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The Derivative

The Endowment Playbook: Balancing Long-Term Goals with Current Market Volatility

Apr 17, 2025
Join Dave Morehead, CIO of Baylor University's $2.2 billion endowment, as he shares his insights on institutional investing. He discusses innovative portfolio strategies, successfully deploying volatility tactics during the 2020 crash. Morehead emphasizes a cautious approach to equity exposure while focusing on secular growth in healthcare and technology. He also dives into the dynamics of bond markets, trade policies, and how institutional funds navigate market volatility while supporting education. A captivating blend of finance and personal stories awaits!
01:09:39

Episode guests

Podcast summary created with Snipd AI

Quick takeaways

  • Baylor's endowment emphasizes risk management and long-term goals by shifting focus away from cyclical investments towards secular growth sectors like healthcare and technology.
  • The strategy of diversifying investments across public and private markets mitigates risks and safeguards ongoing funding for the university's programs and scholarships.

Deep dives

Endowment Strategy and Risk Management

The focus of an endowment like Baylor's is primarily on risk management, operating under the principle of 'do no harm' while aiming for returns. The strategy entails balancing investments between public and private markets, with an emphasis on understanding the potential drawbacks of each. Investments in private equity, while potentially lucrative, also involve long-term commitments that can entail loss of liquidity and reduced flexibility in capital allocation. This prudent approach also safeguards the university's future by ensuring stable funding for scholarships and essential programs.

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