Endowment Fund Management Advisory

🔍 What if your $1B endowment could access the same investment firepower as Harvard or Yale—without moving to New York or Boston? That’s exactly what Rip Reeves and LSU Foundation did, and the results are impressive. 💡 The OCIO Advantage - LSU partnered with Cambridge Associates, giving them world-class research and access to top-tier investments—even from Baton Rouge. “You basically rent a global team of hundreds,” says Rip. 👉 Why? - Smaller pools can’t attract the same talent internally. OCIO lets you punch above your weight. 📊 Portfolio Magic - 40% stocks, 30% bonds, 30% alternatives. Sound familiar? It’s the Yale Endowment Model—evolved. 👉 Why? - Wide guardrails, not rigid rules. Flexibility is key for outperformance. 🌍 Global Access, Local Roots - Even with just $1B, LSU gets into deals and funds that would otherwise be out of reach—thanks to pooled allocations and volume discounts. 🤝 Building Relationships Rip Reeves shares how he vets managers: - In-person office visits (arrive early, listen to hallway chatter) - Sports games, dinners, and casual meetups (see how they really are) - Reputation checks (what do others say behind their back?) 💬 Best Practices for GPs - Be cool, not pushy. - Follow up with a warm call, not a cold pitch. - Join events where real relationships form. - Be transparent about your goals. 🚀 Why This Matters - 90% of portfolio performance comes from asset allocation—not manager selection. Are you optimizing yours? Or are you just chasing “sexy” managers? #Finance #Investing #AssetManagement #Investmentstrategy #Innovation #CIO Link to Podcast in Comments Below 👇

𝗪𝗔𝗤𝗙: 𝗦𝗠𝗔𝗥𝗧 𝗙𝗨𝗡𝗗𝗜𝗡𝗚 𝗙𝗢𝗥 𝗘𝗗𝗨𝗖𝗔𝗧𝗜𝗢𝗡 𝗔𝗡𝗗 𝗟𝗘𝗔𝗥𝗡𝗜𝗡𝗚 Waqf (endowment) is one of the oldest social-finance tools in Islam: you lock the capital (the waqf corpus) and deploy the returns for public good. Education is a perfect fit. Here’s how to make it work—practically. 🟢 What makes Waqf ideal for education? Perpetual funding: Keep the principal intact; use investment returns for schools, scholarships, teachers, and tech. Mission lock: Donor intent is hard-wired—funds stay dedicated to learning. 🟢 Proven funding channels - Scholarship Waqf: Annual returns pay tuition, stipends, and research grants. -  Campus & Facilities Waqf: Endow classrooms, labs, libraries; maintenance funded from returns. - Teacher Waqf: Endow chairs and teacher salaries to raise quality and retention. - EdTech Waqf: Finance devices, connectivity, and digital platforms for underserved students. - Curriculum & R&D Waqf: Support content development, accreditation, and pedagogical research. 🟢 Modern instruments (Shariah-compliant)  Cash Waqf: Pool small gifts into a professionally managed endowment. Income-Generating Waqf Assets: Property/SME stakes where net halal income funds education. Corporate/Alumni Waqf: Companies and graduates seed endowments; dividends/returns support programs. Waqf-linked Notes/Sukuk (where permitted): Channel investment income to the waqf while preserving donor capital. 🟢 Governance that builds trust Clear mandate: Name beneficiaries (e.g., “STEM scholarships for low-income students”). Investment Policy (SRI + Shariah): Capital preservation, prudent risk, halal screens. Independent oversight: Mutawallī/board, Shariah review, annual audits, impact reporting. Ring-fencing: Separate waqf assets, endowment accounting, and reserves for bad years. 🟢 Impact—put numbers on it Example: £10m waqf @ 5% net → £500k/year for education forever. That could fund 500 scholarships @ £1,000 each annually—while the £10m corpus stays intact. 🟢 How to start (playbook) Define the why: who you fund, where, and how success is measured. Pick the vehicle: trust/foundation compliant with local waqf/charity law. Seed & scale: cash waqf + corporate/alumni matches + recurring micro-donations. Invest prudently: halal, diversified, low-fee portfolio with liquidity for payouts. Report relentlessly: publish returns, costs, and student outcomes. An educated world is a better world.

