Lew run the show. How did that experience shape you, your team now and your philosophy of building an investment team?
MJ: It still continues to be the case that we are a very small team. We’ve got seven investment professionals and a total of nine people who are doing everything. Perhaps it was even more acutely so back then with an even smaller team, but throughout, you really see the importance of team fit.
The way that impacts today is we take a lot of time when we do add someone to the team. We will take a lot of time interviewing candidates and thinking about whether they are the right fit. We involve everyone on the team, because everyone has to be comfortable with that fit. One person can mess up the whole dynamic on a team. That was something that I saw from my earliest days here.
Being on a small team in the early days, I saw how motivating it was to be involved in all stages of the process and have, in many ways, a broader mandate. In some ways, it could be frustrating because you didn’t feel like you were an expert in things, but when I look over the expanse of my career, it was ultimately a valuable experience. It helped increase my understanding of thinking about a portfolio, across a portfolio, instead of in one silo or one asset class.
The value of that also permeates through how we think about our team today and our wanting people to have cross-portfolio experience and to contribute to the conversation and diligence in areas of the portfolio that they may not know as well. Hopefully, over time they will learn to make cross portfolio trade-offs and understand where everything is coming from.
TI: You moved to Hong Kong for family reasons in 2007, but continued working for Carnegie as a special envoy. Without me prying into your personal life, can you tell me about that experience and how it informed you as an investor?
MJ: It was a wonderful experience. My husband had a job opportunity over there. We made the decision that we would move our family over there. Ellen, our CIO at the time, asked me to stay on, because we had started to do a fair amount of investing on that side of the world. We’d always done it on the public side, and we’d started, in the years around then, to do stuff on the private side.
She was really enthusiastic about having someone on the ground that could do the due diligence and be in the information flows there, hear about what the managers were interested in, hear what the back stories were on managers that may not necessarily make it all the way over here.
That is a big piece of my experience over there. You do hear different stuff on the ground, and you get a better understanding of people’s backgrounds. It is a smaller community over there. It is very dynamic and constantly changing, but a lot of people know each other from different phases of their careers. It was a really valuable experience in terms of making contacts over there that I feel like I can call on now.
TI: Let’s talk about education. You are a Harvard graduate, a school known for producing private equity minds. You later went on to be the head of private equity for Carnegie. Surely that’s no coincidence. What is your investment philosophy, and how has that train of thought been informed by your time at Harvard?
MJ: In terms of its impact on investment philosophy, it was less that Harvard formed my investment philosophy and more that it gave me perspective on the different investment philosophies that are out there and the different models. It gave me great exposure to different investment firms that I might not have otherwise known or heard of.
I was fortunate I was in a class that Andre Perold taught. Each class was literally a case study on a different type of investment or a different manager. That was probably one of my most valuable classes.
In terms of forming my investment philosophy and where I feel comfortable when I think about a portfolio, my work experience at Sanford Bernstein did a lot of that. I am much more comfortable in value, fundamental research, fundamental in-depth due diligence and more of a value bias. I do look back more to that work experience than Harvard.
TI: You hold the title of co-chief investment officer at Carnegie. Tell me about your dynamic with Ms. Lew and how that works with the rest of the team.
MJ: It’s really great. As someone had once said to me: There’s a lot of not investing that’s part of being a chief investment officer. That part of the job can be overwhelming, and it can be lonely in a lot of ways -- managing teams, managing your board, managing the placement of your team with the larger context of the organization that you are in. It has been really nice to have someone else to share that burden with, so that neither of us gets overburdened by it. We share and trade ideas on how to deal with this.
On the investing side, we really try not to duplicate effort too much. We have a structure of primary-secondary. I am primary on about half of the portfolio and Kim’s on the other half; vise versa on the secondary. We really push that out to the rest of the organization.
The primary is really the person who’s got the primary responsibility on the managers in their portion of the portfolio, and ultimately the buck stops at that person in terms of decision making on those particular managers. Although, in reality, our process is more collaborative, and it’s never come down to one or two people pushing through a controversial decision because they have primary responsibility. The secondary plays a really important devil’s advocate role in making sure we are not missing something and flushing out the whole case on an investment. It makes our whole process much richer.
TI: Tell me about your investment team at Carnegie Foundation and what sets you apart from other foundations.
MJ: The co-CIO structure I think does. It’s worked so well for Kim and I and the way we’ve pushed it out to the rest of the organization. I think that differentiates us.
I think the other stuff is more debatable. I’m sure there are other teams that feel they are differentiated by this as well, but I feel we are differentiated by the level of research that we do on our managers. We focus on being really good partners to our managers. Once we’ve done our due diligence and we feel that a manager meets our investment case as an opportunity for the portfolio, we do think about it as they are executing every day for us. The quality of the partnership is just as important to us as what they are doing on the investment side.
