Case Study: Establishing the New Standard for Endowment Management (Part 1)

I reached out to two very different schools earlier this year to recruit a co-author for my research in quantitative finance and explore how we could further collaborate: 1) New York University (“NYU”) with an already established and highly reputable department of risk engineering, and 2) my alma mater, Louisiana State University (“LSU”), to determine whether they had the will to establish such.

When I reached out to the NYU Department of Finance and Risk Engineering (which interestingly falls under the Tandon School of Engineering as opposed to the Stern School of Business), I learned that their chair had recently passed. The interim chair, Dr. Agnes Tourin, expressed sincere interest in collaboration but was concerned about the timing given the transient circumstances of the department…

Concurrently, I reached out to the LSU Office of Research and Economic Development requesting they connect me with mathematics or physics faculty with an interest in interdisciplinary studies, the only people I expected would possess the mathematical chops to understand my work. Instead, they introduced me to the Dean of the E.J. Ourso College of Business, Dr. Jared Llorens. He quickly looped in the Department of Finance, its chair and senior faculty. Among them was Dr. Kurtay Ogunc, the Director of Undergraduate Studies & Research who had been working in both the public and private sectors for over three decades…

Kurtay has two graduate degrees: Master of Applied Statistics (Binary Choice Models and Bayesian Theory) and PhD in Decision Sciences (Asset Management, Stochastic Processes and Econometrics).

His research has been published in the Journal of Financial Transformation, Journal of Investment Consulting, Review of Quantitative Finance and Accounting, International Review of Financial Analysis, Journal of Behavioral Finance, Investments and Pensions Europe, Global Pensions, and Handbook of Corporate Governance.

Kurtay employed his quantitative expertise as investment manager of the LSU endowment from 1994 to 2000. He later served as senior researcher and consultant at Watson Watt & Company (now Willis Towers Watson) in Washington, DC before taking the role of senior investment officer for risk management and asset allocation in the Mayor's Office for Pensions and Investments at the New York City Retirement System ($100 billion AUM).

Since meeting Kurtay, it’s been off to the races…

Every ambitious initiative I hoped to pursue with LSU, Kurtay had already been working towards—with limited support—for years:

Kurtay created and serves as the Director of LSU’s Asset Management Academy. He developed the second discipline in asset management program for math majors. He serves as faculty advisor to asset management program students, all undergraduate finance majors and the Quantitative Finance Club, which he created for high-achieving students from various fields such as math, computer science, economics, finance, et al. He also works with Honors College students on their theses.

Kurtay just needed an equally motivated collaborator with similar expertise, vision, and values to help his initiatives—and LSU as a whole—realize their ultimate potential. After reading my paper and quickly into our first conversation, he was as thrilled to meet me as I was to meet him.

To gain a better understanding of each other’s work, he asked to see examples of Adagio’s risk analytics reports, structures, and performance, and he shared his research with me. As we dove into all of it, I expressed my frustration with the current best practices of institutional finance. To my surprise, not only did he share them, but he suggested that we collaborate to take the best from our respective research and asset management expertise to establish a Center for Quantitative Finance to assist pension funds and endowments in replacing uncertainty with best practice processes and techniques to improve their risk-adjusted performance… and to make LSU’s endowment the standard-bearer.

After reaching out to and determining several key asset manager LSU alumni greatly appreciate and support our effort, we have initiated engagement with the office of LSU President William Tate…

Over the following weeks and months, I will post updates on our efforts as a case study for meaningful change in the world of institutional finance.

In the meantime, everything I know has been distilled into The Shadow Banker’s Secrets: Investment Banking for Alternatives book and masterclass. It was written for everyone from smart non-financial professionals to chief investment officers. If you’d like to create and manage capital like the most sophisticated financial institutions in the world, order your free copy of the book and read it to get introduced to the financial engineering principles you’ll need for a productive conversation, then schedule your free private consultation.