Capital Allocators – Inside the Institutional Investment Industry Stephen Nesbitt – Innovation in Private Markets for RIAs (EP.410)
23 snips
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.
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Cliffwater's Founding and Focus
- Steve Nesbitt founded Cliffwater to focus on alternative investments, foreseeing their importance in exceeding actuarial rates.
- He aimed to replicate his prior success at Wilshire by building credibility with large institutions before moving into discretionary management.
Early Private Equity Exposure
- Nesbitt's interest in private equity was sparked by witnessing George Roberts' success at an Oregon Investment Council meeting.
- This early exposure shaped his understanding of private equity and his approach to identifying successful managers.
Hedge Fund Evolution and Challenges
- Hedge funds initially seemed promising for achieving high returns with low risk, but the industry became crowded, diminishing arbitrage opportunities.
- The 2008 financial crisis exposed hedge funds' inability to protect capital, leading to reduced allocations.