Investing Wisely: YU CIO Ahron Herring
It was in August of 2009 that President Richard Joel announced the appointment of Sid Browne as Chief Investment Officer. Prior to Mr. Browne’s appointment, there was no such a thing as an investment office in Yeshiva University. They never believed they needed one. The endowment was handled by the board and investment consultants. This wonderful board included Bernie Madoff, of ponzi-scheme fame, who besides being chair of its business school and treasurer of the university, received an honorary degree from the university in 2001. His positions in the University allowed him to help a cohort of his, a high profile investor named J. Ezra Merkin become a member of the board. Merkin impressed the board so much that they made significant investments in his Ascot Partners fund. Mr. Merkin steered that money to Mr. Madoff which caused $110 million dollars, ten percent of the endowment, to disappear like fairy dust.
To avoid repeating those financially fatal mistakes, the Yeshiva instituted a CIO position. Dr. Sid Browne was a professional investor who has held leadership positions at Goldman Sachs and Brevan Howard. Out of nowhere, however, Sid Browne resigned as chief investment officer on December 24, 2011, a move in which Yeshiva University refused to comment on.
In March 2012, Ahron Herring took over Browne’s position. As Chief Investment Officer, his role essentially is to guide YU’s investment strategies to secure the financial future of the University. Herring, whose contact information - and even his name - is not directly listed on the yu.edu website, is not an easy man to contact. After finally getting through, Herring replied quite promptly. He gave me mostly general information, explaining that until the 2014 financial reports on the university are disclosed, he is very limited as far as what he could discuss.
Herring first delineated the purpose of a college endowment, in particular YU’s endowment. He explained that “the purpose of the endowment is to ensure a reliable source of funds that secure the most vital needs of the University including scholarships, faculty salaries, and building upkeep.” The investments that support students on campus in any given year must also be available to students who will be in Yeshiva in the future. The stock market is a very volatile entity. In some years it may rally while in other years it may tumble. The endowment is meant to smooth out those ups and downs so that funds are readily available to distribute every year. It is therefore foolish to simply measure the endowment for just a short period of time, such as two or three years. According to Herring, the objective of the endowment is to allow for a sufficient return to support a yearly distribution without taking on the full risk of the stock markets.
While Herring continues to work on these investment strategies, many financial decisions lie with the Board of Trustees, who met last week to discuss some of the plans YU has in store. Those and other developments will continue to be reported on.
