Financial History Issue 133 (Spring 2020) | Page 29

Dr. Roger Murray joined CREF on
February 1, 1965, as vice president
and economist, to head the CREF
investment operation…He was elected
chairman of the CREF finance com-
mittee and executive vice president
of CREF in 1967 and served in those
capacities until 1970. He had already
served on the CREF board for nine
years and on the finance committee
for five years before joining the staff
full time.
Under Dr. Murray’s leadership,
CREF’s investment staff developed a
deep knowledge of the literature on
risk management, modern portfolio
theory, and actual portfolio manage-
ment. He established an extensive
research program using both inside
talent and university research facili-
ties. In 1970, Dr. Murray asked to be
relieved of his duties as CREF invest-
ment head after the new team was in
place so he could return to Columbia
Business School. During his tenure,
CREF’s assets grew from $500 million
in 1965 to $1.5 billion in 1970.
His tenure at CREF was also marked
by his social consciousness and activ-
ism. Institutional Investor magazine pub-
lished an insightful cover story article in
1968 entitled, “Roger Murray: Portrait of
the Professor as a Fund Manager.” The
author, Penelope Orth, observed that in
an age when many institutional investors
are passive stockholders, CREF was both
active and articulate.
Murray attended the 1967 shareholder
meeting of Eastman Kodak which had
been picketed by the civil rights group
FIGHT to expand their training programs
and hiring policies among black residents
of Rochester. CREF owned 181,500 shares
of Kodak when Murray addressed the
shareholders: “The 225,000 educators who
are policy holders of CREF have great
confidence in what education can do and
great confidence in what Kodak could do
to bring the hard core unemployed into an
employable position.” The crowd roared
in approval.
In his interview for the article, Murray
stated, “We are sensitive to the employ-
ment practices of companies in which we
invest. We do not knowingly have our
money in a company that practices dis-
crimination of any kind.”
The assets under management of CREF
have grown from $500 million in 1965 to
$234 billion in December 2019. The total
assets under management of TIAA, which
includes both CREF and Nuveen Asset
Management, is $1.1 trillion. It is one of
the world’s largest asset managers.
The Common Fund (1969–1981)
After two years of preparation, The Com-
mon Fund was launched in 1971 by a grant
of $2.8 million from the Ford Foundation
as a non-profit organization to manage
university endowment assets. It was a nat-
ural extension of CREF’s success in man-
aging the retirement assets of university
teachers. Roger Murray was a founding
trustee of the Common Fund from 1969 to
1981 and Chairman of the Board from 1977
until 1980, after he retired from Columbia
Business School.
In 1974, at the bottom of a bear market
when colleges were withdrawing funds
from the Common Fund equity portfolio,
he wrote a paper for the annual report
in defense of equity investment. In it, he
stated, “My position was that this was an
opportunity of a lifetime to buy equities.”
Again, pure Benjamin Graham.
In 1986, Murray wrote the article “The
Formative Years: A Founder Reflects”
to celebrate the 25th anniversary of the
Common Fund. He recounted the legal
obstacles faced by trustees in overspend-
ing dividend income of equities in their
operating budgets, and in commingling
assets of beneficiaries in a common pool
of investments. These issues led the way
to the founding of the Common Fund.
Since its inception, the organization has
grown from $63 million in 1971 to $25.2
billion today.
Keogh Plan and Individual
Retirement Account (IRA)
Professor Murray was highly influential in
the passage of these landmark laws. In his
interview with Peter Tanous in Investment
Gurus, Murray recounts his experience.
He states that Gene Keogh was a member
of the House Ways and Means Commit-
tee who sponsored legislation to allow
self-employed individuals to set up pen-
sion retirement accounts. Murray was the
expert witness who testified to Congress
each year over 10 years that the Treasury’s
estimates of revenue loss were much too
high. Thanks largely to Murray’s persis-
tent advocacy, the Keogh Plan legislation
was finally passed in 1962.
As a Board Member of CREF, Murray
was also thinking about creating pension
benefits that were completely portable for
persons not covered by a pension plan—
an “individual retirement account.”
As part of the Hunt Commission’s study
of US financial institutions, Murray was
invited to write a position paper address-
ing fiduciary standards for the protection
of pensions. Murray’s paper mentioned
the gap in pension plan availability for
individuals who are not part of a sig-
nificant group. He proposed an individual
retirement account as a potential remedy.
The Hunt Commission report led to the
Employment Retirement Income Security
Act (ERISA) in 1974, which contained
a tax benefit for the self-employed, the
deductibility of contributions to an IRA.
Relationship with Warren Buffett
Murray told Tanous that Warren Buffett
“had come and gone before I got there
[Columbia]. I did not meet up with him
until later. One of the good sessions he
and I had was when we were both on the
SEC Advisory Committee on Corporate
Disclosure, which was a fun enterprise.
David Dodd originally introduced me to
Buffett, but on our committee, we had the
opportunity to sit around the table and
really discuss things at length... He comes
back to Columbia on occasion. When I
taught the class in value analysis…he was
one of our guest speakers.”
The bridge from Benjamin Graham to
modern value investing as personified by
Warren Buffet was under construction.
Retirement
Murray retired from Columbia Business
School in 1978 and moved to the family’s
country home in Wolfeboro, New Hamp-
shire, on the shore of Lake Wentworth,
which is adjacent to Lake Winnipesaukee.
His definition of retirement was not con-
ventional, however. It included member-
ship on the local school board, selectman
of the Town of Wolfeboro and a member
of the boards of Andover, Smith College
and Douglass College.
In addition, he served on the board of
directors of the Common Fund and several
companies,
» continued on page 39
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