The Ledger
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Liquidity Constraints Will Trigger Indiscriminate Selling Across Private Credit Markets
“There will be indiscriminate selling in private credit. There's good reasons why many of those companies will be sold, but there'll be many reasons where it's just liquidity that's driving prices down.”
Concentrated Secular Themes Provide Better Diversification Than Market-Cap Weighted Indices
“If you can pick some of these higher octane or more promising secular tailwinds and marry it at that total portfolio risk, You end up with a portfolio that is more robust, better diversified than the index, which as you know, is so concentrated these days.”
Secular Tailwinds Provide Margin of Safety Against Suboptimal Manager Selection
“One of the nice things about trying to invest in these secular tailwinds is you don't necessarily have to get the manager selection piece right. We like it when there's multiple ways to win in the stuff that we do. The nice thing about the secular tailwind is …”
Liquidating Legacy Portfolios Let Allocators Build Culture and Process Faster
“If you keep those portfolios, you're going to spend most of your time reviewing what's in there, slowly changing things out and adding new stuff. Whereas if you start over and start from scratch, you get to build the institutional knowledge from day one. You g…”
Buyout Valuations Remain Too Extended to Offer Adequate Risk-Adjusted Returns
“What we've seen in the buyout space since we've been invested is that that's just not been true. The valuations have been extended and some of that was related to low interest rates, But even as interest rates have repriced, we haven't seen enough of a valuati…”
VCU Diffuses Risk by Requiring Its Entire Team to Meet Prospective Managers
“We do team-based underwriting. There is a lead on every investment. Everybody on the team plays some kind of role in the process, and everybody on the team has to meet the manager. It diffuses ownership of that idea so that folks might be incrementally willing…”
Mega-Endowments Simply Cannot Deploy Massive Checks Into the Vietnamese Market
“If you are a twenty billion dollar endowment and need to write a five hundred million dollar check into that market, it's not possible.”
VCU Shares Its Full Internal Underwriting Memos With Prospective Fund Managers
“One of the things that we do with all the managers that we work with, we'll share our memo with the managers before we invest. We'll have all the work done. We'll run it by them. We want them to fact check our work.”
Avoiding Private Equity Buyouts Protected VCU From Overvalued Enterprise Software Exposure
“We do very little in buyout. That's been a windfall for us right now because we don't have to worry about private equity software.”
VCU's Endowment Explicitly Avoids Private Credit, China, Latin America, and Africa
“Our portfolio probably looks a little bit different in that there's a lot of things that we've decided to not spend our time on. Because we believed we'd be better spent spending time elsewhere. Things like private credit, China, Latin America, Africa.”
Simple Cash Would Have Beaten VCU's Complex 2020 Interest Rate Overlay
“We had great insight in 20, 21, 22, that rates were going to go up. We put on an overlay and the way we expressed it was all wrong. It was too complicated. It would have been simpler to have no position at all and not have lost money on the hedge or just taken…”
VCIMCO Liquidated VCU's Entire Legacy Endowment Portfolio to Start From Scratch
“So we made the choice to sell everything and start from scratch. Which was a bit easier than it would be for most portfolios because there was actually no private equity at all.”
VCU's Endowment Caps Its Private Market Allocation at 25 Percent
“We only have about 20 to 25% of our portfolio in private assets.”
VCIMCO Initially Held ETFs Before Layering In Active External Managers
“We started with a portfolio of ETFs and slowly layered managers in. We weren't going to take the traditional amount of equity risk in those early days because we didn't have the traditional amount of diversification.”