Our first rule
of decision-making is "Do no harm."
We believe that risk
management is an integral part of investment strategy, not a separate function
within an investment office that produces neatly quantified statistics and
reports. At RMC, risk management is embedded
in every decision we make: which
managers to partner with, which projects to pursue, which employees to hire,
and most importantly, how to spend our most limited resources: our time and attention. RMC integrates risk management with
investment strategy to protect the large endowment entrusted to our care.
We are inspired by our mission,
humbled by its nobility, and motivated to achieve it.
From inception, the
University has had the goal of educating those who would otherwise not have the
opportunity. Rice has, and has always
had, 100% need-blind admission; therefore, the endowment supports a large part of the University's
annual operating budget each year (>=40%). Appropriate investment
strategy and risk management decisions are crucial to supporting the mission of
Rice. A majority of RMC's staff members,
including our CIO, benefitted from educational scholarships.
We are keenly aware that
investment management is a support function, not an end in itself.
The University's risk
tolerance is key to how we construct our portfolio, and RMC works closely with
the University to understand and help shape the institution's goals and its
consequent risk parameters. The CIO of
RMC also serves as the University's Treasurer, and many of RMC's board members
also serve on the University's finance committee. This high degree of collaboration and
cross-functional oversight ensures that RMC's investment strategy is
contemplative of and aligned with all the University's stakeholders, both
present and future.
Our most important risk tool is
understanding the drivers of return in every investment we make.
Many risks are present in
an investment portfolio: equity, credit,
leverage, and illiquidity are just a few of the risks present in (and often
necessary to) owning a portfolio that generates sufficiently high return to
meet the needs of the University and to protecting intergenerational equity for
future students. No one measure of risk
is sufficient or advisable. At RMC, we
continually monitor our investment strategy and risk framework in light of the
myriad risks that exist. Portfolio risk
is neither neatly nor wholly quantifiable, but we believe that it is largely