Jan 25, 2021 · 58m · capital-allocators
Collette Chilton – Humility and Loyalty at Williams College (Capital Allocators, EP.174)
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of Capital Allocators, host Ted Seides interviews Collette Chilton, Chief Investment Officer of Williams College, who discusses her career journey across public pensions, corporate plans, and endowments. She shares insights on institutional governance, manager selection, venture capital liquidity management, and the value of humility in investment leadership.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Ted holds 21.2% of the talking time here. How this is scored →
Ted as informed peer 4.6 Guest teaching 4.2 Guest disagreement 0.9 Ted pushing back 1.7
speaking balance: gold is Ted, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 42:00 Rejecting herd consensus and cool kids
Colette firmly rejects peer-following behavior, calling it a flawed strategy in institutional investing despite legal protections in public funds.
Hardest push from Ted ▶ 42:45 Questioning non-consensus investing amid elite LP overlapTed challenges Colette's anti-herd stance by noting that top-tier hedge funds and VC portfolios inherently share the same crowded roster of elite institutional co-investors.
Biggest teaching moment ▶ 23:00 Correcting the post-crisis timeline narrativeColette corrects Ted's assumption that Williams formulated its policy portfolio smoothly after the crisis, explaining they were building it in real time while hunting for contracts during the Lehman crash.
Ted holds their own ▶ 38:08 Drilling into massive allocation drift mechanicsTed demonstrates deep endowment allocation expertise by precisely unpacking how a 6 percent target tripled to nearly 18 percent and interrogating the rebalancing policy.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Ted as informed peer | Guest teaching | Guest disagreement | Ted pushing back | Why |
|---|---|---|---|---|---|---|
| Entering the Investment Business and Public Pension Stewardship | 4 | 5 | 1 | 1 | Ted prompts Colette on her start in investing and the difference between public and corporate pensions. Colette candidly shares how she entered the industry knowing nothing out of necessity during pregnancy and explains the fiduciary and reputational stakes of public pension management. | |
| Managing the Lucent Pension and Corporate Liabilities | 5 | 4 | 1 | 2 | Ted probes the impact of illiquid venture and private equity assets inside Lucent's massive $75B corporate pension. Colette explains the complexities of carving out LP agreements during corporate spin-offs and managing to fixed liability targets. | |
| Transition to Williams College and Setting Up the Boston Office | 4 | 4 | 1 | 1 | Ted asks about establishing the Williams College investment office from scratch in 2006. Colette details the transition, hiring key deputies, and managing through the 2008 crisis with unexpected liquidity from a 30 percent legacy large-cap mandate. | |
| Williams Governance Model and Alumni Advisory Committees | 4 | 5 | 1 | 1 | Ted asks how Colette manages the governance complexity of multiple alumni advisory committees. Colette explains how advisory committees with high-profile alumni act as an unbiased sounding board rather than an administrative burden. | |
| Endowment Asset Allocation and Hedge Fund Strategy | 6 | 5 | 2 | 3 | Ted asks about formulating the policy portfolio post-crisis and notes Williams's unusually high 40 percent hedge fund allocation. Colette reframes his premise, pointing out they had to build the infrastructure during the crisis while looking for contracts over the Lehman weekend. | |
| Manager Selection Criteria and Underwriting Process | 5 | 4 | 1 | 2 | Ted asks Colette to drill down on manager underwriting and differentiating between good managers. Colette emphasizes intuition, trust, understanding core strategy, and Williams's comfort being a Day 1 or Fund I anchor investor. | |
| Sponsor Message: Ridgeline Investment Management Platform | 5 | 4 | 1 | 1 | Following the sponsor read, Ted asks how ongoing manager dialogue differs between CIO-level check-ins and team-level operational reviews. Colette explains the value of holistic conversations and building respectful, long-term LP reputations. | |
| Managing Venture Capital Growth and Portfolio Liquidity | 6 | 4 | 1 | 3 | Ted digs into how Williams manages venture capital allocations when outperformance causes target drift from 6 percent to nearly 16 percent. Colette explains their disciplined stance against chasing bigger commitments, trusting distributions to rebalance the portfolio. | |
| Investment Pitfalls, Avoiding Herd Behavior, and Risk Evolution | 6 | 5 | 2 | 4 | Ted presses Colette on herd investing pitfalls and how to avoid mistakes when popular consensus supports a manager. Colette shares painful lessons regarding lack of transparency and illiquidity restructuring in hedge fund restructurings. | |
| Operational Innovation and Teaching Winter Study at Williams | 4 | 4 | 0 | 1 | Ted asks about operational innovation and the annual undergraduate Winter Study course. Colette explains ditching legacy custodians for modern administrators and highlights teaching endowment fundamentals to liberal arts students. | |
| Closing Questions: Routines, Humility, and Parental Wisdom | 3 | 3 | 0 | 0 | Ted transitions to standard closing questions regarding daily routines, pet peeves, and family wisdom. Colette emphasizes humility in asset management and the lifelong value of maintaining optimism in high-stress positions. | |
| Bonus Insights: Career Advice, Industry Peers, and Favorite Reading | 3 | 3 | 0 | 1 | Ted conducts the bonus segment covering early career advice, peer sanity checks during COVID, and book recommendations. Colette shares practical career stages and discusses reading Madeline Miller's Circe. |
Statements from this episode (29)
Williams College endowment supports over 50% of the operating budget
“Whereas at Williams, we support over 50% of the operating budget, so it's incredibly important, but there are like people I knew who retired and were relying on what we did every day.”
