YouSaid · the spoken record

Jon Hirtle

lines on the record: 86
first: 2019-05-06
most recent: 2019-05-06
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“I would say it's a notion of unintended consequences, that every cloud has a silver lining, and every silver lining has a cloud. And I said that to someone one time and they said, that's the most pessimistic. I said, no, it's just I want to understand what it is. Calvin Coolidge was a person as president who almost tried not to pass laws because he thought that the unintended consequences would far outweigh what they were trying to accomplish. So I think that's this notion, the unintended consequences, which then flows into the hidden risks, the hidden correlations. How is the whole thing related in this notion of trade-offs? You should be on the lookout for them at all times.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, fair is kind of a four letter word in our family. And I feel that way about myself. And they certainly made me feel that way and commitment they had to me, which I have made to my children, I think is probably the most important thing they left me with”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“The self confidence you can do anything and the high personal standards, integrity. So I'd say those are the two. And just their love. I was raised in a small town and I really felt like I had an idyllic childhood. It wasn't that easy, but that was part of the idyllic. And related to that, one of my daughters said when they were young to my wife, said something about something wasn't fair. And she turned to them and said Let me tell you something, young lady, you were born in the United States of America to two parents who love each other and love you. You're so far ahead on fare I don't ever want to hear that word again.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“One copy left that comes out every day. I met a guy who was like the editor and he said, we should send you a prize. You're the only one left. But I do read that every day. I read barons on the weekends, so it's pretty old fashioned. But then I'm looking for, I'm really being fed a lot of opportunities by my strategy group and by friends and by money managers. That's the periodicals I read. I do read the economist because I just find it, I make a point of reading to economist and listening to the BBC just to make sure that I'm thinking that I'm not too chauvinistic about my worldview”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, it's funny, I'm sorry to be so old fashioned, but I read the Wall Street Journal every day. I still read it in hard copy, which is amazing.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“About it, it is largely a CYA exercise. So it's set up so that they get sued by the Department of Labor. They've got this defense. And I'm not criticizing that defense. What I'm criticizing is misapplying it into family and endowment management, where we should like tracking error. We should think about what you need to do to outperform, not shy away from it. I guess that's my biggest pet peeve is best practices that are actually destroying value.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“It relates to this notion of misapplying ERISA rules that best practices are things like tracking error and quarterly performance and the nine box framing of money managers. I mean, this is the thing that is fascinating to me. Charlie Ellis has written about you sort of can't win the game and you should just index because you can't win the game. Well, I agree because the game is a game that is defined as a game that you can't win. So this notion of saying, I'm not going to differ from the benchmark and yet I'm going to outperform is nonsensical. But that's what best practices have told us, that this ERISA rules and the pension consulting business has said we're going to put a manager in this box and a manager in this box. And each one of those managers is somehow going to outperform their box, even though they're not allowed to have tracking error. And in the end, we are going to minimize liability.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“I was raised around horses, so I think riding a horse raises a man's perspective. And they always say the outside of a horse is good for the inside of a man. So I love horses. I love outdoorsy stuff. I was a Boy Scout growing up that was tremendously meaningful thing for me and fishing, bird hunting in particular, fly fishing. I don't want to say fly fishing like exclusive. I like fishing, period. If you can do fly fishing, it's even more fun because it's just a fun thing. And trout live in beautiful places. The rush of the water and it's mesmerizing and it distracts you from thinking about things like investments.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, guess what? Using leverage is its own skill. I mean, I don't want to act like that's easy. You just put 5% on and leave it. That's not my point at all. People were to poo-poo hedge fund guys say, well, they're just long short with leverage. And I'm like, well, yeah, but knowing how to use the leverage is its own skill. So I don't want to pretend that it's easy. But I think it's an interesting notion that there could be another innovation.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“The thing I always struggled with with leverage in that context is that in theory, if you go over a multi-year, even multi-decade horizon, you want to push the envelope hardest when valuations are cheapest. Now, no one thinks valuations are particularly cheap. And how do you distinguish whether a conservative or appropriate amount of leverage is the right thing for the long term? And even if that's the case, Now, the right time to start doing it.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“It is not novel, but it's novel with our client base. And that's where we spend all our time. How do we bring cutting-edge science? And I don't mean frontier, you know, out there at the ragged edge of science, but proven best practices to the $200 million college endowment.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“The one that intrigues me as an investment technique, which is pretty out there, is leverage at the fund level, because you and I know that that's just another thing. And if you could flatten out the efficient frontier, not flatten it, but not compromise on its promise, that would be a good thing. 