Muthu Muthiah, CIO of Children's Healthcare of Atlanta, explains why real estate struggles to compete for allocation against venture capital and private equity buyout strategies.
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…”