Karl Scheer – Competing Sensibly as CIO of the University of Cincinnati (EP.74)

Governance

Effective governance in investment management is crucial for success, as Karl Scheer explains. He emphasizes the importance of clear roles and responsibilities, stating that a committee's quarterly meetings are insufficient for selecting private equity managers. Instead, discretion within the investment office is vital, allowing them to hire and fire managers and manage exposures within pre-approved ranges 1.

It is necessary but insufficient to have success. You can't have success with a bad governance structure.

--- Karl Scheer

The investment committee's role is to approve strategic asset allocation ranges and risk levels, ensuring accountability and effective oversight 1.

   

Collaboration

A collaborative culture between the investment office and committee is essential for effective governance. Karl Scheer highlights the importance of transparency and communication, ensuring that the committee understands the rationale behind investment decisions. This approach prevents micromanagement and fosters a productive relationship 2.

The value is in the discussion. So you have to have a well-informed group of participants.

--- Karl Scheer

By conducting information sessions with committee members, the investment office can provide detailed insights without seeking approval, maintaining clear lines of responsibility and encouraging informed feedback 3.