Ever since its inception four years ago, the entirely student-led Centre Investment Society has experienced positive rates of return, including an impressive 10 percent in its first year of existence.
To recognize the significant role he played in helping the society acquire its initial portfolio, the student organization will now be known as the Paul W. Chellgren Investment Society. The change comes at an important moment in the College’s history, with the endowment reaching a new and impressive milestone, surpassing $300 million.
It was the Centre College Board of Trustees Investment Committee, chaired by Chellgren now for 14 years, that decided in 2013 to allot $100,000 from the College’s endowment for the students to invest. Since then, the fund has seen a 7.31 percent annualized rate of return and has a current account value of $131,814.
The name change was strongly endorsed by Centre President John A. Roush and shared in a message to Chellgren by current Investment Society president Mark Dill, a rising senior economics and finance major from Lexington, Kentucky.
“President Roush consistently states that Centre is a place where important conversations can and do occur,” wrote Dill. “We firmly believe that your work to create the Investment Society has provided a valuable forum for students to learn, question and engage with each other about investing and much more.”
According to Dill, co-founders Bryce Miller and Clark Gairing, who made the original proposal to the trustees in 2013, supported the name change wholeheartedly.
“The Investment Society could never have been founded without Mr. Chellgren’s support, and for that we will be forever grateful,” said Miller. “Generations of students for years to come will benefit from the trust that Mr. Chellgren placed in a handful of students.”
In addition to echoing his gratitude, Gairing also credited trustee Kevin Taylor, current chair of the Finance Committee, for his support.
Allowing students to manage a portion of the institution’s endowment is fairly unique to Centre and is an idea that Chellgren easily embraced for many reasons, not the least of which is because of its educational value.
A trustee since 1992, Chellgren’s now quarter-century of service on the board has not gone unnoticed nor unappreciated.
“Paul represents the kind of excellence we are fortunate to have in our trustees,” said Roush. “Sitting in an Investment Committee meeting chaired by him is like having a front-row seat at any of the nation’s finest business schools. What we’ve achieved from an investment standpoint under his guidance is simply best practice.”
And the numbers speak loudly and clearly.
Chellgren has chaired the Investment Committee since 2003, when the College’s endowment stood at $129.4 million. Thanks to his leadership and guidance—as well as sound fiscal discipline and the many donors who have made generous gifts and bequests—the endowment currently sits at $301.1 million, a 133 percent increase.
Besides contributing to this significant increase to the endowment, investment portfolio growth contributes directly to the annual operating budget, and over the last 14 years has done so to the tune of $116 million. An additional amount, $34.5 million, has gone to support capital budgets.
With his trademark humility, Chellgren said of the recognition, “I am flattered and honored, and also a bit surprised with this action, because I’m not sure if one person should be singled out for a team and group effort.”
In fact, Chellgren credits the quality of the Investment Committee, and a subcommittee authorized to act between the College’s three annual trustee meetings, for Centre’s consistent ability to outperform benchmarks established by the National Association of College and University Business Officers (NACUBO).
The sheer tenure of his committee colleagues is equally important, he said. “Longevity offers a longer term outlook that helps with a consistent investment strategy over market cycles, especially the kind we experienced in 2008.”
Chellgren also emphasized the seriousness with which he and his colleagues invest endowment resources in their role as fiduciary stewards of the College’s assets. “In reality, we hold ourselves to even higher standards than we might when investing our own funds,” he said.
Asset allocation is always the biggest challenge, Chellgren admits, and since the market recovery began in 2009, he has favored investment in U.S. equities, with attention to index funds, where the College portfolio has been over weighted, as well as in private equity.
When he cycles off as chair at the October 2017 trustee meeting, Chellgren is sure the good work will continue, though with most analysts predicting a low-growth phase, with rates of return potentially limited to 5-7 percent in the foreseeable future, he knows there will be challenges.
“A focus on asset allocation and measurement against benchmarks will always help,” Chellgren said. “We may also need to shift the balance between U.S. and international equities, and consider expanded and new alternative investments.”
Whatever the strategy, Chellgren calls the investment portfolio “the financial engine of the College,” and one he is confident will keep growing.
“Thanks to his leadership of our portfolio,” Roush emphasized, “thousands of students have been prepared for meaningful lives of work and service. In the end, that’s the most important metric of success.”
by Michael Strysick
June 1, 2017
Photo credit: Snow Phipps Group, LLC