Portfolio Construction

“That being said, the thing I'm most worried about is everything being called or becoming AI. Everything is adjacent to AI, but then if you start to talk about an investment thesis, or what is our exposure to AI, or how do we get more AI in the portfolio, you'r…”

“If it's for a very young person, it's okay to have 80, 9000% alternatives, because they don't need the cash immediately. So let the stuff grow, you know, at the highest risk possible.”

“One of the conclusions was the portfolio was too correlated, but the root cause of that was the research pipeline had become too correlated.”

“In today's world, the majority of the volume that we see is probably executed around portfolio construction. And there's a lot of reasons to sell. Sometimes managers are over allocated to private equity. Limited partners are over allocated to private equity. L…”

“I think it always matters. You know, your people actually lose money as distinct from thinking about losing money, and particularly when they lose money, two funds in a row, even a brand name firm can hit a bump, right?”

“I don't believe that we're trying to win in terms of portfolio construction in the way the assets are assembled. We're mostly trying to win through manager selection within those tools.”

“One of my gripes is sometimes people over-diversify. They're not sure, so they end up with Godly number of asset classes, which really doesn't do anything from a performance point of view.”

“I think portfolio construction is one thing, especially in the venture side, where newer funds, founders on the GP side, who haven't done this before, have very little idea of how to construct a portfolio, whether it's having reserves or position sizing, the p…”

“If you have a portfolio of 25 in your, let's say, ten million dollar solo GP, the odds of you being a three X fund are high, if you're competent. The odds of you being a 20 X fund are low.”

“If you're building from scratch, you need people who love finding new managers. The joy in their life is to meet with seven managers a day. Find really one or two, do a ton of due diligence. That gives them joy. If you put a person like that in a mature portfo…”

“Manager selection is great, but portfolio construction is really where it matters.”

“The best portfolio construction in the world is to invest in one company and put all your money into the first round and be right. And every derivative from that basically is allowing for uncertainty and risk.”

“There are periods of time when someone who's doing portfolio construction, the way you're hearing here, will underperform because you're not 80% in venture, and venture's having a great time, and everyone goes, how come my portfolio's not up 800%? It's only up…”

“So I don't obsess over the ownership and the portfolio construction in a way that I think it matters on a deal by deal basis. I think it matters on a portfolio basis.”

“If you're running a long only bonds plus equities portfolio, portfolio construction has to come first. And the selection of the assets is a definite second in an alpha portfolio. It's the other way around.”

“Well, if you control the vol, and you know the correlation is more persistent than returns, then your portfolio construction and your strategy construction should rely more on diversification than on target returns.”

“The downside of secondaries is you can't always be so precise the way you can on primaries or co-investments around picking your portfolio construction, X percent Europe, Y percent venture. The founder of the secondary business used to say, you can only buy wh…”

“And I think some of the best things that I learned was portfolio construction and understanding that we're not capital allocators. We're actually risk allocators first.”

“What's been interesting is that portfolio construction is actually more of a science than an art. Some of the inputs may be more art, so think about risk reward, think about upside, downside, some of the things that would go into inputs of portfolio constructi…”

“In general though, I think what we try to do is to go after the best opportunity And not get worried about the portfolio construction from a diversity of different categories. We're very much interested in finding the right brand with the right entrepreneur.”

“Portfolio construction leads to a bunch of inefficiencies that are great in a sort of theoretical world, but not in the sort of reality of this business.”

“If you want to outperform, you construct your portfolios with high active share, which means your portfolio doesn't look like an index. You concentrate within that. You underwrite medium, longer term horizons, and you take a very fundamental approach.”

“What we found over the years is that, you know, the more folks are confident and have a handle on their own approach to portfolio construction, as opposed to kind of blowing in the wind on it, the much more likely they're going to be successful in it.”

“But I do think that we have learned over time that one of the important strategies of portfolio construction is Aiming for initial diversification across business models, across time horizons to scale, anticipated time horizons to scale, across what are your a…”

“These portfolio constructions are incompatible. If you're an investor, you're going to end up having a lot of companies that need a little bit more money to hit the milestone. And if you're an entrepreneur, what happens if you raise just a little bit too littl…”