Northwestern’s investments have been subject to much scrutiny and debate recently, considering there have been three divestment campaigns in the past three years. Student groups have called for divestment from coal companies, companies that are allegedly involved in human rights abuses in occupied Palestinian territories, and the most recent campaign is focused on divesting from private prisons. However, investments are very complicated and have jargon to match.
Since we’re not all economics majors (even if it sometimes seems like the whole school is), here is a guide to some investment and finance terms you might hear when the three different campaigns make their demands to the Board of Trustees.
Directly held investments – Investments held by an individual or company that are made through an investment manager. The individual gives the manager money to make investments, but can tell the manager to get rid of these investments. If Donald Trump’s investment manager thinks Trump’s money can make Chipotle great again, he might invest this money in Chipotle in Trump’s name. Trump can divest from Chipotle if he so chooses, because he is directly invested in this specific company. According to Northwestern’s Chief Investment Officer, William H. McLean, Northwestern has direct holdings in two companies ASG voted to divest from last year.
Hedge fund – In order to understand a hedge fund, first we have to understand a mutual fund. When a group of unrelated investors pool their money together, they can create a mutual fund for a third party to invest in. A hedge fund is a type of mutual fund where this third party looks for non-traditional investments to diversify his portfolio. If Leonardo DiCaprio’s agent (who acts as the third party) wants to have an Oscar-winning client, he might invest his actors’ time and talent for a bunch of non-traditional movies in the hopes that the Academy likes one of them.
Equity – an equity is ownership in a company. If you own a stock, you have equity. If you invest in DJ Khaled’s Snapchat, the equity you have is Khaled’s viewership for that day, which may go up or down depending on the market. According to NU Divest, Northwestern has about $3 million worth of equities in two companies that are allegedly involved in human rights abuses in occupied Palestinian territories.