TIAA-CREF to invest on behalf of endowments

The New York-based pension fund and asset manager is expanding into investment management for endowments and foundations, hiring Rice University’s Scott Wise as chief investment officer of the new management business.

New York-based pension fund and asset manager TIAA-CREF is expanding into investment management for endowments and foundations, and has hired president of Rice University’s Rice Management Company, Scott Wise as the new business’ chief investment officer.

“As one of the most experienced and successful chief investment officers in the endowment management field, Scott understands the challenges endowments and foundations face in addressing asset allocation concerns and liquidity needs that arose during the economic downturn,” said TIAA-CREF president and chief executive officer Roger Ferguson Jr. in a statement.

Wise has served as RMC’s president and chief investment officer since 1989. He will head the endowment business – which will be independent of the organisation’s retirement plan business – from Houston, with plans for the new TIAA-CREF arm to be fully operational later this year.

Endowments have performed better than market indexes after focusing on alternative investments, such as private equity and private equity real estate, according to a report by Bloomberg. The endowment investment style is attributed to Yale University investment chief David Swenson, and saw endowments significantly increase their exposure to illiquid asset classes as well as hedge funds and commodities. In April, Swenson told Reuters he remained enthusiastic about illiquid assets, despite huge losses as a result of the global economic crisis.

TIAA-CREF, whose investments range from traditional equity and fixed-income to real estate and other specialized portfolios, has $426 billion of assets under management as of the end of March, a 17 percent increase from 31 December 2008. The firm manages assets on behalf of 15,000 institutional clients and 3.7 million individual participants.