The Ledger
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Institutional venture capital is not worth doing without top-tier manager access
“Also, in some of the cases in some asset classes, for instance, venture capital, unless you had access to the very best managers, it wasn't worth doing at all.”
Bowdoin's endowment outperformance was driven entirely by manager selection, not allocation
“If you look back on the attribution of our performance over the years, it's all manager selection, and I think asset allocation is important, but as, like, even today, asset allocation gets blurry.”
David Swensen urged Bowdoin to exit global macro, but Volent refused
“And when I first got there, David would look over my shoulder and say, no one can anticipate interest rates. You should get rid of these investments in global macro. However, those have been a signature part of Bowdoin's portfolio.”
VC funds cannot afford concentrated bets in regulatory-risk sectors like Chinese education
“Lately, I've been thinking a lot about risk management because I've been thinking about China and some of the manager's That we're so overweight in some of the education companies and things like that. You can't really do that in venture capital because it's a…”
Scale impairs performance, giving an advantage to smaller, meaningful portfolio allocations
“Scale doesn't work in many asset classes, and so The ability to invest small amounts of money, but it will make a big impact on the bottom line is important.”
In 2021, venture capital funds returned to market faster than ever
“I've never seen funds come back to market so fast in my whole career, and so you're always doing these re-ups, where before you had a lot of time to do the due diligence and think about it.”
The Yale Model is not a transferable recipe for other endowments
“Well, first of all, I think that the Yale model, quote unquote, is not a recipe that can be transferred. It's different for every organization, so it's more the key tenets of thinking about long-term investing rather than a recipe.”
Volent prefers investing in venture capital firms raising $250M to $350M
“I really like the venture capital firms that are raising 253 hundred and fifty million.”
During market crashes, ensure managers remain engaged and take calculated risks
“I always remember like in big drawdowns, like in March after the COVID was starting to happen, the March drawdown, you want to make sure your manager is sitting back up on their chair and looking at their screen rather than under their desk, and so I'm always …”
Volent predicts endowments will eventually face mandatory carbon footprint financial disclosures
“But I do think as time goes on, endowments are gonna have to be more transparent in their financial statements about what their carbon footprints are, so that's something I'm interested in.”
Siloed investment committees risk paying fees for canceling overlapping long-short positions
“When I first came to Bowdoin, they had asset class committees. So they had a hedge fund committee, a core equity, private equity. And it was interesting because there were overlaps, but they're also like on the long, short funnel. Say they're a short Tesla, wh…”
Re-upping into a troubled manager's subsequent fund is never a good idea
“The biggest mistake is not reading legal documents, but the other one is sort of thinking I can give a manager where I have a really bad feeling, and something is happening, or a person left one more chance and re-up to their next fund, thinking I'll squeeze o…”
Volent traded art conservation services for works by Ruscha and Francis
“I worked for Ed Ruscha, Sam Francis, you know, a lot of artists today, and we would do trades because they were broken, I was broken, and they could never pay me. So that turned out to be sort of lucrative later on in life.”
Stanley Druckenmiller chaired Bowdoin's investment committee after leaving Soros
“Amazingly, Stanley Druckenmiller was the chair of the committee at that time. He had just left Soros and was doing Duquesne”
Bowdoin had zero venture capital allocation when Paula Volent became CIO
“We had no venture capital at Bowdoin when I got there. Zero.”
VC fund distribution cycles have lengthened as funds hold public equities longer
“The length of time until you get all your money back is much longer. They hold Publix longer.”
Volent created an emerging manager fund to secure capacity and lower fees
“So one of the things I did at Bowdoin in the hedge fund was start an emerging managers fund where we didn't take economics, but we would usually get capacity rights, maybe a lower fee, like all that.”