Princo's investment process is primarily driven by finding exceptional external managers and building the portfolio around them. The formal asset allocation serves more as a guideline, with the aggregate portfolio emerging from the sum of individual manager convictions.
Princo actively avoids over-diversification, believing it leads to mediocre returns. The endowment makes large, concentrated bets in its highest-conviction managers, with its domestic equity and hedge fund portfolios being prime examples of this focused approach.
Learning from past mistakes, Princo institutionalized a 'bull/bear' debate for all major investment decisions. This process ensures all viewpoints are heard and rigorously challenged, aiming to remove hierarchical bias and internal politics from the final outcome.
Princo defines its true time horizon not by the university's perpetual nature, but by its ability to withstand significant discomfort without altering its strategy. This philosophy underpins its ability to invest in illiquid assets and tolerate volatility, and it avoids strategies that cannot be re-underwritten during a crisis.
Princo prioritizes developing investment talent internally and believes this creates a stronger, more cohesive organization. This cultural focus is a key reason they avoid direct investing, as the required compensation structures could undermine their collaborative, team-based approach.
Keep pulling the thread on Andy Golden.