Scott Wilson – Non-Traditional Endowment Investing – [Invest Like the Best, EP.297]
My guest today is Scott Wilson. Scott is the CIO of Washington University’s endowment, which manages over $13 billion. In this conversation we discuss WashU’s non-traditional endowment model and cover a variety of asset classes and geographies. We talk about the qualities Scott looks for in managers, lessons from investing in Asia and emerging markets, and red flags in the venture space. Please enjoy this conversation with Scott Wilson.
For the full show notes, transcript, and links to mentioned content, check out the episode page here.
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[00:02:38] – [First question] – What he learned about markets from quant fixed income trading
[00:04:42] – How his experience shaped his degree of skepticism of the world
[00:05:15] – The story that brought him to Grinnell College
[00:06:45] – What his education was like back in 2010 and what seemed sensible and insane when he arrived
[00:08:05] – The style of investment he learned at Grinnell compared to his style now
[00:09:37] – His philosophy around trying to have more direct ownership
[00:11:00] – Why their co-investment approach is outperforming the rest
[00:12:03] – Lessons learned about choosing good partners and doing it effectively over time
[00:13:51] – Things that are most enjoyable about getting to know new managers
[00:14:25] – The role that global travel and having boots on the ground plays in his success
[00:16:17] – Why they spend so much time in frontier and emerging markets
[00:18:21] – Lessons learned from investing in China and thoughts on it today
[00:20:10] – What else he’s learned in continental Asia outside of China
[00:21:02] – Interests and red flags when it comes to investing in the venture space
[00:23:16] – The worst things he sees from venture investors
[00:24:39] – Whether or not venture investors should care more
[00:26:16] – The virtues and vices in private equity and his thoughts on that space
[00:27:55] – What percentage of investors in private equity are investors versus just involved to try and engineer returns
[00:28:59] – His impressions on hedge funds and the evolution of the hedge fund model
[00:31:18] – The role that credit can play in a portfolio like the one he manages now
[00:33:10] – Common characteristics of managers that perform well in credit
[00:34:20] – How he thinks about the sources of returns in the “other” portfolio category
[00:36:34] – Everything he’s learned about asset managers acting as asset gatherers
[00:39:35] – Ways he fights convergence and tracking error overseeing so much capital
[00:41:49] – What it’s like to go through the bad side of tracking error
[00:44:27] – Thoughts on how the macro environment influences allocating time and resources
[00:45:43] – What he sees as a normal level of tracking error for endowments and foundations
[00:46:59] – Why such big pools of institutional capital tend to look so similar
[00:48:10] – Whether or not real estate sits somewhere between stocks and bonds
[00:49:07] – The cultivation of a talented investment team and effectively teaching investing
[00:51:10] – Colliding managers in a fun and spirited way at meetings
[00:52:16] – An investing trip from his career that he finds most memorable
[00:53:34] – Whether or not the factors that sort winners from losers will be different today compared to a decade ago
[00:52:50] – The kindest thing anyone has ever done for him
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