EndowmentUniversity of Notre DameSouth Bend, Indiana

Most people know Notre Dame for a few things: the Fighting Irish, world-class academics, and—if you're in the institutional investing world—the school's endowment. It's grown over the years—from around $425 million in 1988 to nearly $7.5 billion today.

At the helm for that entire time has been CIO Scott Malpass, and he has more good things to say about the school and his teammates than himself. When asked about this growth, he points first to "stellar fundraising"—and only then does he mention the strong stock markets of the late 1980s and 1990s. And while the macro environment following the financial crisis has obviously not been easy, Notre Dame has recovered to new highs while other endowment pools have not.

Malpass credits one asset class in particular for allowing the endowment to emerge well positioned: emerging markets, in which Notre Dame uses active managers for its roughly 20% allocation to the sector. Returns from emerging markets, along with private equity, have been especially instrumental in allowing thousands of Notre Dame students earn a college degree. Want proof? While the university's composite for all its emerging market managers for the fiscal year was down 1%, the index was down 17%. "The emerging market sector is one area I find fascinating, and our investment office probably travels to these places more than others—we really make an effort to understand these markets," Malpass asserts, noting that during his CIO tenure, he's been to China alone between 40 and 50 times. "It's a signal that we really take ownership of our work in these places compared to most investors that haven't built out the sophistication to do research in emerging markets."

Emerging market managers: Keep an eye out for Notre Dame, because they may just want your skill. Malpass says that he foresees the fund's allocation to emerging markets going even higher. "But that's based on finding the right investment partners. We're still looking to add emerging market partners over time," he says. While still uncertain, the turnover of around 70% of China's leadership next year may fuel more opportunity in the region, as "scale and inefficiencies are compelling over the long term," Malpass says.

Another initiative that this university's endowment has been pursuing is micro venture capital—investing with venture capital firms to help fund start-up businesses, which now require a fraction of the capital needed decades ago, Malpass says. "The cost of start-ups has really come down, largely due to low-cost hardware, open-source software, and search engine marketing...Entrepreneurs can bootstrap their companies much further with a fraction of the capital." There's a fair amount of that fighting spirit in the air in South Bend, it seems. It's rare to have a university with stellar academics, a strong sports team, and an endowment that's weathered the economic storm largely above the rest. While Notre Dame's students show much-deserved pride for their football team, they certainly have reason to be proud of their endowment as well. —PV

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"The emerging market sector is one area I find fascinating and our investment office probably travels to these places more than others—we really make an effort to understand these markets."Scott Malpass, CIO
ENDOWMENT NOMINEES2011 Winner: Wake Forest University
  • Washington University in St. Louis (Runner-up)
  • Georgetown University
  • Institute for Advanced Study, Princeton
  • Smithsonian Institution
  • University of Chicago
  • University of Texas Investment Management Company
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