In October 2021, administration of Harvard’s charitable trusts, pooled income funds, and annuities transitioned from the Trusts and Gifts team at Harvard Management Company (HMC) to TIAA Kaspick. A longtime leader in planned gift management, Kaspick partners with nonprofits nationwide, including many colleges and universities. The Kaspick investment team now manages the University’s three pooled income funds as well as the charitable remainder trusts and charitable lead trusts that are not invested in Harvard’s endowment. We spoke with Kaspick’s chief investment officer Abby Mason AB ’80, MBA ’87 and Damian Uebelhoer, former chief trust officer at HMC who now serves as senior director of investment strategy and asset management for Harvard Alumni Affairs and Development, about their respective roles and their partnership in managing Harvard’s trust investments.
Can you tell us about your experience managing trusts and other planned assets?
Abby Mason: I joined TIAA Kaspick in 1995 as the CIO and have held that position ever since. Our team of 17 investment professionals is responsible for managing over $9 billion in planned gift assets. Many of us at Kaspick have 10 or more years of experience, which means we’ve worked together through many different market environments and managed every type of planned gift.
Damian Uebelhoer: I have over 15 years of generalist experience investing trust portfolios across public equities, fixed income, and alternatives. Before joining the University team in 2021, my work at HMC began back in 2007 with the trusts and gifts group. My responsibilities leading the investment function included investment research, strategic and tactical asset allocation, portfolio construction, fund selection, financial modeling, trading, and risk management. I also served as a portfolio manager for more than 200 charitable trusts invested in the tax-efficient investment strategy. I’ve worked closely with gift officers and donors to help structure customized planned giving solutions. Over the long run, we’ve been successful in delivering superior performance that has exceeded market benchmarks with lower volatility.
What are your roles pertaining to the investment of Harvard’s trusts and how will you work together?
AM: The investment team at Kaspick is responsible for designing the portfolios and conducting all related trading and execution activities. In that work, we leverage Damian’s extensive experience managing trusts and his deep knowledge of Harvard’s program. The University investment committee oversees our work and our results.
DU: While I will continue to play a critical role in advising Kaspick and as a member of the investment committee, having Kaspick support portfolio execution and trading allows me to focus on strategic opportunities to build and enhance other aspects of the University’s giving program.
What are the different ways that Harvard trusts can be invested?
AM: Trusts can be invested in two ways. First, many trusts are invested in Harvard’s endowment—and that has not changed. The endowment option is available to donors who name the University as the sole remainder beneficiary of their charitable remainder trust. It provides those donors with access to the sophisticated investment strategies employed by HMC. However, for tax purposes, the payout for endowment-invested trusts is treated, essentially, as ordinary income. The second way is to invest a trust in one of three tax-efficient investment allocations that Kaspick manages. We worked together with Harvard to develop these strategies, designing them to have the same risk and return profiles as prior tax-efficient portfolios. These portfolios are invested exclusively in low-cost mutual funds—primarily index funds—and we manage the portfolios in a tax-efficient way, so that most payouts are taxed at the income beneficiary’s lower long-term capital gains rate rather than at ordinary income rates. At the inception of each trust, Harvard works closely with the donor to select an asset allocation that considers the donor’s objectives and risk tolerance, the trust type and payout rate, and the expected horizon of the trust, among other factors. These decisions will be reviewed annually by Harvard in collaboration with Kaspick.
DU: We also work closely with donors to understand their unique circumstances and objectives to consider if a tailored investment allocation is needed.
What are the principles that guide how Harvard invests its trusts?
AM: When building portfolios, we take a long-term perspective and avoid trying to time the market. We broadly diversify portfolios across both equity and fixed-income asset classes, leaning toward equity assets to generate the returns needed to maintain the trust’s purchasing power after payouts and inflation. We include assets we think will do well in the case of unanticipated inflation and deflation, and we only invest in sound strategies, avoiding investment fads. We keep fees and expenses low and regularly rebalance portfolios to manage risk. While Harvard has enlisted Kaspick as an outside manager, it continues its longstanding tradition of assessing no management fees against trusts, annuities, and pooled income funds.
DU: Our goal is to maximize the after-tax beneficiary distributions and remainder value over the trust investment horizon in a manner consistent with a fiduciary obligation of prudence and fairness to all beneficiaries. We invest with the aim of building diversified portfolios that deliver sustainable and attractive long-term investment returns. We take a multidimensional approach to investing focused on asset allocation, superior investment selection, and strong attention to risk management. Being open to change and new ideas is critically important, so our investment process and strategy will continue to evolve even as our fiduciary objectives and investment philosophy remain unchanged.
Abby, as an alumna of both Harvard College and Harvard Business School, what is it like to be working with Harvard?
AM: It’s a great honor—not only because I’m an alumna, but also because it’s the largest university planned giving program in the country. Everyone at Kaspick is excited to be a part of Harvard’s long and successful tradition of planned giving, and we are thrilled to know we are helping Harvard donors meet their philanthropic objectives. The only disappointment is having to hold our meetings virtually because of the pandemic when I’m only three stops from Harvard Square!
Damian, what brought you to Harvard and what do you enjoy most about your work?
DU: My experience growing up in the Philippines, Malaysia, and Honduras strongly influenced my desire to work for the benefit of an institution that, through its research and scholarship, addresses many of the global challenges that disproportionately affect the developing world. At Harvard, I found an incredible opportunity to grow professionally while supporting a mission I care deeply about. I value the opportunity to take courses, engage with faculty, and access the latest academic research. Each day I learn something new working with people who are among the very best in their field.
What are your interests outside of work?
AM: I enjoy traveling—particularly to Italy, where I get to practice my rusty high school Italian—and I serve on several nonprofit boards, including those of the Boston Lyric Opera and the Friends of the Public Garden. I am also a trustee emerita of Norwich University, where I sit on the investment committee.
DU: I enjoy exploring the world with my four-year-old daughter, and when we can, we also travel to see family in France, Germany, Honduras, and Japan. I also like reading books on a wide range of subjects.
This Q&A is featured in the Spring 2022 issue of the Gift Strategies newsletter. For more information about TIAA Kaspick, the new trust administrator for Harvard's planned giving program, please visit our webpage or contact us with any questions.