As a category endowments and foundations (E&Fs) include some of the most sophisticated and prominent institutional investors. They have long been known for successfully generating outsized returns from top-quality investment programs. Now, in 2020, E&F investment portfolios are being relied on even more to support underlying operations that are under pressure.
We have asked our 3 guests to each highlight 3 decisions that they think E&Fs should be considering right now to best position themselves for success.
• 5 min. read •
- Take a more active role in managing your private markets portfolio
Now is the time to reevaluate your manager roster. Don’t just re-up on autopilot. Focus on relationships that add value, and consider using the secondary market as a portfolio management tool to trim non-core positions.
- Use your long-term perspective as an advantage
Unlike many private equity investors, endowments and foundations have an indefinite time horizon and a smooth spending rate. Use your patience and long term nature to your advantage. Now could be the time to allocate to out of favor sectors or managers who could benefit from your long-term perspective.
Turn the current crisis into a litmus test to ensure that your asset allocation matches your organizational goals
There’s no one-size-fits-all asset allocation, and the endowment model -- heavy on illiquid assets -- is not a good match for all endowments and foundations. Now could be the time to evaluate liquidity requirements and readjust the balance between liquid and illiquid assets in your portfolio.
Deepen relationships with your investment managers by educating them about your organization's unique mission
The distributions from many E&F investment portfolios benefit some of the most needy and best-deserving individuals, non-profits, and programs. Be proud of this, and share the news! Managers like to feel a sense of connection between their investment results and the end beneficiaries. Use this to your advantage to create more productive relationships with key relationships in your portfolio.
Identify investment themes that take advantage of your broader organization’s expertise, networks, and relationships
Many E&Fs have an impressive group of knowledgeable staff, board members, and other interested parties. Don’t forget to tap into the deep network of subject matter experts within your organization -- who knows what unique investment insights you could find?
Consider more creative cash flow generation ideas
Today, we are all forced to try new ways of existing. Many E&Fs are thinking outside the box when it comes to ways to generate funds to support operations -- how about a text message fundraising campaign!
Explore digital tools that make your team’s life easier and your investment decisions smarter
The investment community has historically not been the most tech-forward crowd. But you can be in the vanguard by adopting tech tools that help make better investment decisions. Identify one technology tool have you not yet used -- and then try it.
Incorporate a more diverse set of voices your investment decision process
There are some true advantages with working remotely, and one of them is the opportunity to include more of your team members at the decision making table. Many E&Fs have found that refreshing their decision making process encourages better-reasoned more thoughtful investments.
Find ways of being personal and authentic in professional interactions -- even on zoom
We are all behind screens for the foreseeable future, and we are sharing more of ourselves (and sometimes or dogs, our kids, the inside of our houses!) with colleagues, clients, and investment managers. This new level of engagement can foster more authentic interactions.
Take the secondaries challenge!
While selling on the secondary market used to be unheard of in the E&F community, many now see the secondary market as a critical portfolio management tool to finetune their private markets manager roster. Take the secondary challenge yourself to make sure your private equity portfolio is well-positioned to meet your investment goals.
Palico is the leading digital marketplace for private equity primaries and secondaries specifically designed for fund managers and institutional investors.
Secondary Platform: Palico's secondary marketplace, designed by PE industry experts, standardizes the process of selling and buying PE fund interests -- especially for smaller transaction sizes (~$2 - $20M). The marketplace features nearly all traditional major secondary funds in addition to hundreds of non-traditional/opportunistic buyers. From single family offices to large pension funds, LPs are now a few clicks away from participating in and enjoying the versatility that secondaries provide to their PE portfolios.
Primary Platform: Palico's primary platform is a comprehensive fundraising solution. GPs have access to a full array of digital tools to communicate and nurture prospective investors, including: Virtual Data Room, Messaging Module, Stats for fundraising performance, and Newsroom. Those tools are complemented with a matchmaking algorithm that alerts a vast LP member base (over 2,800 LP members and counting) of new fund investment opportunities and a notification system that notifies the LP network when the Newsroom is updated with major milestone and events.