25, 30 years ago, there were a lot of people who didn't understand total return, and they only wanted to spend income in the portfolio. And the moral issue was you don't eat the goose, right? There's the goose and there's the golden egg. So we had to educate our clients to say, look, the goose is the corpus plus inflation. Everything else is golden egg, whether it's income or appreciation. So that took a while, but people got it. Now today you hardly hear anybody saying we only spend income. I just wonder if this notion that leverage is a taboo might someday be overcome.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“On that. We think it's revolutionary, actually. We think the whole OCIO concept has been underappreciated by Wall Street because the big firms who are getting into the space see it as a distribution arm. It's a label. They want to get more assets. Good. But we see it as actually this sea change in fiduciary governance. So that's going to be a lot of it. It's not just going to be the next investment technique.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“This is a hot topic for me because in a way the CIO function changes the fiduciary relationship between the owner of capital and the manager of capital. So the whole point of having an internal office is that you have somebody works for you who isn't selling you a product, who is sophisticated and has massive purchasing power, who is working hard every day to advocate your interests only in the marketplace. So when you do that, the relationship which historically has been buyer beware with Wall Street is no longer buyer beware. It's much more of an advise and consent. It's like you go to the Mayo Clinic for your wellness and they say, look, we looked at your FAC pattern, here's what we recommend. Most people don't argue with them. You know, they say, oh, I get it. You know, you're the Mayo Clinic and you guys are all doctors and you're conflict-free and this whole concept. So that's how we see this relationship moving. And we're going to continue to press.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“Why the small cap manager ought to beat the benchmark by 50 basis points. And yet a lot of times the governance decisions that are coming out of the committees are destroying massive amounts of value and no one's ever held accountable for that. So we really want to talk about best practice on governance.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, a lot of it is more the same, and so better access, how do we have better weighting systems within the broad market exposure that are more effective? How do we educate our clients? This is the one I always want to emphasize. It's not just about investing. It's about getting the clients to understand what real investing looks like and getting these best practices into their portfolio. For example, a client will say, look, I've got a 5% required spending policy and so on and so forth, but I'm conservative. How do I get a higher expected return? We say, well, let's think about capturing some illiquidity premium. Well, that's frightening to people. But there's only so many moving parts that you can have. And so a lot of it is getting it into the client's system. And I believe that we are going to continue Ranji Nagaswami, who's our CEO and I spent a lot of time on what we call governance alpha. So governance alpha is everybody's had lots of decades of concentrating on”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“All right, so if we're sitting down here two or three years from now, and now you've had two or three more years of innovation on your process, what are the things that you're focused on with your team now to continue to grow and improve what you're doing for your clients?”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“First of all, I think that's a yield hog problem. You know, everybody's desperate for yield, and so they're not paying attention to risk. So we're not very high on credit right now. And, you know, fixed income-wise in general, we're pretty conservative. We are finding interesting things in private credit. And that's where we would prefer to go. Rather than taking a higher risk in public markets, where we think the opportunity has been bid away, we want to look for private credit.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“I say it's equity. In other words, equities are the place to be because low interest rates are good for borrowers and bad for lenders. And so equities are borrowers. So we like to focus on the debt coverage ratio rather than the debt itself.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I like to think more about debt coverage than debt, and right now we see the tenure treasury below two hundred fifty. So there's something secular going on in the world. The central banks seem to be pretty permissive because certainly the Fed could push up the tenure treasury any day they want by flooding the market with their 10-year treasury inventory. So they're not doing that. And left to their own devices, the 10-year treasury is stubbornly low in yield. indicates something. And it's unusual. And my guess is it's sort of the thing that everybody else is talking about, which is the deflationary pressure from digital and that we're still in the middle of that. It's still happening. So what happens if we have this long, drawn out period of low interest rates and that the risk is really deflation, not inflation, and we have an accommodative central banking system.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“Which doesn't seem likely to me. Everything's overpriced and underpriced kind of at the same time, and it's a rank order decision. Do I still think that the managers were engaging, and that's a key concept? This isn't private equity on average. There's a huge spread, and everybody, you know, it's like woebegone children are above average, so everybody believes they're in the above-average managers. But we certainly do. And so do I think that we can still get 400 basis points over the public markets? I think the answer is yes. But you got to be careful.