The former head of private equity at the University of Chicago's endowment, Joanna Rupp, was on the Origins podcast a couple of years ago. She shared the following key insights on venture: · If you cannot get into the top venture funds, it is not worth being in the asset class. The endowment’s cost of capital is at least 15% net, so venture needs to return five to seven times or more to justify locking up the money. · A flood of capital into venture distorted valuations and led to bad behavior, but the fundamentals of venture are still strong. Great companies will keep getting built. · AI gets all the headlines, but robotics and personalized medicine are just as important. · Companies are staying private longer, so private markets are the only way to access that innovation and the wealth it creates. · Venture should be a core part of any institutional portfolio, but you have to be patient, build real relationships, and commit to the asset class for the long haul. · Without a hurdle rate, VCs have no cost of capital. That means there is an incentive to just hold assets and let them appreciate over time, because any upside earns carry, even if the actual return does not come close to what LPs need. · SPVs without cross-carry are another red flag. A manager can collect carry on a winner while the LP gets crushed on the loser, with no offset. · The core questions for evaluating venture fund managers are the same no matter the fund size. Is the GP aligned? Is the edge durable? Can you work together for three or four fund cycles? Does the fund manager understand they need to generate real multiples on capital and eventually return cash? · Early-stage performance is really hard to judge. Funds do not settle into their quartile rankings for at least seven years, and most VCs raise way more often than that. So early on, you are relying on founder references, ownership levels, price discipline, and how the portfolio is constructed. · Once you sign the LPA, you have almost no leverage as an LP. So trust matters more than paperwork.

For allocators… Here are a few things that we’ve run into recently and worth a reminder. 1. The purpose of an endowment can differ, though most university endowments prioritize growth (to help with costs). If so, then an allocation either needs to increase returns to the upside or shield returns to the downside. We all know about the benefits of uncorrelated returns. But if the strategy has an excellent risk adjusted return and doesn’t do either of the above, that doesn’t help achieve the objective. It might be helpful to have good risk-adjusted strategies to pull from to the downside, but most endowment teams don’t get credit for lower returns with a good Sharpe ratio. A piece of paper is also completely uncorrelated with other investment strategies, but it doesn’t help achieve the goal. 2. In one of our strategies, our experienced 3yr annualized returns were 250 bps better than the GP’s composite annualized returns over the same period of time…only because of allocating to/from effectively. It’s a commingled strategy with quarterly liquidity and our allocation decisions were not overmuch in frequency or size (+/-20%). It has been the case that the sector has been volatile. But it demonstrates that excellent manager selection and effective allocation decisions can have approximately the same impact on a portfolio. If that is true, then equal time should be spent on both activities. 3. A takeaway from both of the above is that the marketable side of the book must be liquid enough to take advantage of the manager’s demonstrated capability (to the upside or downside) in order to allocate effectively. Lengthy lockups in volatile sectors effectively eliminate any gains an allocator could generate from allocating between strategies. Thus, there should be a higher hurdle rate in making the go/no-go decision on longer lock strategies to incorporate the “allocation returns” one is giving up in acquiescing to such terms. For most of us in the university endowment space, this isn’t the start of a new year, but the halfway point of the current fiscal year. Onward!

I’ve recently been speaking with charities and endowment funds - their investments often provide income for granting programs. For endowment funds to shift into values-based investing firstly requires an exploration of the charity’s purpose: 1 – what does fiduciary duty mean for the investments? Is it about returns plus something else? 2 – what is the purpose of the trust and who are the beneficiaries? (are most of them even born yet?) What values align with the trust’s purpose and present/future beneficiaries? 3 – what values are taken into account in the grant program? How are these reflected in the way money is made to enable the granting?   There’s no silver bullet for values-based investing – it is a process of moving forward and improving each year. For endowment funds it is also about trying to close the gap between the values applied in giving grants, and the values applied in investing to make the money to enable the granting. (And continuing to make investment returns that meet objectives). #endowment #fiduciary #investing #trustee Lily Richards Ana Dermer Simon Leach Bryony Greenhalgh Bridie Lloydd