We have been aware of the Opal Foundation and Endowment Forum in Boston for years, but only this year did we make it. It was worth the trip.
Tim Sykes from Anchor Point Capital and formerly CIO of the James L. Knight foundation chaired a panel on fund of fund investing. Anchor Point has two funds – General and global macro focus – and is readying the launch of a commodities fund in Q1 2009. He maintains strong relationships to the foundation community that are his clients.
Jared Perry introduced Stonehorse Capital Management, an emerging manager FOF in Boston. Target funds are less than $3 billion and more than $500 mln. He launched in August and indicated an interest in speaking to new and emerging managers. Jared’s background comes from running Duke hedge fund portfolio with 30% of hedge fund portfolio dedicated to emerging managers.
Representing end investors, Conrad Freund, Chief Operating Officer of the LA84 Foundation and Stephen Merz, Executive Vice President of Strategic Planning and Capital Projects at the Woodruff Art Center spoke to the leading rationale for FOFs. Both indicated that access to the best managers – specifically citing Paulson & Co – which could not be accessed individually, was a leading benefit. In addition, most foundations and endowments are comprised of small staffs and highly skilled boards with a disparate set of skills. However, the dynamic of the boards is that they are there to lend expertise, however, operate on a part time basis, and are not there to do the exhaustive due diligence. FOF’s offer a level of comfort and advice that smaller endowments and foundations can’t achieve on their own.
A panel that attracted a packed audience was a consultant roundtable featuring panelists from Wilshire Associates, Fund Evaluation Group, Disabato Advisers and Citi institutional consulting.
Breaking down the investment universe, Rich Grzymajlo from Fund Evaluation Group spelled out how they advise clients. Investments are divided among 1) global equity, 2) global debt, 3) real assets and 4) diversifying assets including FOF, absolute return strategies. This is a departure from the accepted orthodoxy of viewing alternatives as a separate asset class in of its own.
When asked where opportunities lie in the present environment, panelists mentioned the following:
1. MLPs with yields of 12-13%
2. Proven distressed hedge fund managers including Farley, Wilbur Ross and Angelo Gordon
3. Public/private infrastructure funds