How one of Europe’s biggest university endowments is run
Stefano Caselli, the dean of SDA Bocconi School of Management and a member of the investment committee of Bocconi Endowment Management, explains why his university is an outlier within Italy and Europe at having such a fund, how it is run and why he thinks more European universities will consider them (Francesca Volpi/Bloomberg)
Good morning. A few weeks ago we looked into the endowments at European universities - which are, to begin with, fairly few and far between.
This week we kick things off by speaking to one of the people who runs such a fund: Stefano Caselli who is dean of SDA Bocconi School of Management, a professor of banking and finance and a member of the investment committee of Bocconi Endowment Management, which runs one of the larger such funds in Europe.
The entity Bocconi Endowment Management was set up in 2023 (the fund itself was set up in 2008 and manages in the order of $800mn).
Why does Bocconi University have such a large endowment? Well, it was itself set up in 1902 by department store magnate Ferdinando Bocconi and, as Caselli says, it is a private institution - whereas many of Italy’s other top universities are public and state-funded.
It probably also helps being a university that specialises in economics and finance.
Caselli said: “Being a private institution means we can decide on a model of management for the university that is totally aligned with best practice.
"Every day we have to demonstrate our value and the healthy management of the university's finances.
“We decided to start the endowment in 2008 to manage the surplus we were creating and to generate more value that could be reinvested into the university.
"The purpose of the endowment is not to cover losses, it is to generate a yield to reinvest in tuition waivers for students or on any strategic investment the university wishes to do in the future.”
Many universities in Europe are state-funded but governments are facing financial pressures associated with factors such as ageing populations.
Caselli said the long-standing position of state universities meant discussing endowments could trigger a “cultural shock” but he said in his experience the topic was increasingly being discussed.
He said: “Having an endowment is not against the concept of a state university. It can promote your ability to have an impact.
“It will support your DNA better and it is this narrative that we have to promote more.”
As a reminder, here is how Bocconi’s allocation compares:
Caselli said the endowment does not make short-term tactical adjustments but it does behave much more similarly to a US university than some of its European peers.
He said: “The Yale model is very close to the philosophy behind Bocconi’s endowment, because it is genuinely long-term in nature, based on strong governance, on strategic rather than tactical asset allocation, on selecting high-quality managers, and on building long-term partnerships with them.
“We also share the view that an endowment can appropriately hold a degree of illiquid investments.”
But, Caselli said, there are some key differences between the Yale model and how Bocconi manages its endowment.
He said: “First, our exposure to private equity and venture capital is probably more limited. At Bocconi, it does not exceed 25 per cent of the portfolio. This reflects a more cautious approach to illiquidity and concentration, consistent with the scale and institutional role of our endowment.
“Second, the liquid portion of the portfolio is managed through passive strategies rather than active managers and through security selection. This choice reflects a preference for simplicity, diversification, cost efficiency, and transparency in the liquid book. And to consider that long-term markets self-adjust ove-weights.”
The endowment also acts as a limited partner and does not invest directly in companies.
On whether Bocconi would move to a different model, Caselli said he did not see it happening “at the moment”.
But he said: “My personal opinion, as a professor of finance, is that what I see around the world is that the trend is towards co-investing. Many LPs will invest in companies if they have the option of co-investing.”