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's a net number. I think of it as 500 over the expected return of the portfolio because we have some bonds in the portfolio. So we're not trying to get, we underwrite to high numbers, but if we get up a 10 network. And that's real. That's happy. That's good. So 12 nominal. And it's always relative. So unless it really bursts and you lose money.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“True, we've got to be careful. I would say this our expected return for private equity is about 400 basis points over the long-term expected return of the public markets. So 10 real.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“If you think about the risk side, and you articulated earlier, wanting to be sensitive to bubbles, let me throw out a few things that lots of people talk about as possibly bubbles, their own opinion. So the first is the private equity world, particularly buyouts, just based on, say, EBITDA multiples being maybe twice what they were 10 or 20 years ago.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“The Great Recession was very bad, and it was almost a lot worse. So when you think about how close we came to depression, to really the whole thing falling apart, and how long did it take to recover from the Great Depression, World War II really ended the Great Depression. So this is a long, drawn out process. We've had a long recovery. We could have a long... I keep saying this, but logic tells me that this is the time when people who know which stocks are going to surprise on the earnings side are going to make money. And it's not just a risk-on risk-off world. We're more neutral, and it seems like expertise is going to matter more.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“You have recovery, which we had in the beginning of the decade, right after the crisis. Then you have acceleration, which went for a long time. And now we're in slowdown. And the next would be retrenchment. So recession, we don't see that in sight. But this section, this part of the cycle, I hate to use the word cycle because I think the world's much less cyclical than it used to be, but this part of the economic condition that is slowdown is not very directional. And the world's kind of fairly valued right now. And so we expect quite a bit of volatility here because every time good news comes out, people are going to say, oh, we're accelerating again. And when bad news comes out, says, oh, my goodness, we're retrenching. And actually, this period could go on for a long time.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, I think of Europe as sort of a proxy for Asia because all the growth I was talking to a fellow today was saying that he just got back from Germany and all the industrial companies over there are waiting for the China trade deal to happen so that they can trade into China. So if we get a deal done, if there's a trade deal done with China, Europe will pick up based on their business with Asia. But it's a question of the United States today versus Europe is we are more expensive than that, but there's a reason for it. And so we feel kind of neutral on that. So there are not a lot of beta shifts going on in our allocation today because nothing's at an extreme. I was talking this morning about the Fed's mandate is to have low inflation and full employment. Well, guess what? That's where we are. So what if they sort of stay still here and we have a long period of slow but positive economic growth? But we're in this phase right now where, you know, if you think about economic conditions,”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's a couple things. One is that it's such a small portion of world market cap and it's getting bigger. So our notion is it might be, who knows, it might be a third of world market cap in 10 years. If that's true, we don't want to be too cute. We would just be there in something that's meaningful. And if you look at emerging markets as about 10% of world market cap, and then this is a portion of that, a third to a half, you're really not getting a lot of China exposure when you just have an at weight emerging market's portfolio. So that's one thing. And the second thing is simply the earnings yield from a valuation standpoint, it's more attractive. So that's really it.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I don't know about a couple years. I was going to say to reinvest in January of 2009, to re-risk, that was tough. But in retrospect, it doesn't seem tough because it worked, but at the time it was tough. And you remember the market didn't turn until March. In the last couple of years, I think we've been doing more of the same, just constantly trying to improve things. It's been a fun period the last two years because we're finding more and more managers with Alpha. Our team was strong two years ago, but it's even stronger today. So we're seeing great managers and great techniques. I feel like we have not had any very difficult decisions over the last two years from an investment standpoint.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, a lot less alpha out there than people would like you to believe. That's one. This notion of structure, people process portfolio performance, structure, culture, philosophy, execution. How do you use that to try and find what is durable and what is fleeting? And records change and environments change. And the manager is going to do different things in different environments. So I think it's more of subtleties other than the fact that we redefine alpha as misunderstood beta, like every quarter. That's sort of the story of asset management progress if you are a user, if you're a CIO.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's right. Now, that is also true. Our largest account today is about a billion dollars. And when it gets large, we can do more direct investing. So we're really indifferent. We make no money on the pools. We are conflict-free in the sense that all we have is an asset, an AUM fee, and it doesn't vary with the asset allocation. So if somebody's got 30% in private equity or five, our fee is the same. It's just on the total pool. So if we can do it without a pool, we're happy to do that.