endowment

“Because we pay taxes, we have to think even longer term than an endowment, I would say. We have to be even more conscious of turnover, both at the fund level and at our portfolio level.”

“We're looking at all sorts of niche kinds of investments, but the problem is if you're a big endowment, a lot of these categories probably can't take a lot of capital.”

“What I found is that, as you know, they're very different investors than pension plans. They're not pension plans. They tend to be much longer term. They tend to be more interested in Total return than other issues like fitting things in boxes and some things …”

“After 2008, people were spending five percent Based on the last couple of years values, which was 10% based on their 2009 values. And so what that does is it takes a significant number of dollars out of the endowment. So it is very difficult to recover. The nu…”

“The five percent spending rule makes absolutely no sense for about the last 20 years. And so a lot of folks are addressing that by reducing their spending policies. I think four is the new five among endowments. Should probably be three handle and I bet it wil…”

“If there's poor performance, alarm bells come up and down the chain and the committee doesn't say like, Let's do nothing. They always say, like, we should do something, right? So this notion, and by the way, I think it's a Western thing, maybe an American thin…”

“So there were lots of very prestigious institutions, endowments and what have you, who were longer illiquid investments, and particularly those subject to capital calls, than they realized they were. And they got in a liquidity pinch In late oh eight, early oh…”

“I think a lot of that disconnect comes by creating financial incentives, you know, bonuses and things like that for the investment manager that actually steer them away from things that the client should actually be investing in. And I see that often in farmla…”

“We don't have inflows of capital. So an endowment, an insurance company, a sovereign wealth fund, they're always putting money, new money to work. We don't have any new money. We just have existing money.”

“Great paradox of the small endowment is that we have the capital base to do really interesting things, but we don't have the people in terms of resources on your team.”

“Most of the people in those seats pursuing these strategies all will tell you that there are only a few dozen pools of capital that are properly structured to pursue these and succeed. It requires an army of people, a small army of people, a small army of tale…”

“Because at this point, there aren't many endowments that can do that. I'm sure universities can, but everybody else, it's difficult to get those analytics, even working with a lot of great groups like we do.”

“I think we're going to find that the portfolios that applied that logic to the greatest degree are the worst performing. And so that behavior will be significantly curtailed, whether it's through regulation or whether it's through investment committees and end…”

“They're not going to shoot the lights out because those opportunities don't exist anymore.”

“The very long-term orientation and a willingness to take some illiquidity risk is not so bad as long as you set aside enough money to pay, let's say, three years' expenses and have a healthy cash flow into the organization.”

“With all due respect to some of the best endowments or investor groups out there, doing it internally is very complicated because you just don't have the expertise, or you see lots and lots of opportunities that are decently scaled but low return.”

“So if you look at the biggest investments in Grinnell's history, it wasn't uncommon for them to have north of 10% of the portfolio in a single individual name.”

“The reality was in the financial crisis, endowments and pensions were net sellers, not net buyers.”

“But my guess is that in another year, that's similarly will feel not like a terribly difficult allocation decision operationally.”

“Because the type of capital that an endowment runs or a foundation runs is similar compared to a pension fund or compared to a wealth advisor, they do tend to have a similar way of looking at the world. Because of the nature of the capital.”

“I think a lot of endowments take the approach that we only invest with single strategy firms. And I get that, but I would argue vehemently against that. I think there's been huge benefits to us having the various strategies and the benefits are to both us and …”

“I really truly do believe, Ted, that these are the most important organizations on the earth, and that's full stop. I don't even have a caveat around that or a constraint.”

“I've done this in a research project in the last four years, and I have to tell you, I was blown away that most of these organizations actually have different definitions of success.”

“What you've seen across decades of the venture industry is that different pools of capital can go in and out of the venture market. There have been times where endowments have pulled out of the asset class because they face liquidity challenges and their own o…”

“But I do think as time goes on, endowments are gonna have to be more transparent in their financial statements about what their carbon footprints are, so that's something I'm interested in.”

“A lot of funds are fairly short term trying to pick quarters or events or trades or macro, and I often think that forfeits a big part of the competitive advantage that endowments have.”

“I would bet that if you looked at a ten billion dollar endowment in fiscal year, 20, 21, it would shock me if they didn't pay at least Five hundred million dollars in fees in fiscal year, 20, 21. It wouldn't surprise me if it's even higher than that.”

