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Wall Street Fights to Pitch Endowment Funds

Wall Street is reportedly lining up to pitch endowment funds on their services.  According to a recent Bloomberg report, TIAA was one of more than two dozen asset managers looking to persuade the University of Connecticut to make an allocation.  As someone who has pitched investors, it’s not uncommon to have your presentation come before or after a number of competitors.  This is especially true in the institutional investor community where it is no secret what endowments, pensions, or sovereign-wealth-funds are looking to allocate their substantial dollars to a particular asset class.

What is unique about this story, though, is that the competition seems to be intensifying for endowments in particular.  There’s a lot of new players coming onto the scene hoping to manage even a small portion of an endowment’s investable capital.  These firms typically cater to family offices, endowments, pensions, foundations, and other investors with significant assets under management and a need for expert assistance in growing their portfolios.  Some endowments fully outsource the investment management to consultants, while others like Harvard’s endowment fund manage internally with a dedicated investment team selecting and monitoring investments.

So why are so many firms calling on endowments?

  • For one, endowments often invite multiple firms to present before deciding on an investment.  As Bloomberg notes, for example, Oregon State invited 15 managers to compete for its $505 million endowment (ultimately settling on Perella Weinberg Partners).  Part of this is just getting a complete view of the market before making your pick but another aspect is forcing these managers to compete in a high-stakes auction that may result in managers undercutting each other and offering better terms and fees.
  • Another reason is that there are simply more fund managers and asset management firms out there competing for institutional dollars.  In years past, it might have been more difficult for an emerging manager or an upstart firm to get a meeting with an endowment but now as endowments have become more sophisticated and established processes for submitting investment proposals, it seems the barriers to entry have lowered.
  • Finally, the size of these endowments makes it a hard investor group for any ambitious investment firm to ignore.  When Kenyon Partners entrusted its $218 million endowment to CornerStone Partners, that’s a big deal even for an already-successful firm. When you compare that allocation to the $10 million or $20 million check sizes some of these firms would be happy to get from a foundation or family office, it’s no wonder investment firms are willing to line up alongside 26 other managers for a shot at the big leagues.

I hope that you enjoyed this article and if you are looking for more trends and insights on how endowment funds invest, consider joining our Family Office Super Summit which will feature institutional investors alongside family offices on stage.


tags: endowment funds, presenting to endowment funds, how to pitch an endowment fund, what endowment funds invest in, endowment fund investors, endowment fund conference

About Richard C. Wilson