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Dietrich Foundation's massive venture allocation features a heavy China and India focus
“Our focus on China and India, it's a big chunk of our 52% that's venture.”
Dietrich Foundation has held zero direct U.S. index exposure since 1997
“We have not had a direct exposure to the U.S. S&P. 500 or any U.S. Index since 1997, ok?”
Dietrich Foundation's total portfolio exposure to China peaked at 38% in 2020
“We peaked at a total portfolio exposure in China of 38% in late twenty-twenty, which is a big number. Today, as we sit here, we're about 19 or 20%.”
The Dietrich Foundation operates entirely without an investment committee
“Yeah, he put in the controlling trust document the fact that he wanted the trustees to delegate investment authority to the CIO and CEO of the foundation. That's unusual. We do not have an investment committee.”
Multi-billion VC funds need 50% concentration in few winners to 4x
“When they see a company they've backed in the seed in Series A, they will lean in hard on the subsequent Rounds to the point where at the end of portfolio construction, they might have 40, 50% of the fund in three or four companies. That, to us, is exactly how…”
A European GP waterfall requires 5.6x gross to deliver 3x net
“We have a European GP. We actually are underwriting right now. We really like the firm, but the way the waterfall is calculated and the fact that the GP is actually charging some fees to the portfolio companies, they need to generate a 5.6 X gross to hit a thr…”
Grefenstette: Venture managers cannot reliably identify fund breakout winners at first check
“You have 30 positions in the VC fund, and only a couple are going to outperform the entire fund. I know the GP isn't good enough to identify what those companies are at the point of first check.”
Grefenstette: Dietrich Foundation re-backs returning venture GPs who autopsy past mistakes
“Some LPs won't give them a second chance. We have done that where we have said to a GP, okay, we all know this is what went wrong here, and we can do the autopsy. And then we still supported them when they came back to the market because we think they're going…”
Grefenstette: Dietrich Foundation allocates an outlier 52% of total NAV to venture
“Dietrich Foundation is 1.6 billion in total assets, and we have pretty unusual allocation where about 90% of our assets are in private strategies. Venture capital alone is around 52% of the total NAV right now, which is quite the outlier”
Seides: Dietrich Foundation allocates 90% to private assets and 30% to China
“Earlier this year, I had Ed Grefenstedt, who's the CIO of the Dietrich Foundation. And I'll just tell you one thing, then you'll say, wait, that's possible. 90% in privates, like half of that's in venture, like as much as 20 or 30% in China.”
Dietrich Foundation currently allocates 90% of its portfolio to illiquid assets
“As we sit here today, we're 90% illiquid, which is pretty much the upper threshold of my comfort.”
U.S. public equity market concentration is at a 100-year high
“If you take the top decile relative to the remainder public securities in the U.S., it's at three X. It's the highest ratio Market cap in a hundred years.”
Dietrich Foundation's China portfolio generated $160M in excess liquidity
“In fact, our portfolio in China over the last 10 years produced a hundred and sixty million of excess liquidity. One hundred and sixty million distributions over capital calls over the last decade in our China book.”
Taking half-bite fund allocations on lower conviction is a dangerous trap
“It's good discipline, I think, to be biased toward equal weighting, because there's a tendency to say, okay, well, I'm not quite sure about this one. Let's do a half of a bite on this one and see what happens. I think that's a very dangerous, slippery slope to…”
Dietrich allocates roughly 55% of its private portfolio to venture capital
“So if I take the 90 as a whole pie, a hundred percent, probably 55% of that pie is venture. And then the other is split evenly, roughly, between growth equity funds and buyout funds. We don't touch any real estate. We do very little in the energy space.”
Dietrich Foundation returns rank first across major institutional surveys
“Fortunately, we have been performing, as far as we can tell by all reported surveys, our returns are number one for the trailing in 1015, and 20 years.”