Massachusetts municipal pension funds are underfunded and mismanaged
“So the pension funds up here are terribly underfunded and mismanaged. Each city and town has its own pension fund, and so the state one started doing well, and so then the towns could invest with the state.”
AT&T was among the first corporate pensions to back venture capital
“AT&T was one of the first corporate pension funds to invest in venture capital and private equity.”
Pension fund returns drove Lucent's corporate earnings in the 1990s
“I used to make the joke that Lucent was really a pension fund with a little bit of technology on the side, which is what drove the earnings of the company for that whole time, but nobody thought that joke was funny except for me, but it was actually pretty clo…”
Lucent headcount plunged from 150,000 to 8,000 during Chilton's tenure
“When I started at Lucent, there were a 150,000 employees, and when I left, there were 8000 employees.”
Williams College invested in earliest CD&R and Madison Dearborn funds
“Joe Rice's good friend was John Canning. So we were in like the earliest CDNR and Madison Dearborn funds.”
Investment committees easily add positions but struggle to cut them
“The problem with having committees put portfolios together is they love putting stuff in, but they really don't like taking stuff out, and it's hard to agree on what to stop doing.”
Bill Simon, Andreas Halvorsen, and Paul Singer advised Williams College
“So the chair of that committee was Bill Simon, is famous for almost being the Republican governor of California. He's a wonderful person and a dear friend. So he chaired that and then people on the committee were like Andreas Halverson and Paul Singer and just…”
Williams College's secret sauce is unbiased alumni advisory committees
“And I tell people that that's the secret sauce of the Williams Investment Program, is we have these alums who are on these committees, and they love helping us, and they don't have an ax to grind. They're not trying to sell us something, or it's like you can c…”
Williams College endowment grew from $1.5 billion to $3 billion
“You know, when I started, the pool was 1.5 billion, and now it's three billion over 14 years, and we've tried to keep the number of managers the same as when I started.”
Williams College allocates nearly 40% of its portfolio to hedge funds
“We have almost 40% of our portfolio in hedge funds”
Williams College holds about one-third of its endowment in private assets
“The private part of the portfolio is about a third of the portfolio, I want to say.”
Williams College's value-add comes entirely from manager selection, not market timing
“You know, all of our value add is in manager selection. It's not in calling the market or anything like that. When we do the attribution work, it's all manager selection.”
Williams takes a year to underwrite and recommend new managers
“It takes us about a year between the time we meet someone and recommend putting them into the portfolio.”
Williams conducts 500 manager meetings yearly, adding only a small handful
“We do like 500 meetings a year between our current and potential managers, and we only will add a small handful of new managers every year.”
One-third of Williams College's portfolio is in first-time funds
“We've done a lot of investing with first-time funds, or a day one investor, about a third of our portfolio. When I went back and looked, it's, you know, we were in fund one, or invested with somebody who started, so a lot of times the track record isn't really…”
Williams College avoids black box and quant strategies for fundamental managers
“What's important for us is understanding what our managers do and being able to explain it to the investment committee. So I've always sort of felt like if I can't explain to these guys what we're doing and why something went wrong, then I shouldn't be in this…”
Andreas Halvorsen helped start Williams' portfolio, imparting Tiger's investing style
“Andreas Halvorsen was part of the committee that started this portfolio, and there are a lot of Williams people who have worked at Tiger or Tiger family firms, and so what that means for our portfolio today is there's kind of this fundamental bottom-up kind of…”
Elliott's Paul Singer was a longtime Williams investment committee volunteer
“Paul was an incredible committee member and served for a long time, and he's not an alum. He has two sons who went to Williams, which is how he got involved and was an incredible non-alum volunteer.”
Williams College's VC allocation reached roughly triple its 6% target
“So our target allocation is six percent. Our current allocation is like Three times that.”
Chilton: Williams College avoided borrowing during the 2008 financial crisis
“We didn't get upside down in the last financial crisis and have to borrow because we couldn't get money in our portfolio, and that's just really important to Williams.”
Chilton: Williams College targets a 9% allocation to private equity
“I mean, we saw the same thing with our private equity portfolio where our target's nine percent, and it was well above that when buyouts were doing well, and now it's venture's turn.”
Rushing due diligence based on urgent recommendations rarely ends well
“They say something to you like, run, don't walk to this manager, and you do, and that is not necessarily a good thing to do. I mentioned earlier that we have sort of a slow, careful process for adding new managers and getting to know them, and sometimes when y…”
Investing in a manager just because peers do is a bad strategy
“All your friends are doing it, And you say, this doesn't feel right to me. But all the cool kids are doing this, so we're gonna do this. And that's never a good strategy.”
Williams was the first endowment to replace its custodian with an administrator
“We did one thing that was innovative, I thought, and saved us a lot of money and headaches is we moved away from a custodian and hired an administrator, which at the time we did it, nobody had done that in the endowment world, and not very many people have don…”
Liberal arts grads are better suited for investing than business students
“These kids come out and they learn how to think critically and write and make an argument and put a mosaic of things together, and that's what investing is, right? So I keep telling these guys, you are the most well-suited for investing or investment managemen…”