Hilton Foundation Expanding Alts. Allocation

Oct 5 2006 | 5:57pm ET

Contrary to media reports, there will not be a $750 million allocation to alternatives from the Conrad N. Hilton Foundation any time soon, but the foundation is still moving forward with plans to expand its alternative investments to up to 30% of its portfolio.

“It’s on a 10-year horizon,” explains Patrick Modugno, the foundation’s CFO. “We are in the process of making changes in the $900 million Hilton Foundation and the $800 million [Conrad N.] Hilton Fund that we control at the present time.”

Modugno said that the foundation is in line to receive a $1 billion endowment, and a large bequest from the estate of Hilton fortune heir Barron Hilton—funds which could make the Hilton Foundation as large as $5 billion—but it does not control either source yet. With half of the Hilton Fund tied up in Hilton Hotels stock, the foundation can allocate from a pool of about $1.3 billion today. Modugno said the foundation will invest in fund of funds strategies initially, “until we have a certain critical mass.”

The foundation has hired Cambridge Associates, which according to Modugno is “putting together strategies and then going through preliminary selection of managers to interview. We’ve added four new managers and we’ve got some meetings next week.” Interested managers should contact Matt Lincoln in Cambridge’s Menlo Park, Calif., office.

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