The Ledger
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Malpass argues only 50 or 60 global investors can execute the endowment model
“And I would argue there might only be 50 or 60 investors in the world who really can do this model well. I don't think there's a lot. I think most people should be using more of these other techniques.”
Malpass estimates that 80% to 90% of unicorn startups fail
“You know, I think the data shows that 80 plus percent, maybe 90% of unicorns don't make it, so I don't get too high and fired up.”
Only two or three truly transformational companies emerge in every VC cycle
“But if you really look at What are the companies that really become big and sustainable? Every cycle, there's only two or three. You know, the Googles, you know, the Facebooks. There's only a couple, and those tend to be funded by the same people.”
Malpass has never found a single good investment idea on the internet
“You're going to get ideas from smart, experienced people who've been around, not from looking online. Online can affirm things. You can develop some of the thesis. It could give you research, put the framework around it, but the best ideas, I haven't gotten on…”
Malpass predicted a 60/40 portfolio would return under 5.5% over the next decade
“Sixty-forty, the last 10 years was probably five, five and a half percent, and it feels to me like the next 10 years could be that or worse.”
U.S. Catholic charities hold $150 billion in largely mismanaged assets
“4000 Catholic charities in the U S about a hundred and fifty billion aggregate dollars. Most of it not particularly well managed.”
Non-rotating investment committee chairs succeed at Notre Dame despite governance orthodoxy
“It's very unusual and probably most people would say it's probably not the best governance practice, but actually it really has worked for us.”
Notre Dame was the only top-20 endowment not to cut post-2008 spending
“I think we were the only endowment in the top 20 major endowment that did not cut endowment spending.”
Malpass rejects the narrative that index fund inflows structurally overvalue stocks
“Well, I don't believe that because there's been a lot of flows in the past that all these stocks are overvalued. They're structurally overvalued and people are gonna lose money because they're buying at a high. I don't believe in that general narrative, to be …”
Endowments without large direct PE strategies do not need permanent foreign offices
“We decided that unless you're really, like, if you're a big pension fund doing a lot of direct private equity, you know, probably be on the ground. We don't need to be right now.”
Benchmarking endowment CIO compensation against peer performance is a distracting mistake
“See, I think that's a mistake. We do not have that. We never had it, and our board will, I don't think they'd ever do that. That, that, we don't, Honestly, at the end of the day, we don't really care that much what other people are doing. We, we've got our own…”
Malpass notes long-time hedge fund partners are working less than before
“We've had long-time partners, some of the best people ever in the business, they're clearly not putting the time in they used to.”
Notre Dame's entire core endowment investment team consists of alumni
“All of the core investment team are Notre Dame alumni.”
Cambridge Associates co-founder Jim Bailey sparked the endowment model in the 1970s
“But I'll give a lot of credit to Jim Bailey at Cambridge because Jim assembled a group of endowments in the seventies to talk about these issues. And that, from those meetings, came the endowment model.”
Notre Dame's spending requirements prevent tolerating a decade of factor underperformance
“We're not willing to have 10 years where values out of favor and we've got 90% value managers. That we just can't, we have too much to do here. I mean, sure, you say it's perpetual, but it's perpetual in many ways, but it's also, we got to spend every year, an…”
European middle market private equity is attractive due to struggling local banks
“In private equity, we've always done more of that middle market and lower middle market. And in Europe, that's a very attractive space right now, because the banks are struggling so much.”
Notre Dame values its venture capital investments using 20% to 40% discounts
“Look, we, we're very conservative in our valuations. We report what our managers give us, On our valuations. They're very conservative. They take huge discounts. They're 2030, 40%, depending on the company.”
Public investment research is a commodity and direct calling is forgotten
“The public sources are now a commodity, and there's a lot of them. People forgot how to get on the phone and call people.”
Institutional CIOs share due diligence and collaborate more frequently today
“My peers, you know, I'm not afraid to go call another CIO if I hear they might be looking at the same thing, and we'll share due diligence and confirm. You know, I think people are doing that more today, to be honest, than they used to. I don't think there was…”
Investment managers fail most often by raising too much capital
“Most of the time when people don't become successful, They ended up getting away from some of their own core beliefs. You know, they ended up raising too much money.”
Private equity fund formation is shifting from rigid pitchbooks to LP collaboration
“So we, we're seeing more of that in different sectors, whether it's consumer goods, healthcare, energy, you know, definitely seeing more opportunities for To partner with people in those ways. And that, that wasn't the case before. They'd show up with a pitch …”
Emerging private equity managers with operating backgrounds possess an advantage
“And, you know, a GP loves the idea of hearing about that, especially if they didn't come from the asset management business, which can be an advantage. Right? They know their sector. You know, they know the people.”
Building an effective institutional private equity program takes at least a decade
“People ask me, I want to start a private equity program. How long is it going to take to get a, it's a decade, maybe more, but it's probably at least that, right?”
Notre Dame halted its GP stake ownership strategy to avoid conflicts
“At one point, it was very fashionable to want to buy a part of the GP. Or want to, you know, have an ownership stake, or buy some of the cash flow of a hedge fund. We did one of those, and it's been fine. It's worked out. There's still a partner. It's been fin…”
Notre Dame sizes private fund commitments based on absolute downside risk tolerance
“I look at almost any private fund, how much can we afford to lose? I know that's probably
Too conservative, to be honest, because we do such a great job of getting the right people, but I do think of that. So we probably could be a little more aggressive there…”
Notre Dame's endowment rebounded from under $6 billion post-crisis to $12 billion
“We went a little over seven billion pre-crisis to high fives, and now we're at 12.”
Notre Dame strictly limits direct real estate investments to nearby Chicago
“In our size, look, we're not going to have 10 of those in our portfolio, and Chicago's a great market for us. We wouldn't probably do that anywhere else, or it'd be very limited because it's so close to us.”
Notre Dame is one of Sequoia Capital's largest domestic investors
“Now we're, you know, one of the largest investors with Sequoia in the country, and it's been a fabulous friendship and partnership.”
Notre Dame's endowment is doing record amounts of PE and real estate co-investing
“We do more co-investing in real estate and private equity than we've ever done, you know.”
Notre Dame's endowment grew from $400 million to over $12 billion
“Like I said, I was, it was four hundred million dollars when I started. Now we're, our pool's over twelve billion.”
Public equity represents roughly 40% of Notre Dame's endowment portfolio
“So our public equity bucket, which includes long short equity, is about 40%. But long short's about 10%, so a quarter of that.”
Notre Dame uses passive ETFs temporarily for tactical exposures and transitions
“We'll do some passive ETFs temporarily when we're looking at exposures or transitioning some managers, or we might have a theme we want to put in place that's opportunistic for a shorter period. We've done some of that, and we'll continue to do that, and I act…”
Notre Dame builds relationships with distressed managers well before market collapses
“We're talking with managers now that we won't use until the next collapse. But when that happens, we'll be ready, they'll be ready, and we'll be able to put a lot of capital to work.”