Capital Allocators – Inside the Institutional Investment Industry
Stephen Nesbitt – Innovation in Private Markets for RIAs (EP.410)
Oct 7, 2024
Stephen Nesbitt, CEO and CIO of Cliffwater, shares his remarkable journey in the investment consulting world. He discusses the evolution of his firm, focusing on alternative investments, and his successful pivot to managing private credit assets for RIAs. The conversation dives into the complexities of launching interval funds, innovative fund structures, and the immense growth of a flagship fund targeting the RIA market. Nesbitt emphasizes the importance of relationships and adaptability in navigating today’s investment landscape.
45:26
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Quick takeaways
- Effective capital allocation, rather than just manager selection, plays a pivotal role in driving investment success in alternative markets.
- Cliffwater's transition to managing private credit assets, alongside innovative fund structures, highlights the evolving landscape and increasing accessibility of private debt investments.
Deep dives
The Evolution of Capital Allocation Strategies
The podcast discusses the importance of understanding the role of capital allocation in achieving investment success. Stephen Nesbitt emphasizes that effective capital allocation is often more determinant of returns than manager selection, which has traditionally received greater focus. He highlights how institutional investors have evolved from a reliance on historical performance to a forward-looking approach that incorporates expected returns, particularly as alternatives grow more significant. This shift underscores the need for sophisticated strategies that account for the unique efficiencies and inefficiencies present in private markets.
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