interview by Joan Brasher
William T. Spitz has served as Vanderbilt’s chief investment officer since 1985. As vice chancellor for investments and treasurer, he has presided over a ten-fold increase in the university’s endowment, which has grown from $300 million to almost $3 billion over the past 21 years. In 2006, the income from the endowment has provided more than $120 million to Vanderbilt’s operating budget for scholarships, faculty chairs and programs support. The Register sat down with Spitz to talk about the endowment and his impending retirement.
Q: In layman’s terms, what is the endowment and how does it work?
A: We talk about “The Endowment,” but in fact there are more than 2,000 endowments here. When a donor sets up a scholarship or a named professorship, that is an endowment. Obviously we can’t invest 2,000 separate pots of money, so we combine them into a pool to invest. Each year around 4.5 percent of it goes into the quarterly dividend payments to pay for a scholarship or professorship. If you take out the hospital, the endowment provides 12 to 13 percent of the operating budget. What’s interesting is that we can track each endowment individually, so an endowment that was worth $1 million 20 years ago might well be worth $10 million today, and we can show the donor that data.
Q: How is the endowment currently doing compared to previous years?
A: In the late ’90s and 2000, things were really great. Then in ’01 and ’02 we had modestly negative years – we were down 3.8 percent, something like that. But since that time, it’s turned around. In FY05 (fiscal year 2005) the endowment was up 18 percent, and in FY06 it was up 14 percent. That’s good news and why we are approaching the $3 billion mark. We’ve got some really exciting things happening in the portfolio right now. For example, Google is acquiring a company called YouTube, and we are an investor in YouTube. We are getting a huge return on that – probably about a $30 million gain on an investment of $100,000.
Q: It was announced in August that you are retiring. Do you know when that date will be?
A: I’ve said that I will stay on until they find my successor, and that process is just now gearing up, so I’m not sure. I’m having one of those moments in life when you step back and say, what do I really want to do next? Where do I want to live? If there are no constraints or responsibilities, what is next for me? I’ve been here 21 years, and I spent 11 years before that on Wall Street, so I’ve been doing this for 32 years. (The chancellor) came up with the best analogy I’ve heard. He said, “You feel like you’ve been running a marathon around the block.” Every quarter the clock starts again and you worry about your performance this quarter, and then you get that quarter done and you worry about the next quarter. I am ready for a break.
Q: Do you have any hobbies you’ve been neglecting or trips you’d like to take?
A: One of the things my wife and I are thinking about is moving to Europe for four or five months – renting an apartment or a farmhouse some place and just going completely away for a while. I don’t know if we’ll pull that off. We have issues, like houses and dogs and children and all that stuff. As far as hobbies, I love to play golf, and I’d like to do more of that. A lot of investment companies are approaching me about being on boards, and it’s very flattering, but I’m saying no to everything for a while. At some point I’ll need to find the next thing to do. I will definitely keep busy.
Q: You’ve heard the saying “A penny saved is a penny earned.” What’s your motto?
A: I have a lot of mottos. One of them is “When in doubt, don’t.” I say that when I want to communicate to the team that we need to do our research and have a lot of conviction before we jump into something. If you have any issues or any concerns, don’t do it. Just because something seems kind of interesting or cool doesn’t mean you ought to invest in it. Another one is “Never confuse brilliance with a good market.” What that means to me is when things are going well, you ought to be doing well, so let’s not sit around and gloat about it.
Q: What has been your greatest challenge during your time at Vanderbilt?
A: The biggest challenge is just the investment world – the rules are always changing. What worked last year doesn’t work this year, so you’re constantly having to reinvent yourself. Whether we like it or not, we are under the microscope. Every quarter our returns are ranked among 75 of our peers and published everywhere. You can imagine when you don’t do so well, people say, “Well, it was obvious you should have done this or that.” It’s a very competitive business and you have to have a psyche that can deal with the possibility of making a lot of mistakes.
Q: What has been your greatest achievement at Vanderbilt?
A: The greatest achievement is when you can see the tangible benefits of your work. I look at the students who are getting scholarships, the faculty members who are holding the chairs that we helped provide the income for, the buildings that exist because of what we’ve been able to do. The greatest accomplishment is seeing the fruits of our labor.
Posted 11/20/06