TI: What do you look for in a manager?
MJ: We look for curiosity. We look for a manager who does in-depth due diligence and is able to differentiate themselves in terms of their knowledge and understanding of the investments that they hold, no matter what part of the portfolio it is.
We look for managers that are good partners. That’s something that shows up in the terms that they offer to their investors, the way that they think when they lose money, how they make that up to their investors, the transparency of the relationship.
We also tend to love managers that are looking at less efficient spaces and have really found a niche for themselves. We think it’s in some ways easier for managers to differentiate themselves in these less-trodden, less competitive spaces. It’s easier for us to diligence both the space and the manager when it’s a little bit smaller and slightly esoteric. Those are all things we tend to look for.
TI: It’s a tough market right now. What’s your outlook for both public and private markets headed into 2016 and beyond?
MJ: The public markets and real estate feel kind of late cycle-ish. I don’t know when that cycle breaks, and I don’t know what’s going to be the cause of it, whether it’s going to be interest rates or something else. People focused so much on interest rates, and lo and behold everything that happened with the currency in China in August was what did it, and people seemed blindsided.
I don’t know what it will be that will get people anxious next, but it does feel very late cycle. Perhaps not as bad as it was before August. We have gotten a little bit of a reprieve on valuations, but I don’t feel like we are at a point where you want to double down, particularly in real estate or public developed markets.
I do think emerging markets are becoming really interesting. I am a bit more of a contrarian. They have had a really tough year. They were kind of mediocre before that. Not nearly as bad as this year. Over the last few years they have been mediocre. I think there are some interesting opportunities there.
I think there’s interesting opportunities in the energy space. You have to tread carefully and pick your partners well, but there will be interesting opportunities that come about there as well. On the margin we are starting to see more interesting stuff there. I think that could potentially play out much longer, given the change in dynamics of the industry from the shale revolution.
TI: What trends have you identified foundation investing over the years?
MJ: Foundations have, in one sense, the luxury of being long-term investors. But I would differentiate them slightly from endowments in that they’re not getting new capital in. We have to be more thoughtful about liquidity. We can’t go out and raise money. We can’t raise bonds. We have more restrictions on the liquidity. We do have to be thoughtful on liquidity.
It’s yes, on the one hand we can be long-term investors and we can do stuff that is a little more illiquid. We can take a longer-term view, but we do have to be sensitive to the liquidity concerns.
A number of our peers have been doing interesting stuff with impact investing. Either coordinating it in some way with what they do on their program side or just trying to think about it in an interesting way. It’s still very early days on a lot of it, but there’s interesting stuff going on that we’d like to learn about and stay on top of.
TI: What challenges does your foundation face that are unique to the foundation industry?
MJ: Liquidity is a huge issue. Liquidity and having to pay out 5%. The endowments don’t have a number that they have to pay out. We have to pay out 5%. If you think about it, that’s 7.5-8% nominal that you’ve got to earn, and you’re not going to get any money in. That’s a pretty high bogie. That’s by far the biggest challenge.
Another challenge is keeping our teams happy from a compensation perspective. You have to think about the larger context of what everyone else is paid at the foundation and what compensation looks like across the board and what is reasonable. Much of this compensation data is publically available. You have to think about what looks reasonable in the context of the work you are trying to do at the larger foundation level.
TI: Putting this all together: The foundation has no incoming cash flow, it much pay out 5% annually, but the investment team is aiming for a long-term view. In near-term volatility and uncertainty, such as we are experiencing now, how does the portfolio evolve to meet those competing requirements?
MJ: On the margin, we are thinking more about emerging markets, thinking more about energy related opportunities. We are never anyone who swings the portfolio form quarter to quarter or month to month.
We move relatively slowly, but on the margins when we see valuation dislocations, we try to keep a bit of flexibility in the portfolio from a liquidity perspective so that we can take advantage of those on the margin. You won’t see us go “Let’s put 20% of the portfolio in energy.” It’s more of a slow move. It drives where the team spends their time.
TI: What’s the number #1 lesson you’ve learned during your career as an institutional investor?
MJ: The importance of getting a broad experience. This is changing, but when I started in the industry, at the junior levels it was much more silo-ed. I did private equity. You would do private equity or real assets or public equity or whatever.
Having the opportunity to go to Hong Kong and be in a position where I needed to look across the portfolio to work with everyone and think about opportunities be it public, private or real estate, was some of the most valuable experience of my career. To the extent that people can search out opportunities for that or ask for them and figure out ways to get them, I would recommend that.
To learn more about the investors powering the world's top foundations, check out Trusted Insight's list of The Top 30 Most Influential Women In University Endowment Investing.