“Rockefeller had a very unfortunate circumstance with one of their scientists, and there were a lot of lawsuits that came through. That we had to basically take an extra year's worth of spend out of the endowment at Rockefeller to help pay for a lot of these la…”

“People think endowments are the smart money, and I disagree. I think endowments are often run by committee And of a dozen smart people in the room that are paid a lot of money that give money to the obvious stuff. And committees kind of push people towards tha…”

“We have slowly built this up and we will continue to slowly build it up just a little further. It will never get up to the size that you see in some of the largest endowments that, you know, over 20% or in some instances over 30%.”

“Harvard, on the other hand, has every tub on its own bottom, so the Faculty of Arts and Sciences gets More than half of its income every year through the endowment, but the Divinity School does not, and the School of Education gets almost nothing from the endo…”

“I don't see a lot of technologists sitting on boards of directors of pension funds or sovereign funds or endowments. You see lots of ex-finance professionals. You see lots of representative people coming out of the constituencies, teachers, firemen, public emp…”

“What happens is people change strategy and or panic sometimes in really bad times, and that can set you back for a long period of time, and or organizations take on way too much risk at what appears to be a great time, but it's actually the absolute worst time…”

“The things that sometimes people forget is there's really no hundred year money. So there are institutions that have money that will be around for a long time. But most institutions have a spend rate, and even the best institutions may have enough reserves tha…”

“It's about 11 of the biggest endowments, and it's all of the people that hold positions like me, and basically we have a day where we just talk about what are the five most important things going on in your organization.”

“It's 40% of the budget is covered by the endowment.”

“Another example of that was the venture capital world, which has really driven a lot of the high-end endowment returns for decades.”

“A big endowment just said growth equity doesn't work.”

“If you're an institution that already has had perhaps a smaller endowment and they get a big gift, it's as if you start over.”

“There are benefits to being small. There are also obviously benefits to being large, but we are able to be very concentrated as a result of that. We are also Able to access fund managers that might have smaller funds or be a bit earlier in their life cycle bec…”

“And I think at the time, foundations were a lot sleepier than endowments. Most of them did not have professional staffs.”

“At the end of the day, running an endowment isn't any different than running any other portfolio. In fact, based on what endowments are invested in, they're a lot less complex than a lot of hedge fund portfolios. They're predominantly long biased.”

“Now, I would say the one thing that I found that is dramatically different Is the cash flow liquidity piece. That I think is very tricky to get that right. That takes a lot of thought and a lot of anticipation and forecasting and thinking through how you're go…”

“Asset allocation doesn't tend to vary that dramatically. Most endowments tend to have an equity bias. Their bonds are going to be somewhere between five and 10%.”

“There's a real difference that comes in in the manager selection piece. And I think one of the things that I started to realize over time is that the manager selection piece is as important and as impactful”

“It's a pension fund is not levered. So it's one of the only pools of capital on the planet that doesn't actually have balance sheet leverage. So you're talking about a public pension funds, endowments, and sovereign wealth funds. These are the unlevered pools …”

“It took about two weeks of immersion in not-for-profit management to realize that the real action was in the endowments. It was early on when investment management, I could even say finance broadly defined, were extremely unpopular. It was a non-consensus, con…”

“Many of the endowments were invested heavily in hedge funds that shorted the tech rec in 2001.”

“Many endowments at that time were essentially where alumni went to retire after a successful career, and they put in some stocks and some bonds, and they didn't really do a whole lot, and so that profession was evolving massively at the time, in part the tech …”

“They've outperformed so much that the rebalancing that you're going to see in every pension fund, in every endowment, away from these strategies back towards listed equities or back towards, frankly, just bonds, it should be relentless.”

“I tend to weight the quality of the game the manager's playing more heavily than most do. Most of the endowments I talk to tend to say we're looking for the best people, and the quality of what they're trying to do, or how hard it is, or the base rates around …”

“If you take endowments that are looking at selling some of their private equity and venture positions, the primary demand for those secondary positions are coming from evergreen private equity vehicles.”

“Historically, endowments have done a great job of that, but in the last 10 or 15 years with the obsession of private assets, that tool has been taken out of the toolkit.”

“If you keep those portfolios, you're going to spend most of your time reviewing what's in there, slowly changing things out and adding new stuff. Whereas if you start over and start from scratch, you get to build the institutional knowledge from day one. You g…”