Capital Decanted – S2E5 (#3 Decanter's (Half) Dozen): The Modern Asset Owner

Release Date: September 18, 2025
Hosts: John Bowman & Aaron Filbeck
Guests:

• Molly Murphy (CIO, Orange County Employees Retirement System – OCERS)
• Scott Chan (CIO, California State Teachers’ Retirement System – CalSTRS)
• Halftime Guest: Michael Gross (Co-CEO & Co-Founder, SLR Capital Partners)

Overview

This episode, recognized as one of the "Decanter's (Half) Dozen," explores the fundamental transformation under way in the world of asset ownership and capital allocation. Hosts John and Aaron take listeners beyond buzzwords, charting the evolution from legacy endowment and Canadian models to today’s multifaceted and collaborative approaches. Through in-depth discussion, expert commentary, and firsthand accounts from top CIOs, the episode reveals the changing “toolkit” of the modern asset owner—and what it means for risk, returns, relationships, and the investment organization itself.

Table of Contents

1. Evolution of Asset Owner Models (00:00–19:43)
2. The Rise of the Collaborative Model (19:43–31:38)
3. Modern Asset Owner Toolkit: Vehicles and Approaches (31:38–60:03)
4. Halftime Deep-Dive: Asset-Backed Lending with Michael Gross (61:03–67:32)
5. Case Studies: CalSTRS & OCERS—Reimagining Asset Ownership (67:32–113:43)
6. Looking Forward: Nimbleness, Organizational Design, and Next-Gen Challenges (113:43–115:36)
7. Quotes & Memorable Moments
8. Timestamps for Key Segments

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1. Evolution of Asset Owner Models (00:00–19:43)

Key Discussion Points

• Historic Models: The Endowment Model (pioneered by Yale’s David Swensen, inspired by J.M. Keynes) and the Canadian Model (rooted in insourcing with focus on institutional capability in talent/ops/risk).
• Original Objectives: The Endowment Model sought superior, equity-oriented returns for perpetuity; the Canadian Model addressed weaknesses in public pension management and independence.
• Era of the “Binary Slider”: Historically, organizations chose between insourcing (Canadian) and outsourcing (Endowment) as points along a single decision continuum.

Notable Quotes

• "The Endowment Model stared down the common wisdom of the time and argued that a heavy equity exposure ultimately had a better risk reward profile for compounding capital… This would have been viewed as reckless casino talk." — John Bowman [08:16]
• "[Canadian model] is about cultivating a durable culture that promotes innovation, repeatable and defensible processes, and a robust operational and risk infrastructure. Importantly, it’s overseen by an independent board, free from conflict." — John Bowman [13:05]

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2. The Rise of the Collaborative Model (19:43–31:38)

Key Discussion Points

• Limits of Old Models: Both insourcing and outsourcing came with inherent agency, cost, and control problems.
• New Dimension: The "Collaborative Model" transcends the insource/outsource binary, leveraging partnerships among peers, specialist GPs, and other actors.
• Toolkit Expansion: From single-slider soundboards to multi-instrument "cockpits"—today’s asset owners are deploying direct/co-investing, secondaries, JVs, overlays, GP stakes, and more.

Notable Quotes

• "This is not about moving that slider up or down farther… It’s truly jumping onto a new dimension." — John Bowman [19:59]
• "The Collaborative Model focuses on how innovative platforms can be developed directly with other peer investors and investment partners. The platforms...help a group of peers invest more efficiently in long-term assets, get closer to either a direct investment method for real assets or an endowment method for innovation, but on far more aligned terms.” — John referencing Ashby Monk et al. [22:14]

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3. Modern Asset Owner Toolkit: Vehicles and Approaches (31:38–60:03)

Key Discussion Points & Categories

Aaron Filbeck dissects the expanded asset owner toolkit into three broad categories:

1. Direct Investments (Co-Investments and Solo/Direct Deals)

• Canadian pensions exemplify hands-on direct investment, with internal teams engaged operationally.
• U.S. public plans are implementing co-investments to mirror global peers.
• Performance studies show solo deals often outperform benchmarks; co-investments’ results are mixed.
• "There’s a non-monetary cost... retention had plummeted... the thresholds... had completely changed." — John Bowman [42:50]

2. Alternative/Custom Vehicles (GP-Directed and LP-Directed)

• Parallel funds, SPVs, discretionary co-investment or pledge funds.
• GP-directed vehicles tend to underperform main funds; LP-driven vehicles can outperform.
• "It’s often about alignment of interests, not just asset picking skill." — John Bowman [46:43]

3. Creative Structures (Secondaries & NAV Lending)

• LP/GP-led secondaries for flexibility, optimization, or targeted extensions (e.g., continuation funds).
• NAV lending as a liquidity and return tool, with risks and impact on real-distribution metrics.
• CalPERS and Aware Super as exemplars.
• "In very few cases is performance the headline here… control, convenience, getting closer to the investment, alignment—these all play a role." — John Bowman [55:44]

Capstone:

• Partnerships, JVs, wholly-owned subsidiaries can pull from all categories.
• Example: CalSTRS’s innovation portfolio combined fund investment, co-investment, and minority GP ownership in private credit.

