Long-term compounding manager relationships beat short-term high IRR bursts
Andy Golden · Andrew Golden – Navigating Princeton's Endowment Through (Another) Crisis (Capital Allocators, EP.133) · Apr 23, 2020 · at 24:19
Andy Golden, head of Princeton University's endowment, discusses the mathematical tradeoff between high short-term IRR and long-term capital compounding.
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“For relationships that can compound over a long time into something Really big, even if there's a lower nominal return to that, if you don't have that kind of reinvestment risk, you may want to choose that relationship over something that has more of a burst of high IRR, but you're not sure that you're going to be able to keep compounding with the manager”
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