Catherine Ulozas

Chief Investment Officer Drexel University Drexel University The George Washington University - School of Business Greater Philadelphia Area 500+ 500+ connections Connect Connect with Catherine Ulozas Specialties: Asset Allocation Multi Asset Strategy As any prudent person would do, Drexel has accumulated a sizable nest egg to set itself up for the future. Its endowment, $650 million and growing, is designed to provide for scholarships, professorships and other expenses for years to come. But such a hefty sum of savings needs someone to watch over it. Who oversees Drexel’s hundreds of millions in investments, not just protecting them but helping them grow so that they can support the University more and more over time? That would be Catherine Ulozas, Drexel’s chief investment officer. After working for years as a bond trader and portfolio manager, she came to work at Drexel in 2010. She leads Drexel’s Investment Office, which along with the Board of Trustees Investment Committee manages the University’s assets. She helps select and oversee the investment managers who decide exactly where to put the endowment’s funds — including the Dragon Fund, a stock portfolio of about $1.2 million that’s managed by LeBow College of Business students. Ulozas looked up from her stock tables — though her office television remained tuned to financial news — to talk with Drexel Quarterly about how the University manages such a big pool of funds, how managing a nine-figure endowment is different from managing a retirement fund and why investing is kind of like dating. In a nutshell, what do you do for Drexel? This office manages the endowment, which is about $650 million. Specifically, we work with the Investment Committee, a subcommittee of the Board of Trustees, in developing the long-term plan for our endowed assets. We work on the investment policy, the asset allocation, what types of investments we’re going to go into, and then we specifically pick the investment managers that will help us to achieve our goals. We also have other jobs. We try to be as supportive as we can to experiential learning. We hire co-ops from LeBow College, and we’ve now had two junior analysts who have come out of the business school. I teach a class once in a while over in LeBow. And our favorite thing to talk about, of course, is that one of the managers we have in the endowment is the student-run Dragon Fund. They’ve had phenomenal results, and we very much enjoy working and helping Dr. Dorn (Daniel Dorn, associate professor) and the students in that class whenever we can. How do you determine if an investment is a good one for Drexel? The investment philosophy is driven by the Investment Committee. But my personal view is that we are stewards of the money that was given to the endowment. My first priority is always to protect the money and grow it in a thoughtful, long-term way. So our goal is to not be reactive to a specific market environment. Behavioral finance suggests that people tend to sell their assets at the bottom and buy them at the top. We try to look past short-term market fluctuations and focus on the long-term. That takes some discipline. We are also fortunate to have an Investment Committee of very active trustees who bring a lot of different experiences to the table, from company CEOs to senior investment executives. We have a great balance on the committee, and engage in lively discussions about the endowment portfolio on a regular basis. What’s it been like working with investments in the economic climate of the past five years or so? Certainly we’ve had some volatile times. We’ve been up, we’ve been down and in the past four years we’ve been sideways. People talk about paradigm shifts. We talk about being in a low-return environment. But if you looked at the stock market last year, you’d say, “What are you talking about?” What we’re seeing is a slowly recovering economy. But in these challenging times, it is very important to stick to your long-term plan. Markets react quickly to news, and things get emotional very quickly. We can see things like the flash crash (of 2010), and we all know about them instantaneously. In these times, it is difficult to sort out the market noise from the true fundamentals. Having a strong Investment Committee and well-thought-out investment and asset allocation policies help keep us focused. How do you measure how Drexel’s investments are performing? This is a multifaceted answer. We look at broad market indicators. If you’re a large-cap stock manager, you can just look at how you’re doing against the S&P 500. But we’re not just in stocks. We’re in bonds, real estate, liquid assets, as well as illiquid assets. We evaluate our portfolio as a whole. The goal here, first and foremost, is to meet our annual expenditure back to the University: 4.75 percent of the endowment. We also want to match inflation, which is estimated to be about 2.5 percent per year over the long term. But we also want to grow the endowment, at a 1 percent annual growth rate. Each of these may sound low, but that is actually pretty aggressive when you add it all together: 8.25 percent. Over the past couple of years, we made a big change in our asset allocation, and we did that so we could meet that goal. We’re taking on asset classes that may, over the long term, give us higher returns: private equity, commodities, real estate. We’re in the midst of making that shift, and it will take a little bit of time. By the way, and most students of investment will know this, but 90 percent of the return you get is based on your asset allocation. Picking your managers is only going to account for about 10 percent. It’s really about the sectors you pick: stocks, bonds, real estate and more. We do evaluate ourselves, and we evaluate our managers, relative to our specific benchmarks. How does working at Drexel compare to your work in the private sector? It is a big difference, with so many positives here at Drexel. This is a place where everyone wants you to succeed. There are so many wonderful resources to draw from. People are happy to share, which is not what you always find in the corporate world. Trustees will share information and insights, professors are always happy to chat with you and students interact with you all the time. It is really a great place to sit. The sharing of information and being in on the mission together is really refreshing. People want everybody to do well, because it’s benefitting the institution and ultimately the most important thing, the students. One of the best examples is the students who manage the Dragon Fund. We give them real money, and it’s not insignificant. It’s real dollars — $1.2 million. And we try to help. We try to connect the students with our investment managers. Also, when the students make their stock selections, we and some of our trustees attend their presentations and challenge them on their analysis. It is just like presenting to an investment committee at a money management firm. The students do a great job. What’s the best thing about your job? Honestly, the best thing about this job is the many things I get to look at and the many things I get exposed to. You get to utilize your skills, work across different asset classes, meet different people and come across different strategies, thoughts and market thought leaders. Drexel has a great reputation and people want to talk to us. That’s a great position to be in. Do people tend to ask you for personal investment advice? Yes. I usually answer by saying I’ll pull out my Ouija board and see what it says. Providing personal investment advice is not my area of expertise. Provost (Mark) Greenberg always asks me, ‘How’s the money?’ and he means that in a global sense. I’m always thrilled that he has an interest. We won’t ask you for any stock tips, then. But are there any lessons from what you do that apply to personal finance? I think that one should never marry his or her investments. For those of us who’ve been divorced, we understand how expensive that is. My recommendation is to date, instead of marrying, your investments. Remember the buy-high, sell-low tendencies of investors? When things are up, people want to keep riding the wave. But my best advice is to have your goals and rules, and stick to them. Don’t be afraid to trim your gains. And fight the temptation to invest in the latest craze that may have recently shown great performance. Top performers often have difficulty maintaining that level for long periods. As in dating, you should have realistic expectations. http://drexel.edu/now/archive/2014/July/Catherine-Ulozas-Q-and-A/