How to Anticipate a Softening in Returns

Scott Malpass is the esteemed Vice President and CIO of Notre Dame, where he oversees the University's $12 billion endowment. Scott earned his B.A. and M.B.A. degrees at Notre Dame, and returned to South Bend at the ripe age of 26 following a brief stint on Wall Street. His track record for almost 30 years, as defined by both performance and impact, place him indisputably in rare company at the very top of the field.

Among his many accolades, Scott received Institutional Investor's Endowment Manager of the Year award, NACUBO's Rodney H. Adams Award, and CIO Magazine's Lifetime Achievement Award. He has taught students at Notre Dame since 1995 and among other directorships and advisory councils, he serves on the Boards of the Vatican Bank, Vanguard, and TIFF, and previously served on the Investment Advisory Committee for Major League Baseball.

In 2014, Scott became part of the founding group for Catholic Investment Services, Inc., a not-for-profit offering top tier investment solutions to Catholic organizations nationally.

Our conversation is a full-blown master class on endowment management, including the benefits of a long tenured team, asset allocation frameworks, passive management, preparing for dislocations, the state of venture capital, sourcing, monitoring and exiting managers, incremental process improvements, professional and personal development, and education and alignment across constituencies. It's hard not to be in awe of Scott's combination of humility, experience, and success.

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Show Notes

3:26 – How Scott got started at Notre Dame

6:22 – Why tenure of the staff is so long on Scott's team

8:26 – How did he handle bad hires among such a tight knit team

9:37 – Committee makeup

11:18 – How the continuity and depth of institutional knowledge allowed them to make better decisions

12:51 – Their first single asset real estate investment

14:21 – What is the best use of time for the investment team, managing a direct investment or researching new managers

15:07 – Core investment beliefs from Scott's past that drive the portfolio

17:28 – Core investment beliefs that drive the portfolio today

20:43 – How does Scott think about portfolio construction techniques

22:49 – Factors they like to tilt towards

23:36 – Any concerns about the focus on active managers in a world that is moving towards passive

26:02 – How much of the US investing market should be indexed-based

27:37 – The baseline that Scott has to consider when making investment decisions

29:43 – Their focus on emerging and middle markets, particularly Europe

34:01 – Pricing in the venture capital markets today

36:31 – Implications of all of this new money moving into private market investing

37:40 – Do private equity owners make better decisions for businesses

39:52 – Scott's manager selection process

41:44 – How much time does Scott spend with managers before making a decision to invest with them

43:14 – Jim Dunn podcast episode

44:04 – What has Scott learned about the behaviors of making that final decision on a manager

45:39 – Mistakes that Scott has learned from and corrected over the years

49:36 – Creative ways to monitor managers in the portfolio

52:08 – Scott sharing how special the managers in the portfolio are to them

54:49 – How would Scott think about an investment portfolio of $1,000,000,000 of cash

56:57 – Benefits and drawbacks of direct vs co-investments

59:43 – Biggest current subject of debate on an investment topic in the office

1:01:47 – Lessons from their annual offsite meetings

1:04:31 – Biggest concerns about the markets today and over the next 10 years

1:07:52 – Closing Questions