Insight
Institutional boards are increasingly delegating manager selection to staff
“As that dedicated staff is billed out, boards or investment committees seem to be getting more and more comfortable with giving those staff members some authority, if not full authority, but authority to make manager decisions, hiring and firing decisions, but…”
Insight
Quantitative filtering reliably predicts persistent manager underperformance
“It's very predictive on the bottom half. The managers that are drifting down towards the bottom tend to continue underperforming. So it allows us to say, cut the universe in half.”
Insight
Room dynamics reveal true decision-makers over named portfolio managers
“I think the people part to me is the most important. It's not just who they are, but it's how they work together, how they interact, and sometimes that's more subtle things. Sometimes, sometimes there's a named portfolio manager, but you get a group in the roo…”
Insight
Fixed income managers are naturally dour; equity managers are perpetually optimistic
“You're going to expect to have more Dour and conservative people and on the fixed income side of things that the world's always ending and everyone's going to default versus the equity guys that think everything's going to go on forever.”
Assertion Not checkable as stated
Mid-sized endowments drive venture capital demand over large public funds
“The large public funds aren't doing much in venture. So it's, We definitely think it's worth it. I'd say there's more of an appetite for venture from our smaller and medium sized endowment clients. A 500 or billion dollar endowment can make a five or ten milli…”
Assertion Contradicted
China produces roughly twice as much AI research as the US
“If you look at the publication of AI research, probably two X has come from China as opposed to the US.”
Prediction Held up
China will reach negative population growth in the 2030s
“In 2030, or sometime in the 20 thirties, China is going to move to negative population growth.”
Insight
Passive investing in high-yield debt is counterproductive
“You don't want to be passive in high yields. And, you know, even if you just want to get exposure, you still want to be active there. You don't want the biggest bonds in your portfolio to be there just because the company's issued more debt.”
Insight
Clients undermine long-term views after just three months of underperformance
“We're setting five to seven year views, and if they're not working in the first three to six months, we've got all of our consultants and clients saying, why do we do this? How do we not see this? And I think Behaviorally, we all fall victim to it, so I fall v…”
Assertion Not checkable as stated
McCusker: OCIO Has Been Major Growth Tailwind for Consulting Firms
“The tailwind that has helped all of us the last decade is the OCIO channel. And that has been a great source of growth for us and many others.”
Assertion Supported
McCusker: Large PE firms built 100-person sales teams for RIA market
“We looked at some of the big private equity firms starting to raise hundred person sales forces to attack that market, and we thought, well, that's not really implementable for any PC, so let's keep it on there, but we don't really have anything right now.”
Disclosure
McCusker: NEPC hired an investment banker for market education, not auctioning
“We engaged an investment banker to help us not so much scan the universe and bring in other potential suitors, but just help us understand who are the other players besides Hightower. Where does Hightower fit in terms of how they work with their advisors”
Disclosure
McCusker: All 350+ NEPC employees receive bonuses upon deal close
“We made sure that all of our 350 plus employees are getting something out of this transaction. There's a bonus for every single person who's employed when the transaction closes.”
Assertion Supported
McCusker: Hightower Has Acquired 140 Advisor Teams
“Hightower has gone through a lot of acquisitions. They've acquired a 140 advisor teams.”
Disclosure
McCusker: BlackRock's Strategic Income Opportunities is NEPC's most notable BlackRock allocation
“So we do think highly of them and we use them in a lot of different ways, but Rick's strategic income opportunity strategy is probably the most notable one that we use.”
Insight
McCusker: Corporate LDI clients saw the most direct benefit from rebalancing
“If they had an LDI allocation, which most of them do, They saw some of the biggest gains from fixed income, and they were probably the earliest to rebalance, because rates fell very quickly, and it was actually a positive basis mismatch for them if they had an…”
Assertion Not checkable as stated
McCusker: Asset managers across strategies are exploring the TALF credit opportunity
“Everyone is looking at the TALF opportunity now, so we've got everything from long only liquid Managers talking about that.”
Insight
McCusker: Video calls reduce informal competitor intelligence gathered during manager meetings
“That may be one of the things that we lose by not having the in-person meetings in the office. I think that can often be part of the conversation at the beginning or end of a manager meeting, kind of the casual chit chat of, hey, what are you hearing from othe…”
Insight
Public pension asset allocation changes take three to six months
“On the other end of the spectrum, we can go to a, say, a public plan, and we've got to go through the governance process, we've got to go through monthly meetings, we've got to think about what that means for their discount rate and have conversations about th…”
Disclosure
NEPC's bespoke OCIO business manages over $20 billion across 50 clients
“So we have what is now a large OCIO business with probably over twenty billion dollars, over 50 clients. Every portfolio that we build is bespoke.”
Disclosure
NEPC maintains an approved list of up to 400 long-only managers
“I think we have about 350 to 400 managers in long only overall, so probably 200 or so of those, or 150 to 200 are equity.”
Disclosure
Most NEPC client large-cap US equity dollars are passive
“If I go by dollar count, it's much, much higher because many of our large public funds are passive in U.S. Equities and often running it internally for cost management purposes.”
Assertion Supported
McCusker: NEPC was fully employee-owned for nearly 40 years
“We've been fully independent, employee-owned our entire almost forty-year existence, but no surprise, we always say yes to those meetings.”
Assertion Not checkable as stated
McCusker: NEPC's 50 partners kept deal confidential for seven months
“Having our partners keep it confidential for what amounted to about seven months, Which is a borderline miracle at the end of the day.”
