In his Oct. 29 letter, “Duke sustainability requires endowment transparency [1],” Mikael Owunna showed an extremely limited understanding of investment management and the ethics involved. It is alarming that any one should seek knowledge of Duke University Management Company’s investment holdings in order to pursue a witch-hunt against them. The idea that DUMAC should be some kind of activist fund that only invests in cow-dung reprocessing communes and free-trade coffee distributors is highly ironic considering our intellectual wealth is in part a result of a far more realistic investment strategy. If Owunna got his way, we might be forced to live with far lower returns on the endowment over the next few years, a frightening prospect considering our present budget short-falls.
Somehow I think that professional money managers might be better at managing money than 20-something kids too blinded by saving the world to worry about the University’s financial solvency. If those who seek transparency do so because they expect to find investments in Sudanese arms manufacturers and DDT dumpers, they are extremely naive about the nature of transparency. The reason why DUMAC and the majority of good investment managers keep their holdings and strategies secret is because public knowledge would cause them to lose their edge. These are investment strategies developed by highly trained and experienced professionals—many who have a Ph.D.—that can be executed successfully only when others have no knowledge of them. It’s not that DUMAC is hiding their holdings because they are unethical; it’s simply because their returns would be in jeopardy when others learned of the strategies.
Finally, Owunna’s suggestion that DUMAC should refrain from investing in utility companies because they operate a coal-fired power plant is ridiculous considering many U.S. utilities own coal-plants. What’s next? DUMAC shouldn’t invest in any pharmaceutical companies that use animal testing? That’s pretty much all of them. As you can see, investing is done best when left to the professionals.
Kevin Mulhern
Trinity ’12
Links:
[1] http://dukechronicle.com/article/duke-sustainability-requires-endowment-transparency