Capital Allocators – Episode Summary: CIO Greatest Hits: Single Family Offices – Steve Ratner (Willett Advisors)
Release Date: July 28, 2025
Hosts: Ted Seides and Dawn Fitzpatrick
Introduction
In this episode of Capital Allocators: Inside the Institutional Investment Industry, host Ted Seides interviews Steve Ratner, Chief Investment Officer at Willett Advisors, Michael Bloomberg's Family Office. The conversation delves into Ratner's diverse career path, his investment philosophy, and insights into managing a single family office amidst the complexities of modern financial markets.
Steve Ratner's Career Journey
From Journalism to Investment Banking ([07:30] - [12:34])
Steve Ratner began his professional journey as a journalist, working at The New York Times starting in 1974. Over eight and a half years, he honed his skills as an economics correspondent during a period of significant economic turbulence in the United States. However, realizing that journalism was not his lifelong calling, Ratner sought a career transition.
Notable Quote:
"I realized somewhere along the way that I at least wanted to try something else. And particularly I was tempted by the idea of doing rather than writing about it." ([09:17])
He entered investment banking with Lehman Brothers at the age of 30, facing a steep learning curve. His journalism background, however, provided transferable skills in relationship-building and due diligence, which facilitated his progression within the field.
Transition to Private Equity ([12:34] - [13:40])
After approximately a decade in investment banking, including a stint at Lazard, Ratner moved into private equity. He founded Quadrangle, focusing initially on the Technology, Media, and Telecommunications (TMT) sector. This specialization allowed him to build expertise and a focused investment strategy.
Public Service During the Financial Crisis ([13:40] - [18:13])
During the 2008 financial crisis, Ratner transitioned into public service, taking on a role in the government's Auto Restructuring Group. Despite having minimal prior experience in auto finance, his background in financial restructuring and understanding of Washington's operational nuances made him a suitable candidate.
Notable Quote:
"We approached this as a business problem, not as a political problem." ([17:18])
Ratner emphasized the importance of maintaining a commercial mindset and leveraging TARP funds responsibly to navigate the crisis effectively.
Managing Willett Advisors ([18:13] - [42:36])
Establishing the Investment Framework ([19:24] - [25:36])
Upon establishing Willett Advisors in January 2008, Ratner and his team adopted an endowment-style investment model inspired by David Swensen's approach at Yale. This framework emphasized diversification across asset classes while maintaining a clean slate free from legacy portfolio constraints.
Notable Quote:
"We have to be managing our beta across the firm. And that means obviously keeping track of your beta in the public markets as well as in the private markets." ([37:44])
Investment Philosophy and Manager Selection ([25:36] - [40:17])
Willett Advisors predominantly utilizes external managers to ensure diversification and access to specialized expertise. Ratner advocates for a specialist model, allocating to senior managers focused on specific asset classes such as public equities, hedge funds, and private equity.
Notable Quote:
"Most of our money will be always external because we do believe in diversification." ([25:40])
The firm employs a rigorous, methodical process for manager selection, emphasizing track record, investment process, team quality, and the drive of individual managers. Regular reviews of terminated managers help maintain portfolio integrity.
Handling Manager Turnover and Decision-Making ([39:14] - [40:17])
Ratner stresses the importance of accountability and continuous assessment in managing manager relationships. The decision to hire or fire managers is guided by a structured process involving thorough evaluation and consensus within the investment committee.
Notable Quote:
"We have a methodical process. ... Everything goes through the same machine to see whether it measures up to our standards." ([40:17])
Views on Investment Areas
Private Equity ([27:37] - [30:23])
Ratner acknowledges the enduring relevance of private equity, citing its ability to drive performance through disciplined, commercial management. However, he also notes challenges such as fee structures and industry saturation.
Notable Quote:
"It's hard for me to have worked in an area for a decade, plus or minus, and not believe it has some reason for existence." ([27:37])
Hedge Funds ([30:35] - [32:59])
Ratner critiques the hedge fund industry, highlighting diminishing returns and high fee structures as significant drawbacks. He anticipates a shakeout in the sector, favoring managers who can consistently deliver superior net performance.
Notable Quote:
"I'm willing to pay almost any level of fees if I believe the net performance is going to be superior." ([32:59])
Public Markets ([33:02] - [35:47])
Emphasizing the dominance of beta in public market returns, Ratner advocates for a robust allocation to long equities while acknowledging the challenge of generating alpha in highly efficient U.S. markets. He remains committed to active management, particularly in less efficient regions like emerging markets.
Notable Quote:
"Mike Bloomberg actually has pointed this out to me and he believes that no matter how good you are at picking managers, no matter how good your managers are in a normal world, the bulk of your return is going to come from Beta." ([33:02])
Emerging Markets and China ([35:58] - [48:22])
Ratner expresses optimism about investing in China, citing its inexpensive valuation and dynamic market environment. Despite challenges such as transparency and regulatory issues, he believes in the long-term potential of the Chinese market. In contrast, his experience with venture capital remains cautious due to high performance dispersion.
Notable Quote:
"If you just went to China and you feel the energy, you feel the drive to succeed, ... I believe China is still the most exciting major market probably in the abstract." ([45:11])
Corporate Stewardship and Shareholder Value ([49:12] - [53:03])
Ratner voices concerns over the shifting focus from shareholder value to broader corporate responsibilities. He aligns with Milton Friedman's philosophy, arguing that companies should prioritize profitability while operating ethically and responsibly, leaving social problem-solving to the government.
Notable Quote:
"I think you have a fiduciary duty to them [shareholders]. Now, if your customers say, I’m only going to buy products from a company that pays $15 an hour, ... But to say that a company should be forced to do X or Y or Z simply because we want to solve problems that government should be solving ... I don't think is the right way to move ahead." ([50:13])
Personal Insights
Hobbies and Pet Peeves ([53:56] - [54:26])
Outside of his professional life, Steve Ratner enjoys riding horses. He humorously shares his pet peeve about being left-handed in a predominantly right-handed world, particularly the awkwardness of scissors designed for right-handed users.
Notable Quote:
"I ride horses on my weekends." ([53:56])
Life Lessons and Advice ([56:17] - [57:10])
Ratner emphasizes the importance of working with the best people, highlighting integrity and skill as key attributes. He believes that surrounding oneself with talented and principled colleagues significantly enhances both personal and professional success.
Notable Quote:
"Your career and your life will be much better if you work for the best people you can work for." ([56:17])
Conclusion
Steve Ratner's multifaceted career—from journalism to investment banking, private equity, public service, and managing a prominent family office—provides a rich tapestry of experiences informing his investment strategies. His insights into manager selection, asset allocation, and the evolving landscape of institutional investing offer valuable lessons for asset managers and institutional investors alike. Ratner's pragmatic approach, underscored by a commitment to disciplined investment practices and ethical stewardship, serves as a guiding framework for navigating the complexities of modern financial markets.
Closing Quote:
"We have a very understanding and tolerant client who gets the idea of long term performance. And so we want to take equity risk." ([38:25])
This summary is intended to provide a comprehensive overview of the episode for those who have not listened to it. For more detailed discussions and personal anecdotes, tuning into the full episode is recommended.