Investment team lands endowment in the spotlight

Nichols pioneered strategy that has helped fund grow to $1.3 billion

For 19 years, University Treasurer Jim Nichols and his staff have managed an Ohio State endowment fund that has grown to $1.3 billion and enjoyed a robust 20 percent return over the fiscal year ending June 30. Nichols admits individual investors want to know his secret.

"We're not doing anything too risky to get these kinds of returns," he said. "We've just made some correct decisions."

Noting that the University's risk level is considered average, Nichols cautions that institutional investing is a lot different from individual investing, which normally has limits such as retirement and death. The endowment -- money given to the University by alumni and friends for a wide variety of purposes -- is a permanent investment fund, of which the core is never spent, Nichols said.

And the endowment is actually older than the University itself: It was set up as part of the land grant act of 1862. It currently comprises more than 2,800 individual funds.

University Treasurer Jim Nichols has helped manage the University's endowment for 19 years.

The conclusion of the five-year "Affirm Thy Friendship" fund-raising campaign and recent media coverage of Nichols' investment techniques have raised Ohio State's profile in money management arenas.

Nichols and the University's investment process were featured in the September issue of Foundation & Endowment Money Management. He actually pioneered a now-popular investment concept in the early 1990s that is commonly known as core/satellite strategy. He said the size of the University's endowment opened the door for the policy -- which balances core investments in index funds with less efficient, lower-correlating and sometimes riskier asset classes managed by professional investment firms. The core position of the endowment is made up of fixed-income (15 percent) and real estate (3.4 percent) portfolios which are actively managed, and equity split between active and passive management.

Rounding out Ohio State's portfolio are domestic equity (74.1 percent), international equity (6.4 percent), venture capital (0.6 percent) and cash (0.5 percent).

Over the years, Nichols said, he's seen significant changes in the University's portfolio.

"For one, we've taken a greater equity position in the market," he said. "We've also grown in size to the point where we're able to add some additional asset classes that we have not been able to include in the past, such as international equity and venture capital."

While the core is never touched, Nichols said the endowment is "a dynamic fund," with gifts coming in and distributions going out at all times. Last year, the amount distributed to colleges and departments was $45.7 million. That amount is based on a percentage of the market value on a three-year moving average, which guards against market highs and lows, Nichols said. Of that, $13.1 million went to support department chairs, professorships and the Eminent Scholar Program; $11.1 million supported general education and libraries; and $10.4 million supported scholarships, awards, grants and loans.

The total impact of the University's "Affirm Thy Friendship" campaign on the endowment was $402.2 million, said Gary Kitsmiller, assistant vice president for development. That includes $238 million in cash gifts added during the campaign, $110.6 million in planned gifts to be added at the end of the campaign and an additional $53.6 million in outstanding pledges.

Gifts come from many sources to honor individuals and to establish specific funds to support a college or department. Bringing the stories behind the gifts to life often encourages others to give to the University. Examples of some of those stories and funds are:

• Lisa Mandalfino was a physician at Children's Hospital, and her husband Dominic Mandalfino was a chief resident at OSU Hospitals. After the couple died in a plane crash in 1991, gifts from the couple's family and friends established the Dominic and Lisa Mandalfino Memorial Fund to support resident research and projects in the Department of Anesthesiology.

• The Harold E. Burtt Chair in Industrial Psychology Fund was set up in June 1990 by Frank Stanton, former CEO of CBS, to honor Burtt on his 100th birthday. A faculty member at Ohio State for 41 years, Burtt was chair of the Department of Psychology for 22 years and an accomplished ornithologist and expert fencer. He developed a psychological evaluation for WWI soldiers and, in concert with Stanton's doctoral dissertation, developed for radio the original technique and hardware for the Neilsen ratings. Burtt died in 1991 at age 101.

• Nelson Lancione, looking for a suitable tribute to his parents, established the John B. and Elizabeth Lancione Memorial Scholarship Fund in November 1975. The income provides scholarships for undergraduates, with preference to students from Belmont County in eastern Ohio.

• The MerryMakers Club of Columbus, a minority fraternal group, established a fund in October 1988 to provide scholarships for the National Achievement program for minorities. It is called the MerryMakers Club of Columbus, Inc. Endowment Fund.

The endowment office employs 19 investment managers -- including four minority managers -- to oversee 94 percent of the total assets, while a five-member internal team manages the remainder in cash and other assets. An investment committee of five people, including three members of the Board of Trustees and two members of the University Foundation's Board of Directors, oversees the endowment's investment activity. Nichols makes the recommendations to the investment committee, which are subsequently approved by the trustees. He said the emphasis is on long-term investments, with a committee conducting yearly asset allocation reviews.

"You've got to stick to your game plan," Nichols said. "We can't try to react to month-to-month market changes."

The rate of return on the endowment ranks very favorably with other universities. Over the fiscal year ending June 30, 1999, the return on Ohio State's endowment was 15.5 percent, while the average at its peer universities stood at 11.2 percent. Big Ten schools reported an average return of 11.6 percent. Over a three-year period, the return was 17.9 percent at Ohio State, 16.4 percent at peer universities and 16.6 at Big Ten schools.

Responsible for managing a $1.3 billion fund, does Nichols feel any pressure?

