Johns Hopkins Gazette: July 10, 1995

Common Fund Losses Minimal

     Johns Hopkins's share of the losses racked up by a rogue
trader for the Common Fund is very small relative to its total
investments and will cause no significant problems, the
university said.

     The problem will result only in a reduction in the
earnings--which remain very positive--on a small portion of the
university's investments, spokesman Dennis O'Shea said.

     "The Hopkins losses in this are far less than one-tenth of 1
percent of the university's total investments, an amount on the
order of what you could lose on paper on just an average down day
in the stock market," O'Shea said.

     The Common Fund is, essentially, a series of more than 25
mutual funds that invest nearly $20 billion on behalf of hundreds
of colleges and universities. It reported in early July that a
trader for one of its hired investment managers had failed to
follow required procedures for hedging his investments, and had
lost $128 million.

     Only a small portion of Hopkins's $1 billion in investments
--from the endowment, benefit plans and operating cash--is in the
Common Fund, treasurer William Snow said. Of the Hopkins money in
the Common Fund, most is not in funds affected by the trader's
actions, he said.

     Despite the losses, the three affected funds that do have
Hopkins money are now reporting returns from the first 11 months
of their fiscal year ranging from 13.8 percent for a stock fund
to 6.9 percent for a cash fund.

     Snow said the university has invested in the Common Fund
since the early 1970s, with "very good results." The Common Fund
said the trader's actions had come to light during a
re-examination of its internal controls.

Go back to Previous Page

Go to Gazette Homepage