Trusteeship - September/October 2024 - 45

CREDIT: NORTH PIER
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to foundation ICs, which ultimately decided how to implement
the portfolios. Under the new model, ICs ceded the responsibility
for manager selection, rebalancing, and, oftentimes, tactical tilts to
their OCIO, distancing them from the impact of investment decisions,
especially on the manager- by- manager level.
With private markets veiling the volatility of short- term performance
(e.g., IRR over a J- Curve vs. public markets managers'
quarterly returns) committees were left focusing on longer- term
performance, and mostly at the macro level. This detachment from
day- to- day management may have been helpful for promoting
better longer- term performance but created a growing detachment
from the nuts and bolts of the portfolio details.
The New Normal?
Then COVID- 19 happened, resulting in committee meetings
switching from in- person to Zoom, further distancing stewards
from their portfolios. Market volatility and the subsequent rebalancing
threw index comparisons into chaos. The volatility of public
equities was offset by the seemingly steady performance of private
markets. But unlike shares of Apple, which could be sold anytime
for a specific price, private markets oftentimes took 10- 15 years to
fully realize an actual return, relying on valuations from the latest
funding round to model the current value.
The problem of reporting on estimated values worsened when
soaring interest rates caused the public markets to collapse in 2022.
When private market portfolios got marked down closer to their
likely value throughout 2023, many E&F stewards were left unsure
of their portfolios' true value and performance characteristics.
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Further, the Great Resignation (which saw employees quit at
record rates across the country) similarly impacted the institutional
investment world. Upheaval came from a flurry of M&A and
executive shake- ups at firms like Aon, Cambridge, Goldman Sachs,
Makena, and Mercer.
The biggest area of disruption that North Pier observed was
amongst foundation boards themselves. When asked, " Have you
had meaningful board or staff turnover since 2020? " at a recent
joint North Pier/AGB trustee webinar on oversight, nearly twothirds
of respondents said, " Yes! " This loss of institutional knowledge
at the advisor and board levels increases drops in confidence.
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Trusteeship - September/October 2024

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