Insight
Kochard: Portfolios should concentrate liquid assets and diversify illiquid bets
“I'm a much bigger fan in less diversification when things are very liquid. When you can change your mind. But when things are illiquid, I size them smaller. And so I believe in more diversification.”
Disclosure
UVIMCO benchmark is 60% global equity, 30% bonds, and 10% real estate
“Which right now is 60% public equity, 30% public bonds, 10% public real estate. All global. And that's a level of drawdown risk that we re-underwrite every year that the university is comfortable, would be comfortable with.”
Insight
Kochard: Excessive decimal precision in quantitative analysis leads to major mistakes
“A lot of quantitative analyses, I think, give people false sense of precision, and we provide a lot of quantitative statistics about our portfolio, but I also, I'm a firm believer that, you know, a lot of mistakes are made when you kind of take it to the neare…”
Disclosure
Kochard: UVIMCO caps unfunded private commitments at 25% of total pool
“It's a minimum of 20% that we have access to within three months, a minimum of 30% over a year, and a maximum unfunded commitments of, to private Whatever, of 25% of the total pool.”
Disclosure
Kochard: UVIMCO holds 8% to 12% in cash, contrarian to Yale
“You know, we've been running, I try to run between eight and 12% in cash and low duration treasuries, and it's been closer to the high end of that range. It's now kind of in the middle of the range, but that's still, you know, higher than what Yale and some of…”
Disclosure
Kochard: UVIMCO targets global equity beta under 0.70 versus peer averages
“We try to target a beta that's just under .7 beta to global public equity. Our large peers are anywhere from, say.75.”
Disclosure
Kochard increased Makena's venture allocation from 5% to nearly 13%
“When I started, we were about a five percent allocation to venture capital, despite our location on Sand Hill Road, and so we've slowly gotten that up over time to now closer to 13%”
Disclosure
Makena maintains a hedge fund allocation of 18% to 19%
“We are right now, we have an allocation to hedge funds, which is just below 20%, say, 18, 19%.”
Disclosure
Makena caps direct and co-investments at 10% of its total portfolio
“We're never going to become a direct investor. It's going to be a, I think our edge ultimately is forging these long-term partnership relationships with managers. And what we're trying to do is leverage those over time to develop some of these co-investments t…”
Assertion Supported
Emerging markets trailed US equities by 400 basis points over 30 years
“More or less, the U.S. Return is about 10 and a half percent. Non-U.S. Developed market equities close to six percent. Emerging markets slightly above developed market equity at about six and a half percent. So that's a 400 basis point under performance during…”
Disclosure
Makena redirected rebalancing capital into biotech instead of emerging markets
“When I think of how do all of those compete with each other, it's not going to be emerging markets that gets my, say, redeployment, rebalancing dollars. We just actually put more money to work in biotech.”
Disclosure
Makena has made no private natural resource commitments in 3-4 years
“We have not made a commitment to natural resources in over three to four years, and so that's been, it's, we have an interest, yeah, we have a reasonable size NAV in the ground of about six percent.”
Disclosure
Makena manages portfolio drawdown risk within a 0.55 to 0.65 beta band
“We want to make sure at all times the portfolio has a level of risk that is close to the 6040, sort of as a drawdown risk. And we operate within bands. The minimum is a .55 beta. The maximum is a .65 beta.”
Insight
Kochard: Management fees consume a larger share of returns in low-return environments
“In a lower return world, fees take a disproportionately larger percentage of the total return, and anything that can be done to knock those down a bit is, you know, going right to our bottom line.”
Insight
Kochard: Allocators cannot easily time private equity because capital takes years to deploy
“When you commit today, if I were committing to a private, you know, buyout manager today, They may not deploy the capital for four years.”
Disclosure
Kochard: UVIMCO caps underlying company positions at 100 to 200 bps
“A large position for us is going to be in the order of an, at the underlying company level, a hundred, maybe 200 basis points.”
Disclosure
Kochard: UVIMCO reduced private equity allocation from low 20s to 16%
“Our Private equity, which is a mix of buyout, growth equity, and venture capital, has come down from, over the last, say, six years, from low twenties down to 16%.”
Disclosure
Makena allocates to only three credit managers to preserve sizing optionality
“Right now, we just have three managers that have that credit background, that we could size that up if the opportunity becomes right.”