Illiquid assets, small caps, and equities will outperform long-term
“We believe over long periods of time, Illiquid's going to outperform liquid. Small's going to outperform large. Equities are going to outperform fixed income.”
Institutional CIOs avoid cheap Chinese assets due to career risk
“It's not easy because there can be screaming opportunities and China might be perfect example today where intellectually a lot of CIOs know these valuations are getting unjustifiably cheap. But back to career risk. They don't want to walk in, in front of their…”
Underwriting continuation vehicles requires interrogating why assets aren't sold naturally
“We always start by asking, why isn't this company being sold right now? What's preventing this company from being sold in the normal operations of the fund? And is there a reason to hold it? And is this GP the right GP to be holding this asset at this point, a…”
Dietrich Foundation's unfunded India commitments roughly equal its China commitments
“India's exciting theme for us, so we have probably as much unfunded commitment there as we do in China.”
A private market GP who lacks fear about execution is concerning
“If a GP doesn't have any fear about execution, I have a lot of fear.”
Dietrich Foundation dramatically slowed its allocation pacing to China
“So we put pencils down. We haven't stopped looking. We haven't stopped investing entirely in China, but our allocation pacing has changed dramatically.”
Dietrich heavily targets special situations buyouts anticipating market distress
“Most recently, I'd say the last five or six years, We've been really leaning in on the special situation subsector within buyouts because we think there's going to be some challenges ahead and some shoes are going to fall.”
GPs selling strong assets cheaply to boost DPI is a red flag
“And we've often said that the GPs who are selling good assets, probably at a low valuation just to get the DPI up, that's a red flag.”
Dietrich Foundation received $1.4B in private distributions over ten years
“If you look at our last 10 years, we've gotten distributions of 1.4 billion dollars. On capital calls of one billion. So that's four hundred million.”
Institutional outperformance requires embracing an uncomfortably idiosyncratic portfolio
“You can't possibly target a performance over the long period that outperforms everyone else unless you're willing to embrace an uncomfortably idiosyncratic portfolio, and part of that has to be a willingness to look wrong some periods of time, something becaus…”
Dietrich Foundation splits its venture portfolio equally between US and international
“That venture piece is probably split Evenly, roughly, between the U.S. And non-U.S. Most of the non-U.S. In venture is in emerging Asia and Latin America. Little bit in Europe.”
Dietrich Foundation targets seed and Series A funds to move the needle
“We are most excited about the truly early stage in the seed in NA, and as our size is relatively modest, at a 1,000,000,006, we can actually get access that's meaningful, and some of these smaller funds that can move the needle for us.”
Bill Dietrich funded The Dietrich Foundation with $170M in 1997
“So before he sold the company, he put all the stock of Dietrich Industries into a trust. So he had made the commitment there that the proceeds would go into the trust designed to fund the foundation upon his death And that's what he did. So he started with a h…”
Dietrich Foundation holds roughly 32 co-investments totaling 5-6% of NAV
“So I think we've done about 32 in the total portfolio, and it only amounts to
On a cost basis, maybe about five, six percent of the total NAV.”
Dietrich Foundation's private equity portfolio averages 7.1 years in age
“If you look at the dollar weighted average age of all of the partnerships we're in, it's about 7.1 years old. So we are as a portfolio out of the J curve.”
Dietrich Foundation distributes 3% of NAV annually under 509(a) structure
“We are not a private foundation, but structured as a five oh nine a supporting organization under the code. As such, we don't have to comply with that five percent payout otherwise required, and we can pay out three percent of our NAV each year”
Dietrich Foundation's unfunded private equity commitments represent 19% of NAV
“Today, that unfunded as a percentage of NAV for us is about 19%.”
Dietrich Foundation pairs established core venture GPs with independent satellite managers
“We also try to have a core venture portfolio exposure through some of our more established and broader mandated GPs, and then look to have some satellite opportunities around that, that we also put into that category, like Sean, they're a little higher risk, h…”