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Stephen Nesbitt

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64
first
2024-10-07
most recent
2024-10-07
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1
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podcast

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  1. “Couple things investment wise. I felt at Wilshire I accomplished everything I could accomplish. It was getting a little bit routine. I had built in the 90s private equity group, a hedge fund group, going into the new century. I was convinced that it was going to be alternative investments. That, no way, 60-40 was going to meet the actual rate. My feeling was in alternatives we could add three percentage points net, shift up the efficient frontier. And so I said, hey, we're going to establish a firm that focus 100% on alternatives. And that was the investment backdrop, economic backdrop is I didn't have much equity. And the other partners that joined me didn't have much equity. So this is a way for us to generate some net worth for ourselves.”

    2024-10-07 · Capital Allocators · Stephen Nesbitt – Innovation in Private Markets for RIAs (EP.410) · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “Be the only private market that resonated, but it's crowded now. If you have an asset class, you're competing with arguably 30 or 40 other asset classes, and it comes down to asset allocation portfolio construction. One of my gripes is sometimes people over diversify. They're not sure, so they end up with godly number of asset classes, which really doesn't do anything from a performance point of view.”

    2024-10-07 · Capital Allocators · Stephen Nesbitt – Innovation in Private Markets for RIAs (EP.410) · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “I think that's two levels. One level, there's been no change. It's amazing to me that investment theory changed radically in the late 50s, early sixties with Markowitz, Bill Sharp, Jean Fama, basically modern portfolio theory. But we've lived with that theory to this day. Maybe I'd throw in their option pricing, but nothing's changed. I still have a couple textbooks from my MBA days at Wharton. It could be used today. It's amazing. So in one sense, the paradigm hasn't changed. On the other hand, so much has changed in terms of execution and implementation. So the availability of data and data processing is light years ahead. Also, proliferation of asset classes. Back when I started, it was stocks, bonds, and real estate. Institutions loved real estate, trustees could count the number of parking spots.”

    2024-10-07 · Capital Allocators · Stephen Nesbitt – Innovation in Private Markets for RIAs (EP.410) · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “Is really a question of where are the markets efficient and where are they not? People hired Wilshire at the time because they liked the idea of efficient markets and provided a pretty simple solution as opposed to hiring 50 managers. And so our philosophy was, hey, we're going to go index where the markets are efficient and we'll hire managers where they're not efficient. We thought the US equity market was efficient. So we pushed index funds for my tenure there. But in maybe small cap stocks, international, we'd have some mix of passive and active. And it just seems to me the world has basically gravitated slowly to the efficient market thinking except for private markets where arguably there are no markets and where the real economy is inefficient and you can take advantage of that.”

    2024-10-07 · Capital Allocators · Stephen Nesbitt – Innovation in Private Markets for RIAs (EP.410) · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “Because they thought I knew something about asset allocation and they wanted to start a consulting business. So I went there and at that time consulting was all about manager selection. And Wilshire stood that on its head and said, no, manager selection is not important in its asset allocation. I was a consultant there for over 20 years. I ran the consulting group for about 15 years. Success there was on the premise that we spend 90% of our time on the manager's election, but really it's asset allocation that's going to determine returns. So in the implementation of the asset allocation, how did you reconcile your early experience with index funds with this model of manager selection?”

    2024-10-07 · Capital Allocators · Stephen Nesbitt – Innovation in Private Markets for RIAs (EP.410) · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “Steve, thanks so much for joining me. Thanks, Ted. Good to be with you. Why don't you take me back to what got you started in the investment consulting world? I was very lucky. I've had three jobs in my career. The first coming out of business school was with Wells Fargo investment advisors. And they were one of the first to do index funds, if not the first. And I got to work with some very smart people, in particular Bill Sharp and Bill Faust. He taught the dividend discount model to me. I thought that was fascinating because he had a way to project expected returns on equities rather than just looking retrospectively at historical returns. And that was really important in the evolution of asset allocation. It allowed people to pivot from just looking in the rear view mirror to looking forward. I got involved in asset allocation along with index funds. Wilshire Associates hired me in 1980.”

