WILTON, CT, April 27, 2000 — Robert J. Shiller, Stanley B. Resor Professor of Economics at Yale University and author of Irrational Exuberance (Princeton University Press, 2000), has won the Commonfund Prize 2000 for a forthcoming paper based on his provocative new book. His study claims that higher education and foundation endowments — like public and private pension funds — face excessive risk from the presently overvalued stock market, and calls for them to reduce their exposure to equities.

Shiller’s paper applies his book’s findings to college and university endowment portfolio managers, who have shifted asset allocations traditionally weighted heavily in bonds, mortgages and real estate to stocks in order to generate higher current income. He argues that while this has proved to be the correct policy over the past few decades, the stock market has reached unsupported levels due to the ‘irrational exuberance’ of investors, along with a complex combination of structural, cultural and psychological factors. The paper will be published by Commonfund in hard copy and available through its web site at www.commonfund.org free of charge. The $50,000 prize will be awarded to Shiller at a luncheon in New Haven, CT on April 27.

“It is an honor to win this award, and I am pleased to extend my work on ‘Irrational Exuberance’ to the endowment and foundation management community,” said Shiller. “I plan to relate the book’s content to existing literature on portfolio weights of endowments, and will reexamine their current policies of rather significant exposure to stock market risk.”

“While Commonfund as an investment advisor does not necessarily agree with all of Shiller’s conclusions, we value diverse opinions like his for stimulating reevaluation of current endowment management practices,” said Todd E. Petzel, President and Chief Investment Officer, Commonfund Asset Management Company and one of the judges for the Commonfund Prize 2000. The other judges included André Perold, Sylvan C. Coleman Professor of Financial Management, Harvard University Graduate School of Business Administration and author of Inefficient Markets (Oxford University Press); Arnie Wood, Principal, Martingale Asset Management Company; and William Goetzmann, Edwin J. Beinecke Professor of Management and Finance Studies at Yale School of Management and Director, International Center for Finance at Yale School of Management. “Commonfund is committed to encouraging the growth of best practices in improving the efficiency, risk management and returns of endowment portfolios,” said John Griswold, Senior Vice President of Commonfund. “Robert Shiller’s work will bring a unique perspective to the endowment management community, and we hope will spark thought and debate that will result in innovation and better practices.”

Shiller is also author of numerous papers and books including Macro Markets (Oxford University Press), winner of the 1996 Paul A. Samuelson Award, Market Volatility (MIT Press), and “Human Behavior and the Efficiency of Financial Markets,” in Handbook of Macroeconomics.

About Commonfund
Founded in 1971, Commonfund is a nonprofit membership corporation devoted to enhancing the financial resources of educational and healthcare institutions and foundations through superior fund management and investment advice. Directly or through its subsidiaries, Commonfund Capital, Commonfund Treasury, Commonfund Realty, and Commonfund Asset Management Company, Commonfund manages in excess of $25 billion for more than 1,350 member schools, representing the largest pool of educational endowment and operating funds in the world. In response to the growing needs of educational and healthcare institutions and the wide range of investment alternatives available today, Commonfund, together with its subsidiary companion organizations, offers more than 30 different endowment investment programs and funds for the management of short-and intermediate-term operating cash reserves. Securities offered through Commonfund Security Inc., a member of the NASD.