Endowment Overachiever Leaves Money on the Table
Carthage College manager beat Harvard, but he can keep costs low and still improve returns and diversification.
It helps to spread the chips around.
Photographer: Tomohiro Ohsumi/Bloomberg
Bill Abt, who manages money for Carthage College in Kenosha, Wisconsin, is at the top of the endowment game. Using 10 Vanguard funds — the same low-cost funds available to retail investors — his 10-year return beat 90 percent of his peers. He avoided the high costs and extra risks of more sophisticated products and the need for a large staff for due diligence and monitoring.
It's a feel-good story, for sure, but it can be misleading. Not because the message is wrong — low cost, well-diversified index funds are a sensible way to invest. But there are good reasons for sophisticated investors to look beyond them. One investor over one 10-year period is meaningless.