Problem
1. Investors often invest through managed vehicles, such as funds, joint ventures, and separate managed accounts. Discuss the objectives of a university endowment and the suitability of esoteric and often highly levered investment products, such as hedge funds. Use the Vanderbilt Endowment as an example if you wish.
2. It is common that the investment manager's compensation includes a management fee and performance-based incentives. Discuss the rationale for including performance-based structures in a compensation plan and how such a structure may align or misalign the interests of a manager and its client (or employer).