Insight
Falls: Flooding investment committees with finished proposals suppresses critical feedback
“One is if you flood a committee with information, you won't get any feedback. If you come to committee meetings with every I dotted, every T crossed, very few people are going to say, gosh, I know you've done months of work here, and you have a point of view. …”
Insight
Falls: Apparent portfolio diversification often masks concentrated underlying beta
“I use that analogy to think about when we talk about a diversified portfolio, you got to be sure they're not all secretly tomatoes. And I think that understanding what does create that diversity, there's diversity in public large cap equities, but not that muc…”
Insight
Falls: Relying on data over manager caliber causes the biggest investment mistakes
“I think the biggest investment mistakes were usually around too much reliance on data and not enough focus on the caliber of the person. Sometimes the data is either not right. The biggest mistake I ever made was really being swamped by how good the numbers lo…”
Insight
Falls: Young women in finance must seek mentors across gender differences
“I think women need to have good mentors, and I think there will be a world where there's a fifty-fifty chance that the mentor is a male or a female, but until we're in that world, it's very important for young women to be able to find mentors who don't look ex…”
Assertion Not publicly verifiable
Falls: Andover's VC Exposure Hit Nearly 35% of Endowment in 1999
“So we were pretty heavily invested in venture capital. Andover was an early mover in venture capital in the eighties. So we were early investors in funds like Matrix and some others. And that had risen to, in 99, to be almost 35% of the endowment. It was like …”
Insight
Falls: Reviewing investor letters from inception reveals how managers handle mistakes
“I find that if you start with a book, I usually make a paper binder, of all the letters since inception, you will really begin to understand the thought process of a manager and how they handle mistakes.”
Disclosure
Northwestern endowment assigns roughly 15 active managers per team member
“So the way we're trying to create a comparable kind of discipline is to actually assign managers. So everybody has a manager roster. It maps roughly to the old asset classes, but not entirely. And then each manager has a partner. So there's two people on every…”
Disclosure
Northwestern endowment tracks three to four alternatives for every active manager
“And then we've sort of beginning to adopt a slot concept, like we're trying to have a more or less set number of managers. It won't be precise. And then always for every manager, we want to keep track of three or four alternatives.”
Insight
Falls: Allocators must visit manager offices rather than hosting conference room pitches
“I definitely think you got to go to their offices. This idea that people come and sit in your conference room, that's fine, and I'm happy to host people here in Evanston, but I really like to walk around and sense what the vibe is.”
Disclosure
Amy Falls: Northwestern endowment was underweight PE and is now adding capital
“We were underweight private equity.
So we are using this moment to think about where is the best place to add.”
Insight
Falls: Rising cost of capital forces lower buyout multiples and more equity
“Obviously, there's an adjustment as the cost of capital goes up, leverage strategies get hurt, and then there has to either be more equity in deals and prices have to come down.”
Disclosure
Falls: Real estate and natural resources distributions are slower than expected
“Unfortunately, there are other parts of the portfolio that are not returning capital, and I'm not speaking about venture, but natural resources and real estate, which probably we would have expected would have returned a little bit more capital.
That's been a …”
Disclosure
Falls: Northwestern uses an 'on-deck' section to involve committees earlier
“One of the things we do when we do committee meetings, we have an on-deck section, which is these are some managers that we're just starting the process on. So if you have a thought, let me know now. That's really intended to invite them into the conversation …”
Insight
Falls: Allocators must not take on more positions than they can monitor
“The notion of don't sow what you can't reap, because the amount of waste that happens because you just can't get to the crop, it's very hard. It all comes at one time. So just a lot about not setting yourself up for failure, because you can't keep track of it,…”