    2024-10-07 · Capital Allocators · Stephen Nesbitt – Innovation in Private Markets for RIAs (EP.410) · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “Celtics and Roland Fryer Jr. from Equal Opportunity Ventures. My good friends, Josh Gold and Matthew Sidman created the Boston Investment Conference to bring together great investment mines for a great cause. It's a fantastic day to do well and do good. Visit BostonInvestmentConference.com to learn more. Please enjoy my conversation with Steve Nesbitt”

    2024-10-07 · Capital Allocators · Stephen Nesbitt – Innovation in Private Markets for RIAs (EP.410) · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “We then discuss his strategic shift to managing assets for RIAs, including the development of a private debt index fund, innovation and fund structures, management of liquidity, distribution in the RAA channel, and new initiatives on the common. Before we get going, I'm excited to tell you about the 13th annual Boston Investment Conference to benefit Boston Children's Hospital in collaboration with the Brod Institute. This year's event takes place on October 24th in Boston and features a ridiculous lineup of speakers, including Boston Investment Legends, Seth Clarman from Baupost, David Fialco from General Catalyst, Nancy Zimmerman from Bracebridge, Will Danoff from Fidelity, Alex Sassard from Whale Rock, and Gavin Baker from Atreides. And they may all be upstaged by Brad Stevens, president of basketball operations and former coach of the Boston”

    2024-10-07 · Capital Allocators · Stephen Nesbitt – Innovation in Private Markets for RIAs (EP.410) · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “I guess on today's show is Steven Nesbitt. Steve is the CEO and CIO of Cliffwater, an investment consultant and asset management firm specializing in alternatives that oversees a combined $110 billion, including nearly $30 billion in private market interval funds that began just five years ago. Steve founded Cliffwater in 2004 to serve the burgeoning institutional market for alternative investments and bet the farm with a pivot to managing private credit assets for RIAs in 2019. That shift has been one of the most successful initiatives in the industry in the last five years, and catapulted cliffwater to one of the market leaders and brands serving the RIA community. Our conversation covers Steve's journey as a consultant, formation of Cliffwater, and focus on alternatives.”

    2024-10-07 · Capital Allocators · Stephen Nesbitt – Innovation in Private Markets for RIAs (EP.410) · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “Hello, I'm Ted Sides, and this is Capital Allocators. This show is an open exploration of the people and process behind capital allocation through conversations with leaders in the money game, we learn how these holders of the keys to the kingdom allocate their time and their capital. You can join our mailing list and access premium content at capital allocators.com.”

    2024-10-07 · Capital Allocators · Stephen Nesbitt – Innovation in Private Markets for RIAs (EP.410) · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “Capital allocators is also brought to you by admired leadership. Back in April on episode 497, I sat down with Randall Studman, the executive coach behind admired leadership, who advised more than 500 CEOs, including some of the most respected names in asset management. Randall introduced me to Alex, an AI leadership coach's team built on 40 years of proprietary research into what the best leaders actually do. For investment professionals, that means your entire team gets on-demand coaching grounded in the behaviors that drive results, and build the kind of followership that retains your top talent. We use Alex and our team at Capital Allocators Swears by it. Try Alex for yourself at the link in our show notes. Try Alex. Leadership.com.”

    2024-10-07 · Capital Allocators · Stephen Nesbitt – Innovation in Private Markets for RIAs (EP.410) · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “Capital allocators is also brought to you by Ridgeline. Ridgeline makes your day unrecognizable. That's how refreshingly different it is from legacy investment management technology. With Ridgeline's front-to-back AI native platform, your typical tech pains disappear. No integration headaches, no data discrepancies, and no upgrade cycles. Instead, you get real-time data flowing through everything from portfolio accounting to reporting to reconciliation, trading, compliance, and more. In the AI era, asset and wealth management firms moving to Ridgeline gain a decided advantage. That's why customers call it miraculous game-changing and an awakening. If that's not how you would describe your investment management tech, request a demo at RidgeLine.ai.”

    2024-10-07 · Capital Allocators · Stephen Nesbitt – Innovation in Private Markets for RIAs (EP.410) · IDENTIFIED FROM THE TRANSCRIPT · source

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    2024-10-07 · Capital Allocators · Stephen Nesbitt – Innovation in Private Markets for RIAs (EP.410) · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “Capital allocators is brought to you by AlphaCents. Here's something for you. Most AI tools today are very good at sounding right. But can you actually trace it back to a filing, transcript, or specific passage that drove the answer? Or are you just trusting the confidence of the output? For allocators, that's not a minor concern. A missed filing, incorrect source, or context that gets lost somewhere in a retrieval chain aren't edge cases. They're how decisions go wrong. AlphaSense is the AI platform built specifically for this. They own the content over 500 million curated documents from broker research and expert transcripts to filings and earnings calls. And they own the retrieval layer on top of it. That means every answer can link back”

    2024-10-07 · Capital Allocators · Stephen Nesbitt – Innovation in Private Markets for RIAs (EP.410) · IDENTIFIED FROM THE TRANSCRIPT · source