February 22, 2006

Fehrs '77 Leaves Rich Legacy

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Cornell’s recently resigned Chief Investment Officer Don Fehrs ’77 has not yet announced his next career move, telling the Cornell administration he will try to stay until his successor can be brought smoothly into the position. While a new CIO has not been chosen, Stephen Golding, executive vice president for Finance and Administration, said a national search is currently underway, and that Cornell is “conducting the search in a timely manner.”

Golding told The Sun that he commended Fehrs on his time as CIO and said he was “very grateful to Don for his contributions.” Golding said the resignation was “Don’s decision,” but Fehrs has not yet specified reasons for resigning. Fehrs told The Sun “It was a personal decision to leave,” and went on to explain the situation as a weighing of choices – “Of course, it is a very challenging position. At some point, you ask if these are the challenges you are willing to take on, or if it is time for something new.”

Since taking over the position in 2003, Fehrs has expanded and deepened operations in the investment office on multiple levels. Fehrs and his investment team decided on four main priorities for the office at the start of his term, each of which has experienced considerable success in the past three years.

The first priority, to increase the size of the staff, translated into a growth from five staff members to fifteen. The next two, to increase the level of analysis, and to diversify the portfolio, can best be illustrated by the office’s ‘before’ and ‘after’ agenda books. ‘Before’ is a flimsy ream of papers, thinner than a one-subject spiral notebook. The current ‘After’ agenda book is a thick book, roughly the size of an organic chemistry textbook. As for the fourth priority to increase the level of performance, Cornell’s endowment has risen from under $2.8 billion to its current level above $4 billion, in the three-year period ending Dec. 31, 2005, while the rate of return on investments rose almost 16 percent. The S&P 500, by comparison, rose only roughly 13 percent in this time frame. Fehrs attributed these successes both to market conditions and efforts within the investment team.

“You should never judge the success of investments over a short period, over just a few years,” cautioned Fehrs. He pointed to the structural changes made within the office as being equally significant accomplishments as the success of the investment portfolio. He waited until later to say that “as a result of the success of the last few years, payout from the endowment will increase,” which means, for one thing, less university reliance on tuition money.

Fehrs’ resignation comes close to the opening of the public phase of Cornell’s fourth capital campaign, which began in 2004 and is projected to end in 2011. When asked if the resignation puts any of the investment side of the campaign’s efforts in jeopardy, Laura Toy, interim vice president for Alumni Affairs and Development, said “No, nothing is at risk. The investment is handled by the entire investment team