"The reporting deadlines are the most difficult. There is pressure around the office as we prepare our regular reports to donors or monthly reports to the Board of Trustees," he said. "As for the investing area, I actually don't feel as much pressure, because investing is a long-term strategy."

Vocal alums invited back for gala

Former vocal students will return for an Ohio State encore on Oct. 28, when the School of Music sponsors Alumni Gala 2000: A Grand Night for Singing.

Five distinguished alumni will take the stage of Weigel Auditorium for a concert featuring a repertoire ranging from classical Mozart to modern Gershwin. More than 250 current music students will participate in the performance, several emeritus faculty members will be honored, and a new fund to support student performances will be introduced.

This is the first time the School of Music has invited alumni back for a gala concert.

"I think it will have the feel of a very special event. It's a chance to share with the community and with the University what the School of Music has accomplished," said Karen Peeler, director of the school's vocal program. "We have graduated a tremendous number of fine vocalists over the years and we thought it would be nice to acknowledge them."

All of the featured singers are professionals working with major operas here and abroad. The performers are mezzo-soprano Diane Kesling, sopranos Barbara Daniels and Theresa Cincione, and baritones David Templeton and Eric McKeever. Kesling, Daniels and Cincione earned bachelor's degrees from Ohio State, while Templeton and McKeever have master's degrees.

The OSU Symphony Orchestra, under the direction of Marshall Haddock, will accompany the singers, and the Ohio State Chorale, Symphonic Choir and the Men's Glee Club, directed by James Gallagher and Hilary Apfelstadt, will perform chorus numbers.

"We think it's a benefit to our students because they will be singing music they wouldn't normally get a chance to do. For example, the Men's Glee Club will be singing the ÔSoldiers' Chorus' from Faust," Peeler said.

Other pieces scheduled to be performed are: the "Grand March" from Aida, "Cruda sorte" from L'Italiana in Algeri, "Depuis le jour" from Louise, "By Strauss" from An American in Paris, "Votre Toast" from Carmen, "Largo al factotum" from Il Barbier di Sivglia, "To This We've Come" from The Consul and "Brindisi" from La Traviata.

Emeritus faculty members to be honored during the gala include Mario Alch, Maurice Casey, Irma Cooper, Paul Hickfang, Marajean Marvin-Huling and Helen Swank.

"We wanted to show appreciation to our emeritus faculty who helped those performers get to where they are now," Peeler said.

The gala will include a kickoff for the Irma Cooper Fund for Student Enrichment, named for Cooper, a former Ohio State voice professor. The new fund will assist music students who want to participate in opportunities such as auditions, contests, workshops and summer festivals.

"Irma Cooper has probably done more than any other individual to assist area students in opera," Peeler said. Cooper helped found the American Institute of Musical Studies in Austria in 1967, which trained young American students for opera careers, and is a founding member of Opera/Columbus.

Peeler hopes the concert will serve as an inspiration for current students. "It's good for our students to see that people who have traveled the same path that they are on now have been magnificently successful," she said. "Every student on stage can look up to those alumni as role models."

Several events will be held in conjunction with the concert. A free symposium, "Mentoring the Young Professional Singer," will be held from 10 a.m. to 12:30 p.m. Oct. 28 in Weigel Hall Auditorium. Speakers include the alumni guest artists as well as Gayletha Nichols, executive director of the Metropolitan Opera National Council Auditions; William Russell, general director of Opera/Columbus; Nora Sands, director of the American Institute for Musical Studies; and moderator Christopher Purdy, executive director of WOSU Classics Network.

Alumna Daniels will lead a vocal master class, and will participate in a question-and-answer session at 3 p.m. Oct. 28 in 109 Hughes Hall.

Tickets for the gala are $25 general admission; $18 for OSU faculty, staff and Alumni Association members; and $15 for senior citizens and students. Call the Wexner Center ticket office at 292-3535.

Theatre institute establishes movement arts/mime collection

Ohio State's Jerome Lawrence and Robert E. Lee Theatre Research Institute has announced the establishment of a specialized Mime and Movement Arts Collection.

Focusing on the work of the modern mime master Marcel Marceau, the collection will document the emergence of mime and movement arts in the second half of the 20th century as a major performance genre, due in large measure to the popularity and genius of Marceau.

Marceau began his mime performances in 1946, studying with the master Etienne Decroux at Charles Dullin's School of Dramatic Arts in Paris. Marceau created his universally recognized character, "Bip," in 1947.

Since establishing his own company in 1949, Marceau has performed around the world, both as a solo mime and in his "Mimodramas" -- full-length evenings of mimed performances. He has made many film and television appearances, and his paintings and drawings have appeared in books, as well as in major exhibitions.

Marceau will be artist-in-residence at Ohio State's Department of Theatre in the spring of 2001, the third time he has taught workshops in the department in the past several years. He received an honorary doctorate from Ohio State in 1998.

In addition to documentation of Marceau's career, the Lawrence and Lee Institute is collecting materials on Marceau's predecessors, and on the many artists -- both traditional mimes as well as movement artists -- for whom he has been a major influence and inspiration. More information can be found on the Web at www.lib.ohio-state.edu/OSU_profile/triweb/.

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