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“The only other thing would be that there is a customization factor. So, for example, if we take over an endowment and a large donor has a large growth stock manager, a large growth stock manager who has done well is also very important to the institution, then we will work around that. It's also true with a family. They may have a trust at a bank and will go to the bank and say, what do you do best? We go through analysis and say, could you focus on X? Because we think that's where they're going to hurt us least. And then we will complement that with the rest of the portfolio. We try to do it, Ted, just as if we were internal. And if we were hired to be internal, that's what we would do. So we try to make it.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“Active, passive. Every dimension is a lever. And so the managers that are selected for the large growth pool. There might be two active managers and an overlay strategy and in some sort of an enhanced index fund in that solution. Every one of our clients is getting that same.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, for example, if your portfolio was seventy thirty with a range of sixty five to seventy five and mine was sixty forty, and we were neutral, you'd be at seventy and I'd be at sixty. So it allows us to give our best ideas in a custom way. And once again, if we're overweight emerging markets, everybody's overweight emerging markets. So we don't want to have portfolio manager specific solutions. We want to have our best ideas in every portfolio. And if we're wrong, that's the nature of the game. You are wrong. But I don't want to be right and have a portfolio not have it. I want every client to have our best idea.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“And the difference between neutral and the actual numbers, inferring that different clients might have, one might have a 70-30 mix, one might have a 90-10 mix. And so the strategy group kind of has these buckets, and then they apply them with some kind of rule-based. Well, for example,”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, today it's pretty neutral. In other words, US non US is overweight emerging markets and US and equities versus bonds is pretty neutral. So we're short duration, but in other words, if your strategic allocation was 60% equities, 40% debt with a range of 55% to 65, where it's 60% because we think there's enough push and pull in the world today that we're just neutral.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“On a strategy, so it's sort of that core investment. Yeah, another way to think of it, Ted, is modules. So when you think about investing, there's two issues. There's customization, flexibility, and then there's investment returns. So in a perfect world, you'd have one pool, and you could do all kinds of things and overlays and everything, but there's an implementation challenge when you have thousands of accounts, which is what we have. So how do you find enough customization and yet have enough pooling that the strategy group can make it hum so they can make the return hum while the portfolio managers and the investment officers have the ability to customize? And we've solved that with the notion of modules. Another way to think about this is the most flexible approach has having a stock broker. Stockbroker can do anything.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“And they sit right next to the strategy group is to take those best ideas from strategy and apply them to this particular client. So what happens is if we're overweight emerging markets, which we happen to be today, every client we have is overweight emerging markets. One, that might mean 15 above 10, 5 points over 10, another might mean 5 over 2. I mean, it just depends on the client, but we're all overweight. So strategy decides to overweight and the portfolio manager applies it.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“If you think about what internal CIO does, they have to understand the school, understand the operating financial risk, and they have to understand the committee. There's a difference between ability to take risk and a willingness to take risk. And a lot of that is education. So that's one part. That's a big part of what they do, managing meetings, managing expectations, meeting with new committee members to bring them on board. Then there's the investment part, right, which is meeting with managers, thinking about allocation, risk management, quantitative analysis, all that stuff. We in a sense separate those two. So the investment part is done by our strategy group. And the application is done by our portfolio management group. So every client has an investment officer and a portfolio manager. And the two of them are managing that client relationship. One is a little bit more human orientation, the other is a little more technical. And so the portfolio manager's job.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“On if CFO is more of a COO and he's very busy with making sure the dorms are working and not really thinking about cash management, so our expertise can go in and show why they have more illiquidity tolerance than they thought they did. Because there's a huge give up. If you're too liquid, you're giving up a lot of return. So that's important. So a lot of planning, we think about three-dimensional risk management, operating risk, financial risk, investment risk. And how do you put those all together? And then we put together an allocation that fits for that. And then we're looking every day to find dislocations and to watch out for risk and to find managers that have special skill.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“Our philosophy is that we want to maximize breadth and we want to always find as much value add as we can. Alpha is magic. If we can find its valuable, scarce, and fleeting. So we're always looking for alpha. And we spend a tremendous amount of time looking for that. So if we find alpha that we all believe in, then we're going to find a spot for it, right? Because that's like magic sauce, right? We would not walk away from it. We're looking for strong signals and the rest of the portfolio. So we set up this diversified program allocated for the client. I blew by that, but there's a tremendous amount of insight. If you think about going back to a medical metaphor, if I have better diagnosis, I'm likely to have a better outcome. So for example, we spent a lot of time with colleges figuring out what their real illiquidity tolerance is. A lot of times when you look at a $200 million endowment, there's not a lot of finance analysis going on.