Willett Advisors has explicitly adopted the endowment model, focusing on a long-term horizon, a significant allocation to illiquid alternatives like private equity, and a rigorous manager selection process. This institutional approach is supplemented by a direct investment program to mitigate fees and leverage in-house expertise.
Rattner is critical of high-cost investment vehicles, particularly hedge funds, which he describes as a 'fee structure' rather than a strategy. He believes excess returns have diminished in many areas, making high fees a significant drag on net performance, which drives Willett's push into direct investing.
While still believing a return premium exists, Rattner notes it has shrunk and that the private equity sector is likely holding too much 'dry powder'. He acknowledges the value PE can add through operational discipline but cautions against performance chasing and the risks of a crowded market.
The firm's asset allocation is heavily influenced by strong geopolitical and macroeconomic views. This is exemplified by a bullish stance on China, which is seen as the world's cheapest major market relative to growth, and a significant underweight to Europe due to unattractive fundamentals.
Keep pulling the thread on Steve Rattner.