Keep pulling the thread on Robert Wallace.
Upon joining Stanford Management Company, Robert Wallace implemented a strategy to create a more concentrated, high-conviction portfolio by reducing the number of external partners from 300 to fewer than 100.
Robert Wallace estimates that only 10 to 12 early-stage venture capital firms in the United States generate the substantial majority of all profits in any given venture cycle.
As part of its portfolio consolidation, Stanford Management Company liquidated relationships with 265 of its 300 external partners, retained 35, and has since added 50 new partners.
Due to the evolving political relationship between Washington and Beijing, Stanford Management Company finds the Chinese investment market much less accessible for a U.S. nonprofit institution.
The Stanford endowment manages an investment portfolio of more than $40 billion.
The Stanford endowment is distributing approximately $2 billion in the current year to support the university's operating budget.
The Stanford endowment's annual distribution of approximately $2 billion represents about 5% of the total endowment value.
To preserve purchasing power, the Stanford endowment targets an expected annual return of around 9% to offset its 5% distribution and 3-4% higher education price inflation.
The Stanford endowment's portfolio is structured with an equity bias, allocating roughly 70% to equities and 30% to less risky assets.
In 2015, the Stanford endowment was valued at approximately $20 billion and was managed by 300 external partners, a structure Robert Wallace considered overly diversified.
Robert Wallace believes that current U.S. equity market valuations are near all-time highs, with 1999 being the only comparable period of higher valuation on several important metrics.
According to Robert Wallace, median and bottom-half returns in private equity and venture capital are poor and less attractive than U.S. public equity returns.