The global head of investment research at the World Gold Council (WGC) had finished his presentation "The Strategic Case for Gold as an Asset Class" at the 2012 Bloomberg Precious Metals Conference in New York. As a result of the market collapse in 2008 and the ongoing euro-area crisis, investors worldwide had safety and security on their minds, and many in the room were wondering whether gold would provide capital preservation and improve the overall risk-return tradeoff of their portfolios. At the same time, the sustained run-up in the price of gold since 2001 that was mentioned in the presentation was a cause for concern. Was gold the safe haven that it had proved to be in 2008 and 2009, or was it an asset class at the peak of a bubble? The investment case for gold deserved closer examination.

Spreadsheet for case UV6524

Lumina, a foundation focused on increasing both access to and success in higher education for U.S. students, is dealing with the recent resignation of its chief investment officer. The CFO reviews the structure the firm has in place to manage its $1.1 billion endowment. Although the CFO and other finance and administration professionals at Lumina are temporarily overseeing the endowment, Maas recognizes that many other foundations outsource this responsibility to investment advisory firms. As part of his review, he invites a number of firms-including CornerStone Partners, from Charlottesville, VA-to make presentations to the Lumina management team. While each firm claims the ability to outperform its benchmark, Maas wonders exactly how the outsourcing would add value, and how this outperformance could be quantified.

Spreadsheet for case UV5669