The Ledger
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Serving multiple clients forces compromises on portfolio construction for scale
“When you're serving multiple clients, you have to make compromises on the portfolio because you can't underwrite 25 different great portfolios. You need economies of scale.”
Institutional committees have lower risk tolerance than private equity GPs
“We found that the risk appetite of those investment committees when you're serving as a fiduciary for an institution was lower than for many of our private equity GPs.”
Underwriting emerging managers adds business risk alongside investment risk
“When I joined partners, we rarely underwrote emerging managers. The view was our job is to take investment risk. You're also taking on a business risk when you underwrite a new manager.”
NYU endowment delegates manager selection to internal team up to 3%
“When it comes to manager selection, we rely on the expertise of the team who have spent their careers Getting to know the managers, understanding the landscape, the manager selection decisions rest with the team up until a certain point. Once you have a manage…”
NYU uses high-leverage, trading-oriented hedge funds for its absolute return bucket
“One is on the hedge fund side, where when I was at the Mellon Foundation, we were relatively early to underwriting hedge fund strategies that are more trading oriented, that run higher levels of leverage, where you don't have necessarily a single persistent so…”
NYU is substantially growing private market allocations while peer institutions retreat
“Our team has the view that there is still a lot of value to be had over the long term in private markets. Maybe not every private market. We want to be more discerning there. But we have the ability, and we have been growing that portfolio Substantially over t…”
Managing only to tail-risk stress scenarios prevents taking sufficient day-to-day risk
“We're looking at that separately from our day-to-day expectations of how the returns are going to correlate, because if we only look at those stress scenarios, we won't take enough risk on the day-to-day.”
NYU prioritizes size-constrained, nimble public market asset managers
“We're looking at that with Asset managers who can be more nimble, which means they have to be size constrained. That's been a big area of focus for us over the last couple years.”
Historical track records should prompt questions rather than drive investment decisions
“In general, that's how we think about any backwards looking data is it should be the impetus to ask questions, but not the basis on which we should make decisions.”
Manager vehicle structures frequently mismatch the duration of the opportunity set
“Some of that also comes down to the structure that the manager is offering the investment in, where we've seen a lot of mismatches in recent years between an opportunity set Maybe the duration of that opportunity set and the structure that a manager is offerin…”
NYU's endowment shifts core internal diligence debate to the 70% completion mark
“We've changed that where the big conversation isn't at the end. It's about 70% of the way through the research process, where the deal team has gone away, they've done a lot of work, they've probably decided this is something that they think they want to do, s…”
NYU pulls investment committee input to the beginning of the research pipeline
“What we've done is we've pulled their opportunity to input to the beginning of the research process. In each of our committee meetings, we put forward a long list pipeline. What I tell the committee is most of these things are going to fall away. As we're goin…”
Endowment portfolios funding spending are far more sensitive to year-end drawdowns
“If your portfolio is driving a spend level, you're more sensitive to a December 31st mark that is substantially below where it was the year before.”
Knudsen revamped NYU's endowment governance and asset allocation in three months
“Within three months, we had a new governance structure. We had a new asset allocation framework. We had started triaging and re-underwriting every line item in the portfolio.”
Public and private equity comprise roughly 65% of NYU's endowment
“The asset class buckets that we have today on the equity side between public and private, it's about 65% of the portfolio.”
NYU's endowment targets roughly 25% allocation to absolute return strategies
“Our absolute return and opportunistic bucket we're building, but is expected to be about 25% of the portfolio.”
NYU's endowment held less than 15% in private assets before Knudsen
“When I got to NYU, less than 15% of the endowment was in private assets.”
NYU seeks venture allocations spanning from incubator to pre-IPO stages
“We set out to build a balanced portfolio where we wanted to have allocations everywhere from early incubator stage of venture capital straight through to pre-IPO, now IPO-ing companies that have been growing massively.”
NYU has turned over or re-underwritten two-thirds of its $8B portfolio
“To put some quick numbers around it, NYU's portfolio today is about eight billion dollars. We've turned over a little more than a third of it in the last two years. We've re-underwritten another third of it.”
NYU's emerging manager strategy includes backing Fund Is and new hedge funds
“In the two years that I've been at NYU, we've backed A fund one, a new launch hedge fund, a couple fund twos started looking at how do we build relationships with not just the current generation of great managers, but also the next generation of great managers…”
NYU's endowment uses Claude, Gemini, Granola, and Whisperflow for research
“Whether it's using Claude or Gemini to take raw notes, put them into something that is a format we can all consume, or using Granola or Whisperflow to capture thoughts, record them for writing for other members of the team, trying to use these tools to do a be…”
NYU uses AI to extract time-series data from manager audited financial statements
“All of the audited financial statements that we get for our managers, we read them looking for specific pieces of information. They're also interesting time series of data. Trying to use some of these tools to create a better picture over time of how individua…”