Insight
Muthiah: Biotech venture platform models are capital inefficient for private investors
“The reason for that is when we look at venture in life sciences, and there's a broad statement, this is not, doesn't cover everybody, but the strategy seems to be to invest in a platform that has multi-molecule outcomes. And in that construct, dollar that goes…”
Insight
Muthiah: OCIO fear of client turnover leads to under-risked portfolios
“How much portfolio vol can you take before clients start to head for the door? And I think that balance was very much at the forefront. What is the appropriate amount? It can play out in taking less risk than you're supposed to be taking.”
Opinion
Muthiah: Indian public equity managers hold largely undifferentiated portfolios
“On the public market side, there was a lot of ownership of the same things. Not a lot of differentiation in people's portfolios, except on the margins.”
Prediction Not checkable as stated
Muthiah relies on private markets for tech exposure over public mega-caps
“The way we think about it is to say on the growth spectrum of things, especially in tech, let's take the exposure in our private market portfolio, which means that our portfolio won't keep up with big rallies in the market and won't have as much momentum, but …”
Insight
Muthiah: Fundless sponsors wait for fat pitches without ticking deployment clocks
“Because people don't have this unfunded commitment clock ticking on them, they wait for pretty fat pitches, because if they don't get the fat pitch, then they don't raise fund one.”
Insight
Muthiah identifies five distinct forms of edge in private market investing
“When we're looking at managers, it feels like we're looking for managers with edge at the end of the day, and if you were to broadly say that you have behavioral edge, analytical edge, relationship edge, information edge, and execution edge, all of those exist…”
Insight
Muthiah: Removing asset silos forces allocators to rethink what to own
“If you take away the specific asset class buckets, which all own equity on the equity side of things, but they have different reporting frequencies, valuation methodologies, you're changing the question you ask. So if you think in buckets, it feels like you're…”
Disclosure
Muthiah targets 0.7 portfolio beta, assuming 1.4 beta for private markets
“It gives us the equity beta target of .7, and we allocate that across managers and try to manage it to the .7. Within public and liquid realms, we look at actual beta, and then within private realm, we look at an assumed beta. And we think about assume beta in…”
Insight
Muthiah: Hospital leaders intuitively understand volatility better than endowment boards
“People on the hospital side of things have to react to economic realities a lot quicker given what they do and how complex it is and pushing costs through and reimbursement. The conversations around volatility are a lot different. They inherently understand vo…”
Disclosure
Muthiah cut CHOA's liquid equity portfolio from 35 managers to 12
“12 months in, we took our liquid equity-like portfolio from somewhere around 35 managers to 12.”
Insight
Muthiah: Indian venture capital is evolving toward US-style founder-led funds
“There's been really good evolution in the type of manager in India, in venture, which looks like the U.S. A lot now in terms of the type of person who finds themselves with a venture fund, and it used to be investment bankers, a transaction experience, and it …”
Disclosure
Muthiah avoids illiquid Chinese investments due to an unproven illiquidity premium
“We think about it a lot, and where it's come out for us is that we've gotten a lot more liquid in China, so we've not really spent a lot of time on illiquid investments. We're not quite sure the illiquidity premium is there for all the risks that we're bearing…”
Disclosure
Muthiah caps CHOA's annual illiquid commitments at six percent of AUM
“About 20% was what we were comfortable with in terms of leverage, which if you think about the ratio of unfunded to NAV results in about a 40% illiquid investment. And then on a yearly basis, we try to commit no more than six percent of the AUM to illiquids, s…”
Assertion Supported
Muthiah reveals CHOA currently holds a zero allocation to real estate
“If real estate does make it into the portfolio, it's usually Opportunistic. It's usually small, high vacancy development things. Right now we don't have any.”
Insight
Muthiah: Manager culture is revealed when teams obsess over portfolios at dinner
“Debate is critical to be able to get to the right decisions. That implies more collaboration amongst team members. And then I also think culture feels like what people talk about. And when you spend time with people and they're talking about investments, even …”
Disclosure
Muthiah backs fundless sponsors to solve for private equity unfunded leverage
“Fundless sponsors in today's market, mostly because it solves for private equity exposure without the unfunded commitment leverage, and as does co-investments. So for us, it's more driven by solving for unfunded than fees.”
Disclosure
CHOA targets 40% private investments, 30% public equities, and 30% defensive assets
“We generally target about a 50 basis point allocation per fund to venture managers, usually about a one percent allocation per fund for private equity managers, and a three to five percent allocation for more liquid managers, and then adjust those as time goes…”
Disclosure
Muthiah targets a 20% total portfolio allocation to venture capital
“And we think venture will be about 50% of our private portfolio, which is a target of 40, so probably about 20% in the venture portfolio.”
Assertion Supported
Muthiah relies on CHOA's 70% equity allocation for long-term inflation protection
“And then on the real asset exposure, given we do have 70% of our assets in equity-like investments, we're comfortable with that serving as protection for long-term inflation.”
