Boston University Investment Office

Boston University Investment Office is the internal administrative unit responsible for managing the endowment and other long-term financial assets of Boston University (BU). Established in 2007, it oversees the university's investment portfolio, aiming to balance present financial needs with the preservation of endowment principal for future generations. As part of its mandate, the office plays a key role in supporting institutional priorities such as academic programs, research initiatives, student financial aid, and campus infrastructure.

Boston University Investment Office

Company type	Private
Industry	Investment management
Founded	2007 (2007)
Headquarters	122 Bay State Road, Boston, Massachusetts, U.S.
Key people	Lila Hunnewell (Chief Investment Officer)
AUM	US$3.64 billion (FY2023)
Owner	Boston University
Website	www.bu.edu/investments/

History

The establishment of the Boston University Investment Office in 2007 marked a strategic decision by the university to centralize its endowment management functions. Prior to this, the endowment was largely managed through external consultants, resulting in fragmented oversight and limited internal expertise. By creating an internal office, Boston University sought to align investment strategies more closely with its long-term financial and academic goals.

Since its inception, the office has undergone significant development, particularly under the leadership of Chief Investment Officer (CIO) Lila Hunnewell, appointed in 2011. Hunnewell, previously associated with Cambridge Associates, implemented modern portfolio theory, diversified asset allocations, and integrated environmental, social, and governance (ESG) considerations into the investment process. Such approaches are consistent with broader trends in higher education endowment management, as noted by independent analysts and industry studies.

Mission and Governance

The Investment Office's mission is to sustain the real value of the endowment while providing a stable annual distribution—commonly around 4% of the portfolio's market value—to support the university's operating budget. This approach is intended to benefit current and future generations of students and faculty, a method consistent with industry best practices aimed at intergenerational equity.

Governance is overseen by the Board of Trustees’ Investment Committee, composed of trustees with financial expertise, external advisors, and academic leaders. The committee sets strategic investment policies, approves asset allocation targets, and monitors performance. In turn, the CIO and staff implement these strategies, conducting due diligence on asset managers, monitoring performance, and managing portfolio risk. External consultants and fiduciary advisors provide additional layers of expertise, a practice aligned with many peer institutions.

Investment Strategy

The Boston University Investment Office employs a diversified, total-return investment strategy, incorporating traditional equities, fixed income, and a range of alternative investments such as hedge funds, private equity, venture capital, real estate, and natural resources. This broad asset mix is standard among large university endowments, as reported by industry analyses including NACUBO and the Commonfund Institute.

The office employs rigorous risk management techniques, including stress testing, scenario analysis, and performance attribution to ensure that its strategies remain aligned with BU's risk tolerance and long-term objectives. These measures are considered industry-standard approaches to maintaining portfolio resilience across market cycles.

Financial Performance and Impact

During periods of economic volatility, such as the 2008 global financial crisis and the COVID-19 pandemic, BU's endowment management strategies contributed to financial stability. Annual distributions fund scholarships, endowed faculty positions, research, and infrastructure, enhancing the university's competitiveness as a research institution. As of FY2023, BU's endowment stood at approximately $3.64 billion, consistent with trends in higher education where well-managed portfolios often yield long-term gains.

Responsible and Sustainable Investing

The Investment Office integrates environmental, social, and governance (ESG) considerations into its investment decisions, in line with evolving industry standards and stakeholder expectations. This has included evaluating carbon footprints, supporting renewable energy projects, and engaging with asset managers on ESG issues. While the university has not fully divested from fossil fuels, debates persist on campus and among external advocacy groups.

Transparency and Reporting

The Investment Office commits to transparency and accountability by publishing annual financial statements and endowment performance data. External organizations that track nonprofit and university financial practices, such as GuideStar and the National Center for Education Statistics, offer additional context and benchmarks. While direct disclosures may not always provide granular details on specific holdings, analysts and observers often rely on these documents, along with independent media reports and industry surveys, to assess the university's investment strategies and outcomes.

In this manner, the Boston University Investment Office aligns with the broader landscape of university endowment management, balancing fiduciary responsibility, academic mission support, and evolving stakeholder expectations.