Commonfund OCIO’s new chief investment officer Julia Mord plans to use active management, including hedge funds, to find opportunities in U.S. microcap stocks and emerging markets as America's trade policies continue to create volatility and uncertainty.
“Volatility and dispersion help active,” provided the portfolio has enough liquidity, said Mord.
Mord, who joined the OCIO in June, is looking to increase its recommended allocation to active management — which is already at 75 percent. She said the specific percentage will depend on the client. She and her equities team are considering adding more global and international managers as well as those who run more concentrated portfolios.
The former Tulane University investment chief also believes hedge funds, which performed well in the first half of 2025, are “poised to capitalize on broader market volatility.”
Active managers have long argued they can generate excess returns in uncertain markets by pivoting strategies and targeting mispriced assets — unlike passive. While many active managers have historically failed to deliver consistent alpha over the long term, they have outperformed over shorter periods. A 2023 report from Morningstar showed that active management may be turning a corner, with most active mutual funds or ETFs outperforming their passive counterparts over a 12-month period.
While Mord admitted that even the top quartile of U.S. equity managers underperformed the S&P 500 over the past 10 years, when expanding the lens to include international markets, she noted that the median EAFE and emerging markets manager has outperformed its respective benchmarks over the last decade.
“When analyzing managers, we seek to understand the extent to which the managers’ returns are repeatable and based on skill, and not solely market or factor exposures,” she explained.
So, in segments where inefficiencies impede price discovery, such as in U.S. small and microcaps, and even in international markets, Mord argues that active management can succeed where index construction could lead to less desirable portfolio characteristics, as often seen in EM indices.
Still, passive will remain a crucial part of Commonfund’s portfolio. “Passive is still important for liquidity purposes,” Mord said, especially in the more efficient parts of the market.
Currently, Commonfund’s flagship global equity fund is in line with the All Country World Index, with roughly 65 percent allocated to the U.S. The current geopolitical risks are also keeping Mord’s team neutral on duration.
Despite the U.S. making a trade deal with the U.K. and President Donald Trump signing the One Big Beautiful Bill and CLARITY acts, investors still see prolonged uncertainty surrounding geopolitical and regulatory environments.
“There’s a lot of uncertainty. I’m surprised at how sanguine investors have been,” Mord told Institutional Investor. “We still don’t know where we’re going with tariffs.”
She noted that even if the Trump administration succeeds in generating deals with the largest trade partners, tariffs will be larger than the 2.5 percent average announced in April. With some trade deals starting at 10 percent, there will be a large impact on consumers, costs, and company earnings. The recently signed budget bill will rack up “a lot of deficits” and “have an impact on bonds,” she said.
Since joining Commonfund in March, Mord has been focused on leveraging new technology to improve how public assets are managed (private equity is run by another division), streamline the research process, and to help teams more freely share information. This includes consolidating data in a central repository and onboarding a new AI-enhanced CRM system.
