Class of 2012 | Chief Investment Officer

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FoundationConrad N. Hilton FoundationAgoura Hills, California

When one thinks of the Hilton name, images of hotels and heiresses likely come to mind. Yet, up in the hills above Hollywood sits another entity bearing the iconic name: The Conrad N. Hilton Foundation.

At the helm of the Foundation's investment team sits Randy Kim, a David Swensen protégé who decamped for the West Coast four years ago at the tender age of 32. The still-boyish Kim has overseen large changes in the Hilton Foundation's $2 billion portfolio.

Like many a CIO, he's quick to point to his team for helping make the relatively painless changes. His right-hand man is Jay Kang, a fellow Yale Investments Office alumnus, and they are joined by Yatin Patel, Michael Buchman, Zane Hamilton, Blair Critchlow, and Vardges Markosyan—all of whom are even younger than their boss.

Whether it's the fresh Pacific air or the momentum of youth, it's working. For the three years ending December 31, 2011, the foundation returned 12.9% per annum—good enough to place in the top 5% of the Cambridge Associates $1 Billion Plus Endowment and Foundation universe. "An excellent start," Kim says, although he stresses that the foundation's investment horizon on most holdings stretches out a decade or more. When asked about the team's quick start, Kim attributes it to "equal parts luck, hard work, and incredible support from the Hilton Foundation's Board of Directors." Inarguably, it's also due to Kim's unabashed adoption of Yale-type principles for the fund. As aiCIO wrote when it named him to the Forty Under Forty in April 2012: "His three major investment tenets are borrowed from Yale's playbook: a long-term investment horizon, an equity orientation, and backing a concentrated cadre of investment managers focused on finding unique opportunities in inefficient markets. He is also a strong believer in developing homegrown investment talent, he says, recognizing the difficulty in deprogramming people with existing bad (or non-conforming) investment biases."

These drivers have led to some large portfolio alterations since 2008. The collective allocation to US and developed foreign equities has been reduced from 38% of the portfolio to 22%. In exchange, allocations to the less traditional asset classes of emerging markets and private equity have increased from 7% to 22%. Larger, more traditional managers have been passed over in favor of small "emerging" managers, quantified as having less than $2 billion in assets under management. Both ideas are echoes of the work done by the sage back in New Haven, David Swensen. Kim, while he remains coy about his future plans (just as Swensen has always been), hints that there may be more changes in the works.

One thing that won't change, however? Judging by his enthusiasm for the warmer locale of Los Angeles, a move back East might not be in the cards. "I definitely don't miss the weather in New Haven," he said in early autumn.The Foundation just moved to a new campus at the foot of the Santa Monica Mountains, a few minutes away from Malibu. "Sea, sun, and surf all year round is pretty hard to beat," he says with a smile. —KPM

CIO Randy Kim's three major investment tenets are borrowed from Yale's playbook: a long-term horizon, an equity orientation, and backing a concentrated cadre of investment managers.
FOUNDATION NOMINEES2011 Winner: Ford Foundation
  • Margaret A. Cargill Philanthropies (Runner-up)
  • The Kresge Foundation
  • Wellcome Trust