Led by a former trader, Baylor University managed to outperform the Ivy League and climb to the top of the university endowment performance rankings, writes Juliet Chung for The Wall Street Journal.

Many universities distribute their funds across various assets and make periodic adjustments. Baylor, however, takes advantage of market moves frequently to either boost or cut exposure to its managers.

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“The only thing I’m doing is what the market tells me to do,” said investment chief David Morehead. “If the market goes up, we take some money back. If the market goes down, we give it money. It is finance 101.”

Morehead often touts the university’s performance in comparison with other endowments to its outside fund managers. He is especially proud of the fact that Baylor is beating the Ivies, which it has been doing for the last five years despite their significantly larger staff. In addition to Morehead, Baylor has four more investment staffers, all of whom are women.

For the fiscal year ended June 30, Baylor’s endowment gained 6.4 percent, outperforming all the Ivy League endowments. In the last decade, the university’s 10.9 percent annualized return outpaced all but one of the Ivies’ average annual gain. The school ranks in the top five percent of all endowments in the United States over that period.

When Morehead arrived at the private Christian school in Waco, Texas, in 2011, it had a $900 million endowment. Since then, that figure has grown to $2 billion.

The trigger to act for the Baylor investment team is a move of at least 10 percent in a sector or fund. For years, the university has added or trimmed between three and five times a year in one firm’s different equities strategies.

The school has profited from strategic investments in volatile sectors, including energy and biotech. Most recently, it has been lowering its energy exposure due to the rise in crude-oil prices.

“Dave in particular is much more active with asset allocation than pretty much anybody I’ve met in the business,” said Ken Lee, chief investment officer for Dallas-based Children’s Health.

Fred Hubler, CEO and Chief Wealth Strategist for Creative Capital Wealth Management Group in Chester Springs, likes the endowment model so much he created a household endowment model for his clients.

“When I left a national brokerage firm, I also left having someone tell me what to sell,” he said. “So, I researched how large endowments and foundations invest their money and was surprised how little they had in the stock market. This analysis led me to utilize alternative investments to create the equivalent of a personal endowment for our clients.”

Read more about how Baylor University traded its way to the top of the university endowment performance rankings in The Wall Street Journal.

Want to know if you’re on the right path financially? Creative Capital Wealth Management Group’s Second Opinion Service (SOS) is a no-obligation review with one of CCWMG’s Wealth Strategists.

Schedule an SOS Meeting with Fred Hubler and his team.