CIO Greatest Hits: Endowments – Andy Golden (Princo)
From Capital Allocators
Andy Golden•Former CIO, Princeton University Investment Management Company (Princo)
Executive Summary
Princeton's endowment (Princo) operates on a manager-centric, bottom-up philosophy, prioritizing the selection of exceptional people ('who') over market timing ('when') or rigid asset allocation.
The portfolio is highly concentrated, deliberately avoiding the 'de-worsification' common in institutional investing.
This includes allocating 4% of the entire endowment to a single domestic equity manager.
Princo's decision-making is structured around a 'bull/bear session' involving all investment professionals.
This process was implemented to combat internal political dynamics, which were identified as a key factor in over half of their worst investment decisions.
The organization's core philosophy is 'Beyond the Long Term' (BLT), defining its time horizon as the duration it can withstand significant discomfort, enabling it to take on volatility and illiquidity that others cannot.
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Concerns Raised
The potential for asset prices to be disconnected from underlying economic fundamentals and volatility.
The challenge of diversification and active management in an environment where passive indices have performed strongly.
Managing currency risk, specifically Renminbi (RMB) exposure from investments in China.
Opportunities Identified
Leveraging a long-term horizon and stable governance to make concentrated bets with elite managers.
Exploiting the tendency of other institutions to over-diversify ('de-worsification').
Generating alpha through deep, long-standing relationships with a select group of hedge fund and private equity managers.