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, we look at various managers, all of whom we're always trying to get, as you know, private equity, including venture, is a lot of elbow grease on understanding what they're doing, but it's also a lot of access. You've got to really work on your access. We're doing due diligence. While we're getting access so that when this hard to get access to fund says we've got an opening, Ready to go. We don't want to say, well, we'd love to join you, but now we have to do our due diligence. So we're really doing a lot of due diligence prior to that. While we're working to get in. So when we think of venture, we have small firms and we have larger firms that we invest in. And so far, capacity has not been an issue.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“Is that sometimes people will sell a business and be very motivated by going out and looking for deals, and they might do a deal once in a while, but it's not a layer of icing on top of the cake. We really want to have both of those things. So it's programmatic. That's a long way for me to say that my look at private equity and hedge and special opportunities, which is sort of private credit, is programmatic. So we want to have every 12 to 18 months a multi-manager pool We assemble so that our clients can have exposure to that important asset class.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, if we can consistently add 25 to 50 basis points over broad market exposure, that's great. But as you get up the cake, the icing gets thicker. So when we think at the very top, we're thinking about a liquid assets, 10 to 12 year lockups, and that's a big, thick icing on the top. There's lots of alpha there, lots of manager value added because it's an illiquid market, it's idiosyncratic, it takes special skill, it's lots of reasons that that is both rich and repeatable, you know, that there's a persistence among those certain managers. On top of that is when I think about this visual of the layer cake, is sprinkles. Now the sprinkles are either co-investment or there are deals that the client saw and whether if it's a family who made a lot of money in stainless steel, they have an opportunity that they understand and they want to bring that in and that's great. But those are in a sense the sprinkles on top of the icing on top of the layer cake. And what we find”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, when you think about what we do, our business concept is to take the indisputable advantages of a multibillion-dollar independent office and deliver it to a college with a $200 million endowment. That's what we do. And so there are a lot of them. So really, the value added is not only to have a great program, but to get that great program on site so that the committee understands what you're doing, the human dimension of educating, staying with the program, and so forth. So when we look at private equity, we have to have a program, not a deal. So what we want to do, and I think of this, we talked earlier about enhanced indexing and so forth, and I think of it like a layer cake. And each layer has a layer of icing on it. And the alpha, you know, the manager's”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“The manager we dive into question is easier for me to answer than the actual tools. That's a podcast you need to have Matt meet on because of the tools he's actually using. But it is that, first of all, you know this very well, that there's a network of leading managers and thinkers. And if one of those managers who you have a great regard for because they've earned it over the years says this is a manager you should look at and the returns reinforce that that the pattern of returns are unusual and seem to be very interesting that's worth diving into. Now the tools that we're actually going to use to cut it more finely or Matt's area of expertise.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“And are there any particular favorite tools or analytical metrics that you use with the team that kind of gives you that little sense on the quantitative side that this is a manager we want to dive into?”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a combination of quantitative and qualitative. And what we're trying to do is find idiosyncratic risk. In other words, risk that we cannot explain away. And we've got lots of quantitative tools to help us do that. But Dan McCollum, who joined us from Brown University quite a while ago leads the alternatives team, and a fellow named Matt Meade leaves our manager selection in both Hedge and Long Only, and very much focused on this notion of where's the idiosyncratic return. And track record, you know, it's funny because we used to always say 30 years ago people process portfolio performance. That's still true. What tools do you have to figure out what the portfolio is really giving you? And how much of that return is structure, philosophy, execution, luck?”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, when you started 30 years ago, or when I started 25 years ago, the number of concentrated long-only managers was pretty limited. There are a lot more of them today. How do you and your team do the work to decide among the universe of concentrated long-only managers which ones fit for you in your portfolios?”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source
“But we're still long only there. Enhanced indexing and long only and concentrated, but not 13F. So everything we can do. You know what I would say to you, Ted, is that it's all coming. You know, this, if I see this or we've been in business our 31st year, and every year we're getting better. Every year we get more access. Every year we push the envelope a little bit. While the market is changing around us.”
2019-05-06 · Capital Allocators · Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98) · IDENTIFIED FROM THE TRANSCRIPT · source