Kathleen Browne took on the role of chief investment officer at Denison University near Columbus, Ohio, two years ago and watched the S&P 500 rise to record highs over the next several months. She was happy with the equity risk in the portfolio, but Browne, 53, started to add some exposure that might be less vulnerable to a turn in the market. So far the shift hasn’t been dramatic. Denison’s endowment, with a market value of $880 million at the end of June, has its largest allocation in hedge fund strategies, followed by public equities (22%) and private equity (20%).
Browne’s early experience managing money came from working at the pension fund for the company once known as Lucent Technologies, overseeing its alternative investments, including private equity. Before Denison, she worked as managing director of Wellesley College’s endowment for eight years. In Browne’s first full fiscal year at Denison, which ended in June, the endowment returned 8.8%. This beat powerhouses Yale and Harvard, which delivered 5.7% and 6.5%, respectively, over the same period. In an interview, Browne talks about the unusual start to her investment career and how she runs a successful endowment office hundreds of miles from the country’s financial hubs.
Janet Lorin: Tell us about your path from majoring in electrical engineering to law, where you worked as a private equity attorney, to money management.
Kathleen Browne: I’ve always been a math and science person, and I gravitated toward engineering. I became very well rounded by going to law school. I worked as a lawyer for about eight years. I joined the Lucent corporate pension fund and learned the investment side on the job. Once I found myself doing this investment management work, it all made sense. I was 35 when I went there, and I felt, This is it, I’ve found what I truly love doing. I started as a senior manager on the private equity team. Over time we folded real estate and hedge funds under me so I was the director of alternatives. At some point, I felt I was ready for the next step.
JL: What shifts have you made to Denison’s portfolio since you arrived?
KB: We’ve added some exposure that’s less correlated to public equities, and we’ve also been looking to enhance our venture capital portfolio. I think that could be a real value driver.
JL: Are you bullish on private equity?
KB: Private equity is really close to my heart because that’s where I started. I’m never not interested in private equity. It all depends on what’s in your portfolio. Even in a down market, that might be a good time to find opportunities. For a smaller investor like Denison, we may say, “That’s a good time to get in with a manager we haven’t been with before.” We’re not pulling back.
JL: How is managing money different for corporate pensions and endowments?
KB: It’s been a while since I’ve worked in the pension world so things may have changed. Pensions need to focus on their liabilities. When I joined the endowment world in 2009, I thought there would be less focus on that, but it was at the beginning of the financial crisis when endowments were suddenly facing liquidity crises, and it became a bigger focus of their portfolio management. It felt like those worlds were converging.