McDonald, Founding President of DUMAC, Will Step Down
Eugene J. McDonald, president of Duke Management Co. and Duke University's chief investment officer, has announced plans to step down from the post he has held for 10 years.
McDonald, 67, who also is executive vice president-asset management for the university, said he will leave his post June 30 for a sabbatical leave followed by retirement. Duke trustee Robert K. Steel, chair of Duke Management Co. (DUMAC) and managing partner of Goldman Sachs & Co., will lead a national search for a successor.
"I know I reflect the views of all of the DUMAC directors, both past and present, when I describe our mixed emotions about Gene's decision to retire," Steel said. "We are excited that Gene and his wife Barbara will have time to enjoy their many hobbies and interests. We are saddened at the thought of moving ahead without the active leadership of Gene at DUMAC. However, the strongest emotion by far is one of appreciation for what Gene has contributed to DUMAC and the university and the wonderful friendship he has provided to us all."
McDonald, who has been an adviser to three Duke presidents, joined the university in 1977 as vice president for government relations and university counsel. He continued as Duke's top legal officer when he was named executive vice president for finance and administration in 1985. In 1990, he was named to lead the newly created DUMAC to manage university investments.
"After founding and leading DUMAC for 10 years, it is time for me to move in a different direction," McDonald said. "While my overall and varied experience of 23 years as a senior officer of Duke University has been a joy, the capstone has been the 10 years at DUMAC.
"Blessed with good fortune, good markets, a great board, and a supporting cast of colleagues who really carried the ball, I think we have been able to make a positive difference for the university. That experience is very satisfying to all of us here at DUMAC and particularly for me."
DUMAC manages all of Duke's investments ‚ the endowment, some pension funds and operating cash. All those assets now total more than $3.5 billion, compared with $948 million when DUMAC was formed.
"For more than two decades, Gene McDonald has played a crucial role in Duke's growth and flourishing first as university counsel, then as executive vice president and, for the past 10 years, as president of DUMAC," said Duke President Nannerl O. Keohane. "The success of Duke's investment strategies under Gene's leadership reflects his vision, as well as his managerial and financial acumen. We have been very fortunate to have had his commitment as DUMAC's founding president, and look forward to continuing to benefit from his wise counsel for years to come."
According to studies by Cambridge Associates, a consulting firm that works with college and university endowments, Duke's overall investment return over the past 10 years in the long-term pool where most of the funds are invested was 15.6 percent, compared with 13.5 percent for the mean of the largest 50 university endowments. For the 12-month period that ended last June 30, Duke's return was 23.1 percent, dramatically outperforming the group's mean return of 11.7 percent. Duke's investment returns were ranked in the top decile among the 50 largest university endowments for one-, three-, five- and 10-year periods. DUMAC staff members report that Duke's investment return for the calendar year that ended Dec. 31 is expected to be in excess of 40 percent.
McDonald says DUMAC's investment portfolio ‚ which includes common stocks, bonds, real estate, private equities and international securities ‚ is diverse in keeping with its goals of obtaining maximum return with minimum risk.
The university's Board of Trustees created DUMAC and named McDonald its head 10 years ago because of the growth of the university's assets and the escalating complexity and speed of investment-making decisions. The board at the time said the formation of DUMAC was expected "to produce enhanced investment returns through more vigilant and focused attention to investment opportunities and risks."
"Gene McDonald was the architect of our DUMAC organization," Steel said. "His strategic vision at the beginning of DUMAC put the university in a very strong position with regard to the stewardship of our financial resources. This initial commitment to a professional and independent organization has served the university community quite well over the last 10 years. DUMAC has a very strong cadre of investment professionals and a culture of professional asset management in place, which will enable DUMAC to continue to be an important contributor to the financial health of the university community for years to come."
McDonald received his bachelor's degree from the University of San Francisco in 1954, a J.D. with honors from the University of San Francisco Law School in 1957 and a master of laws degree in international law and trade from Georgetown University Law Center where he served on the law faculty for three years before entering law practice with a large San Francisco firm. He also taught at the Duke Law School from 1978 to 1986. Before joining Duke, he was corporate vice president and president of the international division of Intext Inc., a publishing and manpower education and training firm.
McDonald also is executive vice chairman of Central Carolina Bank Financial Corp. and serves on the boards of two mutual fund families as well as several investment advisory boards.
In addition to Steel, the search committee consists of DUMAC board member Joe Grills, retired chief investment officer of IBM retirement funds; past board member Alice Blackmore Hicks, executive vice president of Iridian Asset Management, Westport, Conn.; trustee emeritus and Atlanta attorney L. Neil Williams; Professor Campbell Harvey of the Fuqua School of Business; Duke Executive Vice President Tallman Trask III and Kenneth Morris, Duke University Health System chief financial officer.