Insight
Monk: Clean infrastructure assets cannot support 2-and-20 fee structures
“And when they look to the traditional private equity funds or infrastructure funds to see if there are exciting products there, they don't see any because the fee structures are too high for the underlying assets. They won't, those assets won't support a two a…”
Opinion
Monk: Few institutional asset owner advisors are truly unconflicted
“I don't see a lot of people out there that are unconflicted in their thinking or remarks.”
Insight
Monk: Adopting Total Portfolio Approach requires completely changing fund organizational structure
“If you're going to go from a strategic asset allocation to a total portfolio approach, that's a shift in asset allocation. Can't do that in a vacuum. You're going to have to completely change your organization and how you're implementing it, and that's the par…”
Prediction Not checkable as stated
Monk: Total Portfolio Approach will be obvious standard in 22 years
“It's the future. 22 years from now, we'll be like total portfolio approach. That's so funny. We weren't doing that.”
Assertion Supported
Monk: NZ Super Fund eliminated individual asset-class compensation links
“I can remember the New Zealand Superfund, which is one of the best total portfolio investors having to scrub out all of the individual portfolio links to their compensation. It was total fund, qualitative metrics for compensation.”
Insight
Monk: TPA shifts the institutional unit of work to knowledge analysis
“The unit of work becomes knowledge work instead of deal work. The unit of work is different. It's not capital deployment. It's not bucket filling. It's something else moving you towards your objective, intelligent understanding of additionality in your portfol…”
Insight
Monk: TPA infrastructure enables rapid counter-cyclical investing
“Once you have these systems in place, you could pivot around beliefs, assumptions. It also allows you to be counter-cyclical very quickly. If markets move quickly, you're going to be able to buy low, and if you feel like things are inflated, you can sell high.”
Insight
Monk: Recruiting senior talent into pure TPA structures is difficult
“By the way, that's going to help you to recruit and retain human beings. It's hard to recruit and do a TPA. You recruit people into private equity jobs, real estate jobs, because we demand, especially at the senior levels, a certain level of expertise and netw…”
Insight
Monk: 15-year private asset commitments restrict dynamic TPA portfolio adjustments
“If you're a big private equity infrastructure investor, you're probably a little nervous about the TPA push. It's hard to do TPA when you're making a 15 year commitment. You're planting seeds that are going to take a long time to grow. It's harder to move arou…”
Prediction Not checkable as stated
Monk: AI Inference Will Primarily Benefit Long-Term Pension Allocators
“That's what I'm mostly excited about, and that inference is gonna benefit the long-term pension fund investors. They're the ones that are managing assets over longer horizons, where inference, insight, have enough time to get priced.”
Insight
Monk: Development funds must generate high returns to become industry role models
“Very few pensions are going to copy a development fund that is delivering two percent return. But if there's a development fund like a Tomasek that is out there driving really high performance, then all of a sudden they could become a role model that gets copi…”
Assertion Not checkable as stated
Monk: Australian super funds lead in real-time private market valuation
“There's now the big eight Australian super funds. They're doing a lot on private market real time valuation because you can move from one super fund to another super fund in real time.”
Assertion Supported
Monk: PGGM is launching 3D TPA across risk, return, and impact
“PGGM in the Netherlands, so they're about to launch their version of TPA, which is exciting because PGGM has what they call three D TPA, three dimensions, risk, return, and impact. Every deal gets analyzed in terms of those three dimensions.”
Opinion
Monk: Large funds need technologists and data infrastructure experts on boards
“Just as we're sort of achieving that, I'm going to turn around and go back to them and say, we need technologists, people who've built data infrastructure. We need the right skills on these boards. If you're going to make a hundred million dollar investment in…”
Insight
Ashby Monk: True GP-LP partnerships drive uncompensated value for allocators
“The sign of a good partnership is you help drive a change in your partner's portfolio that you don't get paid for.”
Insight
Monk: Most pension fund innovation requires leaders risking their jobs
“Much of the innovation in pension funds is courage-based. Some leaders fed up, and they're willing to put their job on the line.”
Opinion
Monk: Pension funds fail to explain their operations to technologists
“I don't think we do a great job of explaining to technologists what we do as pension funds.”
Insight
Monk: Crises and leadership changes trigger institutional fund innovation
“The classic one is a crisis, internal or external. The next classic one is a leader. That leadership change Leads to some new innovation and on and on and on.”
Assertion Supported
Monk: Asset owners manage $120T opaque to most finance professionals
“So that's a 120 trillion dollars in capital that kind of exists in this opaque world to the broader community of Researchers, but also people that just are operating in the financial services industry.”
Insight
Monk: Investment risk budgets must align with board governance capacity
“The concept is you need to align your risk budget with your governance budget, which is to say you can't take on a ton of risk in your risk budget unless you have a board that has the time and capacity and skills to really understand the portfolio and to prope…”
Assertion Supported
Monk: Asset owner boards lack tech and data leaders
“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…”
Insight
Monk: Tech's primary allocator unlock is internal portfolio visibility
“If you get your tech stack right, fundamentally transforms what you know about yourself. It's less about what you know about the world. It's great to use technology and chat GPT to go collect knowledge on the world, but ultimately I think the real unlock with …”
Assertion Not checkable as stated
Monk: Average institutional investor spends just 1-2 bps on tech
“Right now, I would say in my community, the average institutional investor is spending somewhere between one and two basis points of AUM on their tech stack”
Prediction Not checkable as stated
Monk: Portfolio data infra will spawn tech verticals like GPS did
“We've built a lot of different businesses on GPS. There's Lyft, Uber, there's Amazon, there's DoorDash, there's all this stuff that exists as a function of GPS. And I think we're going to get a lot of those verticals coming in the investment sphere in the next…”
