Rice Management Company will focus on investments

CONTACT: David Ruth
PHONE: 713-348-6327                                                                                  
E-MAIL: druth@rice.edu

Rice Management Company will focus on investments

Rice University has created an internal company that will focus exclusively on managing the school’s investments.

Named the Rice Management Company, the new organization will be led by Scott W. Wise, who became president of the company Oct. 1.

Although the company is part of the university and not a separate legal entity, it has its own bylaws and a separate board of directors appointed by the Rice Board of Trustees. It replaces the board’s Investment Committee.

Jim Crownover, chairman of the Rice Board of Trustees, said a number of Rice’s peer institutions have formed similar companies to manage their endowments.

“The performance of the endowment is crucial to Rice’s long-term success,” he said, noting that the endowment accounts for approximately 45 percent of the university’s annual budget. “The Rice Management Company will allow us to have a more focused approach to governing and managing the endowment. It will also allow us to tap the experience and skills of top investment professionals across the country by bringing in outside members to the board of directors.”

The company’s business is currently conducted by 13 investment professionals and three administrative support staff members. The company’s chair and the majority of its board will be Rice trustees, and several external advisers will be elected to the board. Crownover and Rice University President David Leebron will serve as ex officio members.

Wise said the new organizational structure is essential to recruiting external experts. “Our theory was that if we approached qualified outside investment professionals who are not Rice trustees and asked them to serve on the board of directors of a management company, we would get a better response than if we approached those same people and asked them to be a member of an investment committee that reported to a board they aren’t on,” Wise said. “The discussions I’ve had with candidates for the board prove this true. Being on the board of a management company focused on the Rice endowment means something to them.”

The reorganization transferred some of Wise’s responsibilities, such as internal audit and risk management, to other administrative areas of the university. This will allow Wise and his staff to devote full attention to investment management, including asset allocation, investment manager selections and terminations, investment performance and endowment spending. The Rice Board of Trustees will continue to establish asset allocation criteria for the endowment, with implementation oversight provided by the company’s board.

“I think this is going to be exciting, challenging and provide a strong foundation for managing the university’s endowment for many years to come,” said Wise, who will continue to report to Leebron and remain part of Rice’s senior management team.

“Rice is very fortunate to have Scott overseeing its investments,” Leebron said. “Rice’s endowment fared better than many of our peer universities’ during the recent economic slump, and things should only get better now that Scott will be dedicated solely to managing investments.”

Under Wise’s leadership, Rice’s endowment has grown from $990 million in 1989 to $3.61 billion as of June 30, 2009. This reflects an 11 percent average annual compound investment return over that 20-year period. The one-year investment performance as of June 30, 2009 reflects an 18.2 percent loss as the country weathered the worst economic and market downturn since the Depression of the 1930s, plus normal spending from the endowment. During that same period, U.S. stock markets were down 26 percent and world markets were down 30 percent.

Wise has a B.A. in economics from Rice and a master’s in accounting from the University of Texas at Austin. He joined the Rice staff as comptroller in 1979. He served as associate treasurer and associate vice president for financial affairs from 1986 until 1989, when he was appointed treasurer. He has been vice president for investments and treasurer since 1992. In 2006, Wise was among the four finalists for Institutional Investor magazine’s Endowment of the Year Award.