Prediction Not checkable as stated
Sargent: Manager selection will drive more future endowment alpha than allocation
“My guess is if you fast forward, there's gonna be more of that from manager selection over time because so many people have just copied this asset allocation model.”
Opinion
Sargent: Investors should not rush to exit China despite new left-tail risks
“There are certainly some left tail scenarios to investing in China that weren't there a few years ago. But on the other hand, you may be getting paid to take those risks right now, and I don't think it's a moment to rush for the exits.”
Insight
Sargent: Farm team manager seeding programs do not work in private markets
“I don't think farm team works on the private side only because if you're really undersized in fund one and fund two, a manager becomes proven there isn't going to be capacity for you in fund three.”
Insight
Sargent: Managers unable to cite an investing moral dilemma raise red flags
“And I often do ask managers before we partner with them, tell me about a time where you had a moral dilemma in investing and how did you handle it? And I don't expect everyone's moral compass to point in the same direction, but if the manager cannot think of a…”
Opinion
Sargent: Current ESG scoring tools are rudimentary, arbitrary, and hard to justify
“The concern that I have is the tools that help investors make these choices in this moment seem very rudimentary and very arbitrary, and so I hope those tools develop and give greater information to investors to help make these choices, but for now, I think ta…”
Assertion Not publicly verifiable
Sargent: Underperforming global stocks by 0.20% achieved top-quartile foundation performance
“If you underperformed the global stock market by 20 basis points a year for the five years ending twenty-twenty-one, that was top quartile performance.”
Prediction Not checkable as stated
Sargent: Investors will regret shifting to passive investing in 2023
“I think probably we're going to look back at this moment in time and say, that was a really bad time to go passive.”
Assertion Supported
Sargent: Median buyout fund beat public markets 6% annually over 20 years
“And if you look at history and you cut out the most recent vintages that are not mature, but look at the 20 years of vintages before that, and you look at buyout funds versus a public market equivalent like MSCI World, the median buyout fund has outperformed t…”
Assertion Supported
Sargent: Yale's historical outperformance split evenly between allocation and selection
“I remember seeing some analysis that suggested that half of the value that Yale had added over time relative to peer endowments was from asset allocation and half was manager selection.”
Insight
Sargent: Foundation investors prioritize principles over outperforming peer institutions
“Well, that's another interesting thing about foundations is the goal is less to outperform other foundations. We have a lot of large foundations with whom we're working pretty closely on the grant making side. Issues, climate, social justice, whatever it is. I…”
Assertion Not checkable as stated
Sargent: Packard's EM equity outperformed developed markets over 10 and 15 years
“Both on a 10 and a 15 year basis, our emerging market public equity has outperformed our developed market.”
Disclosure
Sargent: Packard Foundation previously targeted 20-25% equity exposure to China
“We had a target of 20 to 25% of our equity exposure, so call it mid teens percent of our endowment a few years back.”
Disclosure
Sargent: Packard adopted a hybrid generalist-specialist investment team model
“I do think in the early days, we tried to have a hundred percent generalist model. And philosophically, I love that. I think working on different things makes you a better investor. I think being generalist is more fun. And I also think and sense competition f…”
Disclosure
Sargent: Packard conducts 10 manager meetings and up to 30 reference calls
“I'm thinking of some managers we've added to the portfolio recently on the private side where we would have 10 pretty in-depth meetings with the manager, with their team, doing case studies. We have done 25, 30 references on investments recently in the past.”
Disclosure
Packard Foundation is decreasing expected alpha in its portfolio models
“I do know we are decreasing alpha in our models, just in terms of what we expected historically.”
Insight
Sargent: Lateral moves into endowment investing are hard because talent is homegrown
“It's hard when you're this experience to make a lateral move into the endowment and foundation space. It's very much homegrown in terms of its talent. The leadership opportunities don't open up that often because people tend to stay in the industry.”
Assertion Supported
Sargent: Packard portfolio had just five line items when she joined
“There were five line items in the portfolio, a few index funds, and a lot of HP stock.”
Assertion Supported
Sargent: Foundations hold 10% to 15% less in private assets than endowments
“So you have this massive denominator effect that can occur in the foundation portfolio, which is why you see a lot of foundations holding 10, 15% less in private assets than a lot of university endowments.”
Insight
Sargent: Asking for top 5% rankings cuts through polite reference bias
“Often I will ask a quantitative question. I will force people to rank the person that we're talking about on some metric because you can have a positive, lukewarm reference call, and then when you say, is this one of the top five percent of investors that you …”
Disclosure
Sargent: Packard avoids investments unless the team shares CIO excitement
“Obviously, I have the final say. I'm responsible. I'm the CIO. But we really don't make investments where I'm the only one excited about it.”
Disclosure
Sargent: Packard's top 10 managers represent 40% of portfolio assets
“I think if you are going to have a concentrated portfolio, and ours is, I think we have the top 10 managers are 40%, the top 30 are 70%, I believe.”
Disclosure
Sargent: Packard Foundation has a 3% mission investment endowment carve-out
“We actually have a carve out of our endowment that's a mission investment portfolio. That's a three percent carve out.”
Disclosure
Sargent: Packard Foundation lost money backing a short-only fund in 2015
“We also back to short only fund in 2015. Wonderful people, wonderful research, but it was a really, really tough time and they ended up going out of business and we lost a lot of money feeding the beast over those years.”
