Case | HBS Case Collection | October 2009 (Revised January 2010)

The University of Notre Dame Endowment

by Andre F. Perold and Paul Michael Buser


The Endowment Model of Investing, which was based on creating high risk-adjusted performance through diversification, a long time horizon, top-notch outside managers, and illiquid investments, had served Notre Dame and other large universities well over the past several decades. Scott Malpass, Notre Dame's Chief Investment Officer, was confident that this was a successful way to invest if implemented effectively, but he also saw the top university endowments experience 25% to 35% declines in portfolio value during the second half of 2008 that eviscerated the investment gains from the past several years. Notre Dame had weathered the crisis relatively well, but there were several key questions Malpass had to address. Should Notre Dame continue to make illiquid investments in the context of rising unfunded commitments relative to liquid funds? Was compensation adequate for the illiquidity of these types of investments? In relation to manager selection, how could the Notre Dame investment team continue to find the best managers to create alpha? To what extent would the performance of managers during the crisis be predictive of future performance in other portions of the economic cycle? How would the long-established industry terms of contract between clients and managers change going forward? Was there an opportunity for clients to negotiate better terms? These issues all needed to be addressed in the context of protecting the University's operating budget and supporting the mission of the institution.

Keywords: Financial Crisis; Higher Education; Asset Management; Private Equity; Financial Liquidity; Investment; Risk Management; Performance Evaluation; Education Industry; Financial Services Industry;


Perold, Andre F., and Paul Michael Buser. "The University of Notre Dame Endowment." Harvard Business School Case 210-007, October 2009. (Revised January 2010.)