Navigating Investment Strategies: Evergreen vs. Private Funds

Welcome to the Allocate Podcast, an interview and educational content series to help investors learn and navigate investing in alternatives. Join us to hear from leading founders, fund managers, and allocators on the latest trends and the keys to successfully participating in the private markets.

In this episode of the Allocate Podcast, host Samir Kaji interviews Phil Huber, Head of Portfolio Solutions at Cliffwater and author of The Allocator’s Edge. They discuss the shifting landscape of portfolio construction, particularly the growing role of alternative investments. Phil shares insights from his book, elaborating on how the traditional 60/40 portfolio is evolving and the increasing accessibility of private markets. The conversation covers the rise of evergreen funds, the importance of liquidity management, and strategies for integrating alternatives into portfolios to meet the changing needs of investors.

Phil Huber

Phil Huber, CFA, CFP®, is a Managing Director and Head of Portfolio Solutions for Cliffwater, a leading alternative investment adviser and fund manager. In this role, Phil leverages his prior experience as a wealth management CIO to produce and curate investment research, advise on product strategy and positioning for the firm's growing platform, and help establish and strengthen relationships with the nation's leading wealth management firms.

Prior to his current role, Phil served as the Chief Investment Officer at Savant Wealth Management from February 2020 to December 2023. During his tenure, he was instrumental in guiding the firm’s investment philosophy and portfolio management practices, particularly in navigating the complexities of market shifts and the growing importance of alternative assets. Before that, he was with Huber Financial Advisors, LLC, where he held the roles of Senior Portfolio Manager and eventually Chief Investment Officer. Phil’s work at Huber Financial spanned nearly 12 years, where he was pivotal in shaping the firm’s investment strategy and building long-term relationships with clients.

Phil holds a bachelor’s degree in finance from the Kelley School of Business at Indiana University. He is both a Chartered Financial Analyst (CFA) charterholder and a Certified Financial Planner (CFP) professional, and he is an active member of the CFA Society of Chicago. Phil is also the author of The Allocator's Edge, a book that explores the integration of alternative investments into portfolios. His expertise has been recognized in various media outlets, including The Wall Street Journal, The New York Times, and Bloomberg TV. Outside of his professional life, Phil enjoys reading, yoga, and spending time with his family in the suburbs of Chicago. He is also an enthusiastic fan of professional wrestling.

In this episode, we discuss:

* (02:54): The inspiration behind writing 'The Allocator’s Edge' and the evolution of alternatives and challenges with the traditional 60/40 portfolio and why it's becoming outdated.

* (04:14): The role of interest rates in shaping investment strategies and portfolio construction

* (05:32): Why the relationship between stocks and bonds is not static and how it impacts portfolios

* (07:01): The growth of accredited investors and the implications for private market access

* (08:54): How the private wealth channel has embraced private market investments

* (10:54): The benefits of evergreen funds for wealth managers and individual investors

* (12:54): Different types of evergreen funds and how they provide liquidity."

* (15:54): The role of interval funds, tender offer funds, private REITs, and BDCs in portfolios

* (18:44): Challenges in private fund structures and the importance of manager selection

* (20:54): How secondary markets are enhancing liquidity in private equity

* (22:54): Comparing evergreen funds to traditional drawdown funds in private equity and credit

* (24:54): Tax considerations and asset location in portfolio construction

* (26:54): The generational shift in attitudes towards alternative investments

* (29:54): Strategies for advisors to introduce alternatives into client portfolios

* (31:54): Fee structures in evergreen funds versus traditional private equity funds

* (34:54): The importance of understanding fund fees, expenses, and manager incentives

* (36:54): Best practices for integrating alternatives into a balanced portfolio

* (39:54): Final thoughts on the future of alternative investments and their role in wealth management

DISCLOSURE

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