Assertion Not checkable as stated
Dowling: Inexperienced crossover investors are moving into earlier venture stages
“The other issue is that because everybody's focused on the late stage area, which has become very pricey, they're moving down, down rounds into lower and lower levels that they've never played in before. Some have, some of the bigger ones have, but some of the…”
Insight
Dowling: Conservative multi-strategy hedge funds can serve as fixed income proxies
“So we've even said for some investors, maybe you think about having some of the more conservative multi-strat hedge fund managers and think about it as a fixed income proxy.”
Assertion Not checkable as stated
Dowling: Very few mid-market institutional consulting firms remain
“Well, there's not a lot of us left.”
Insight
Dowling: Aging founders and asset-light models drive consulting consolidation
“Now, fast forward to the last decade or so, these people that started in their thirties and forties, you know, they're 60 and 70 years old, and they need a liquidity event, and even if they've passed down the partnership and expanded it, it's still hard for ju…”
Insight
Dowling: Smaller endowments have the edge investing in emerging managers
“They can invest in smaller managers, emerging managers. That's harder to do with a giant consulting firm”
Insight
Dowling: Institutional clients claim long-term horizons until quarterly losses occur
“Everybody says they're long-term until there's losses, and then you're like, whoa, we're down 10% in a quarter.”
Insight
Dowling: Quantitative manager metrics explain the past, not future performance
“Some are very, very quantitative, and we're quantitative too, but we would tell you that That explains how they did in the past. It may or may not explain how they do in the future, right? It's all backwards looking. And teams change and people change.”
Insight
Dowling: Due diligence should evaluate cultural alignment with strategy, not idealized culture
“The first thing I'd say is there's no one culture, and we're not looking for the exact same culture. We are just looking for a culture that is appropriate for the strategy and how they're set up.”
Insight
Dowling: Allocators should conduct virtual due diligence individually to read dynamics
“Do calls individually. It's really difficult to do a group Zoom or Teams call in terms of due diligence because you might have people talking over each other. You can't pick up on individual Brady Bunch boxes that when the senior PM talks, the number two rolls…”
Prediction Not checkable as stated
Dowling: Allocator due diligence will permanently shift to hybrid virtual-in-person models
“You ask, where is it going? I think it's going to be a little bit of both. I think our meetings will be more meaningful, and that instead of doing a marathon all day meeting on site where we're exhausted and they're exhausted, or flying to Hong Kong and our ey…”
Prediction Open · timeframe May 2032
Dowling: Lower Middle Market PE Will Beat Public Equities
“You can pretty consistently make good returns, but I would say that these are lower returns than you got in the previous 10 years with private equity, but they're going to be a lot better than the returns in the public equity market.”
Insight
Dowling: Leave venture allocations unfilled if lacking access to premier managers
“It is a access class, not just an asset class, and so that means you may not be able to do as much venture. There's still great venture companies out there. It's the new breed, the people that leave the larger firms and start up and do great at a smaller size,…”
Prediction Not checkable as stated
Dowling: Good multi-strat hedge funds can earn 6% to 7% in 2022
“I think a good multi-strat manager can earn six or seven percent, and that's nowhere near what it returned in the nineties, early 2000, but that might be pretty good this year.”
Insight
Dowling: Niche investments often carry hidden macro and GDP risks
“A lot of times I think that you have to be careful about is even though it's weird, It has a risk factor, and sometimes that risk factor is GDP, the economy. So you're like, oh, and this is really interesting. Aircraft securitizations, and like, well... Someti…”
Disclosure
Dowling: FEG usually passes on co-investments charging management fee and carry
“We pass most times when there's a management fee and a carry, because then it's just a fund of one idea, and that's not great.”
Prediction Not checkable as stated
Dowling: Fewer people will pick stocks as AI replaces financial analyst work
“And there will be people that do that. There will just be less, because some of that analyst work is going to be replaced by artificial intelligence.”
Insight
Dowling: Allocators need a diversified real asset basket against inflation
“You need to make sure you have real assets and you probably should have a Diversified basket of real assets because inflation's weird. It reacts very differently to both expected and unexpected. There's no silver bullet.”
Opinion
Dowling: Institutional investment consulting is a transient industry
“It's a pretty transient industry.”
Assertion Supported
Dowling: Billion-dollar institutions are now outsourcing via OCIO
“What's changed is the size of the institution that are outsourcing. It's pretty incredible. You have, you know, billion dollar institutions that are outsourcing.”
Insight
Dowling: Hedge Fund Sourcing Centers on Prime Broker Relationships
“And with hedge funds, the ecosystem revolves really around prime brokers. If you're a hedge fund, you need a prime broker. So instead of having to go out and talk to 9000 hedge funds, we can start by talking to the prime brokers and ask them who's launching in…”
Assertion Supported
Dowling: US has 30x more private $10M+ revenue companies than public ones
“There are 30 plus more companies on the private side with revenues over ten million dollars than the U.S. Public market.”
Insight
Dowling: Effective investment committees require a strong chair to align members
“They have very different personalities, and by changing one or two people, it can be night and day, and so a lesson is make sure you have good governance, make sure you have a really strong IC chair, make sure everybody's rolling in the same direction. If not,…”
Disclosure
Dowling: FEG passes on 95% of non-traditional investment ideas
“And I'd say 95% of the time we pass. We just pass. Because they might be interesting ideas, but no one's going to invest them. And it's not worth the missionary work.”
