The Ledger
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Top Silicon Valley VCs Reject Corporate Pensions Due To Finite Fund Lifespans
“We have some growth in buyout mid-cap, and we just never went deep into venture, you know, seed or A round, partially because we just, you know, we're not interesting money to Sequoia and to Sand Hill Row, because Sand Hill Row says, you're not going to be her…”
Overfunded Textron Pension Ignores LDI Strategies To Maintain Growth Focus
“So we're about a 116% funded and we still remain growth focused. We do not have an LDI focused plan.”
Van Vleet: Textron will not seed small boutiques for derivative strategies
“I'm not going to go to four guys in a shoe box and give them a mandate where they're using derivatives and prime broker. And no, I, you go to large firms, you give them a sharp knife and you trust them to use it.”
Van Vleet: Textron avoids multi-asset and macro funds to maintain style purity
“It's very, very important to me that managers stay in their box. And for that reason, we don't hire any multi-asset managers. We don't have any macro hedge funds.”
Yield To Maturity Is Horrible Math Due To Unrealistic Reinvestment Assumptions
“For investing, my biggest pet peeve is the word yield. I think anybody should spend half a minute looking at the math of how you calculate yield to maturity. It's bad math. It's horrible math. This idea that you're going to reinvest at the same rate. So of cou…”
Van Vleet: $8B to $10B is the optimal pension fund size
“It's, a lot of it is because we're at a size of ten billion. I can do that. Again, I really feel for the people at CalPERS who you just can't move the needle, and I feel badly for the firms that are, you know, five hundred million to a billion, you're not goin…”
Van Vleet: There Are Fundamentally Only Two Asset Classes: Rates And Equity
“I really only think there's two asset classes. There's rates, as in government rates, And there's equity. Then there's equity proxies called spreads.”
Van Vleet: Textron pension uses no investment consultants
“We don't have any consultants. I'm not a big believer in consultants.”
Van Vleet: Textron Invests in China Strictly via Domestic A-Shares
“All in A shares. So we didn't want any H shares. We didn't want any red chips. We want as much as possible somebody who's reflecting the local economy. And so that's a lot of healthcare and fintech.”
Textron Pension Maintains Dedicated Equity Allocation To Chocolate, Alcohol, And Tobacco
“For example, we've always had a dedicated allocation to my team's going to hate me when I hate to say this. I call it our cat stocks, chocolate, alcohol, tobacco.”
Textron Pension Holds 5% Levered Long US Dollar Position
“A really easy place to fall back that we have consistently is we just remain overweight U.S. Dollar. We have a standing long dollar with a short versus yen, Aussie, and Euro, and it's a positive carry. We do it unfunded, so it's levered. It's a five percent po…”
Van Vleet: Textron Maximally Underweights International Equities
“And then I have been as maximum underweight international as I could be as much as I felt comfortable.”
Van Vleet: Textron is buying single-B rated CLO equity slices
“The other place, Ted, I think is great. It's where you have such incredible diversity, and that's in, you know, single B rated CLO equity. So CLO equity, you know, where you gather 200 single B rated names and throw them in, and I buy the bottom slice, the equ…”
Van Vleet: Textron assigns an equity beta to every portfolio holding
“Everything we have in our portfolio, we assign an equity beta to it.”
Textron pension replaces physical Treasuries with futures for liquidity
“So we have been actually just taking treasuries out of the market and replacing them with futures. Futures being more liquid than treasuries in one of these taper tantrums.”
Van Vleet: Textron allocates 30% alts, 30% fixed income, 40% public equity
“We're in 30% alternatives, which is private equity, real estate, primarily. A couple of hedge funds, but mostly real estate, private equity. 30% fixed income and the balance in public equity, and that public equity is U.S. And international.”