Penn chief investment officer to step down
Kristin Gilbertson has transformed Penn's endowment portfolio over the past eight years
October 15, 2012, 9:51 pm·
Kristin Gilbertson — the woman who helped drive the transformation of Penn’s endowment portfolio — announced her decision to step down from her position as chief investment officer Monday.
Gilbertson was appointed the second CIO in the University’s history in 2004 to oversee the management of the then-$3.9 billion endowment.
As of June 30, Penn’s endowment was valued at $6.8 billion.
David Harkins, Penn’s managing director of public markets, will serve as interim CIO while President Amy Gutmann and Executive Vice President Craig Carnaroli conduct a nationwide search for the next CIO. Gilbertson will be staying on in an advisory role until Dec. 31 to facilitate the transition.
Gilbertson attributed the decision to her feeling comfortable leaving “at such a good place.”
“When I came here in 2004, Penn was a great school with a phenomenal reputation, but the endowment was a late-bloomer,” she said. “The opportunity to take an Ivy League endowment, to build a portfolio and to do that with the reputation of the school behind you … was a fantastic opportunity.”
Gilbertson added that getting the endowment to where she wanted it took longer than expected, but summed up her office’s achievement over the past eight years with two words: “mission accomplished.”
When she arrived at Penn, the University’s portfolio was still in its early stages of development, while peer institutions had already begun to hire CIOs and diversify into emerging alternative asset classes, such as hedge funds, private equity, real estate and venture capital.
While Penn’s equity-centric orientation served the endowment well in the 1980s, its investments did not perform strongly relative to its more diversified peers during the venture capital boom in the late 1990s.
The University hired its first CIO, Landis Zimmerman, in 1998 under then-President Judith Rodin’s leadership and began to build an investment office and portfolio.
Penn has since gone on to become one of the few Ivy League institutions that has seen its endowment recover from the pre-recession value. The University’s investments were also a top performer throughout the financial crisis, with a negative return of 16 percent in fiscal year 2009, compared to losses of 27 and 25 percent at Harvard and Yale universities, respectively.
“I’ve been at Penn for eight years now, and it was a great challenge when I arrived,” Gilbertson said. “I think we’ve really vindicated ourselves during the financial crisis and we have a tremendous portfolio, and it’s in better shape than it was when I arrived.”
Carnaroli also reflected on the vital role Gilbertson has played in the evolution of Penn’s portfolio.
“She really helped turn around the perception of the Penn endowment as an average performer to a much stronger performer based on her vision and leadership,” he said.
According to Carnaroli, one of the key things Gilbertson has accomplished is the expansion of the investment office from five managers to 18, with a higher staff retention.
Gilbertson said she is not yet sure what she will do after she leaves Penn, but plans to take some time off to travel.
Both Gilbertson and Carnaroli agreed that the portfolio is well-positioned for the next CIO to take over.
“Frankly, if you don’t like the portfolio, it’s liquid — you can sell it and do whatever you want,” Gilbertson said. “I think it’s an enviable portfolio that any CIO would love to have.”
She added, “I think the Penn endowment is not going to miss a beat.”