David Druley, CEO of institutional advisory firm Cambridge Associates, explains how the source of investment advantage has shifted from scarce data to behavioral decision-making.
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“It's not so much what information you get. It's how you synthesize that information and how you make decisions. It's the edge today.”
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More from David Druley
Opinion
Druley: Only 100 to 200 hedge funds merit institutional capital
“What I would say is hedge funds is an asset class not worth the money. That said, there's seven, 8000 hedge funds. We think there's a hundred to 200 that actually do merit institutional capital and continue to merit institutional capital.”
David DruleyAug 19, 2019▶ 34:16David Druley – Structure into Action at Cambridge Associates (Capital Allocators, EP. 106)
Opinion
Druley: Only a few percent of 10,000+ managers merit institutional capital
“We think about the 10,000 plus managers that are out there. There's a few percent that actually merit any of the capital of our clients and asset owners.”
David DruleyAug 19, 2019▶ 20:34David Druley – Structure into Action at Cambridge Associates (Capital Allocators, EP. 106)
Insight
Druley: Co-investments only generate strong returns within a manager's sweet spot
“And what they found out is that when you did co-invest with the managers we like, if you did it in their sweet spot, the sweet spot being either sector or industry expertise or size deal, that co-invest worked out very well. When you did the co-invest outside …”
David DruleyAug 19, 2019▶ 28:17David Druley – Structure into Action at Cambridge Associates (Capital Allocators, EP. 106)
Opinion
Druley: Cambridge still finds significant active value-add in liquid equities
“We are still finding the ability to generate significant value add in the liquid markets, specifically the liquid equity markets. There's pockets of those markets which are harder to generate value add, but in the most part, we're still finding the ability to …”
David DruleyAug 19, 2019▶ 32:31David Druley – Structure into Action at Cambridge Associates (Capital Allocators, EP. 106)
Insight
Druley: Investors should capture at least 65% of a manager's alpha
“We want a fair sharing of the alpha, meaning we think asset owners should get 65 to 75% of the alpha, at least, and that it's fine for the manager to have 20 or 30%.”
David DruleyAug 19, 2019▶ 34:38David Druley – Structure into Action at Cambridge Associates (Capital Allocators, EP. 106)
AssertionContradicted
Druley: Cambridge Associates holds up to 60% of endowment advisory market
“So on the endowment and foundation side, as I think probably most of our listeners know today, we have significant market share. In most cases, we're 50, 60% of the market.”
David DruleyAug 19, 2019▶ 40:57David Druley – Structure into Action at Cambridge Associates (Capital Allocators, EP. 106)
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