Boston-based Adage Capital Management is a multi-billion money management firm with a primary focus on overseeing S&P 500 assets, particularly for Endowments and Foundations. Its notable clients include prestigious institutions such as Harvard University, Northwestern University, Dartmouth College, the American Red Cross, and the Getty Foundation. Over the past 15 years, Adage, along with its predecessor, the Select Equity Group at the Harvard Management Company, has consistently outperformed the S&P index by an average of 3.5%.
The history of Adage can be traced back to the mid-1980s when Phillip Gross and Robert Atchinson first crossed paths as investment analysts at the Harvard University endowment. In the 1990s, amid criticism of multi-million dollar performance bonuses awarded to some Harvard Management employees, Gross and Atchinson, along with an 18-person team, departed Harvard to establish Adage Capital Management. Their venture was supported by a $1.8 billion day-one investment from Harvard, accompanied by an initial agreement to allocate ten percent of Adage's earnings to the university.
By 2015, Adage had earned its place among the world's top 10 largest hedge funds, with its assets under management doubling in the preceding four years. The firm boasted an annualized return of 9.7% since its inception, surpassing the S&P 500 benchmark, which stood at 6.4%. However, in the subsequent year, Adage experienced a significant departure from its usual outperformance, posting a 1.1% return for the 12 months ending in June, marking the first time it significantly underperformed the S&P 500 benchmark for a fiscal year. In the Institutional Investor 2016 Hedge Fund Report Card, Adage secured the third position among major hedge funds. The report highlighted commendable scores in Alpha generation, risk management, alignment of interest, infrastructure, and independent oversight.