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4. Halftime Deep-Dive: Asset-Backed Lending with Michael Gross (61:03–67:32)

Key Discussion Points

• ABL versus ABS/ABF: Michael outlines differences in private credit, including varying risk profiles and asset characteristics.
• Why ABL is Hot: Attractive to allocators for absolute return, countercyclicality, inflation hedge; complexity premium yields higher returns.
• Portfolio Role: Still early in institutional adoption; often follows direct lending; less “beta” and more “alpha” opportunities.

Notable Quotes

• "There’s a ‘complexity premium’ involved—strategies that are highly complex, as a result, borrowers pay higher returns." — Michael Gross [63:14]
• "ABL loss rates tend to be lower than cash flow loans and importantly they are more constant throughout cycles." — Michael Gross [64:35]

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5. Case Studies: CalSTRS & OCERS—Reimagining Asset Ownership (67:32–113:43)

Key Themes:

A. Catalysts for Change

• OCERS (Molly Murphy): Change started with a “listening tour,” realized status quo wasn’t working; early leap into direct VC co-investment (2018) sparked further innovation.
  • "The mindset change came before any activity. There was a real… desire for change in the water here." — Molly [68:33]
• CalSTRS (Scott Chan): Listening tour also initiated strategy c. 2018; growth in private markets led to need for greater cost control and returns—thus the “collaborative model.”
  • "If I look at the divisions, each one has their own investment committee and can make decisions the same day if need be." — Scott [71:50]

B. Objectives, Success, and Measuring Value

• OSERS: Focus on bottom-line returns, advancing from bottom quartile; leverages co-investments/custom vehicles for both cost saving and alpha.
  • "Our co-investment book has been the best performing part of our PE book by a measure of five times." — Molly [79:23]
• CalSTRS: Headline benefit was cost savings—but majority of value is from improved net returns, risk control, and deeper organizational nimbleness.
  • "$2 billion plus in cost savings, but $10+ billion of value added." — Scott [81:30]
  • "We strive to be nimble and responsive to match the responsiveness of our external partners." — Scott [81:48]

C. Cutting-Edge Examples

• Capital Constellation (OCERS): Syndicate model for simultaneous GP/fund economic exposure plus alignment with peer allocators (fellow LPs).
• Collective Global (OCERS): First dedicated VC staking platform—OSERS led creation, enabling fee- and carry-free access to VC economics and building social capital in California’s innovation ecosystem.
  • "We're doing four transactions for every dollar it feels like... the size was appropriate... you have to identify really strongly in your core... and this just checked a lot of boxes for us." — Molly [93:31]

D. Organizational and Operational Transformation

• Staffing: CalSTRS added ~175 people in 6 years (now 4% turnover); focus on staff talent, speed, and delegated decision-making.
• Bureaucracy & Legislation: Both organizations had to change laws for proper structure and reporting lines.
• Tech/AI: OSERS—major investment in automation and AI to let staff focus entirely on deals and relationships.

E. Board Relations & Stakeholder Management

• "We do a lot of education. We have education embedded into every investment committee… we’ve converted all the old cumbersome manual reports… into dashboards… most meaningful data." — Molly [107:47]

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6. Looking Forward: Nimbleness, Organizational Design, & Next-Gen Challenges (113:43–115:36)

Key Future Challenges

• Dynamic, cross-asset organizational nimbility (CalSTRS)—aligning across divisions to act quickly on mega-themes like climate and AI.
• Private credit sector consolidation—OSERS actively seeks creative structures, revenue shares, and equity stakes in next-gen platforms.
• Real estate, infrastructure, digital, and VC: Creative ways to cross-fertilize exposures and access.

Notable Quotes

• "I don't think every investment professional at CalSTRS has the capability… to traverse any of those transactions, but I hope that over the next five years we get to that point." — Scott [95:40]

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7. Quotes & Memorable Moments

• On Evolution & Role:
  "If you don't understand the hearts, minds, and processes of the ultimate client, the asset owner, you're going to be at a disadvantage." — John Bowman [05:15]
• On Collaborative Model:
  "We've gone from a single soundboard fader to an enormous cockpit of knobs, dials, joysticks, and handles… reshaping organizations from the very core." — John Bowman [25:49]
• On Social Capital:
  "[Ashby Monk] has talked about the new model needing something like a chief of social capital… the web of opportunistic interactions that a collaborative model creates, as Molly articulated, just begets and begets and begets." — John Bowman [102:12]
• On Board Education:
  "We do a lot of education… we’ve converted all the old cumbersome manual reports … into dashboards … so that everyone feels like they can digest it, understand it, and get commentary." — Molly Murphy [107:47]
• On Organizational Culture:
  "Early on, there were some areas… very innovative… other areas that needed a kickstart… The whole idea for us wasn't to take on more market risk... we wanted to take operational risks that we felt we could mitigate." — Scott Chan [98:00]
• On Partnership Mindset:
  "It's … like a marriage. Some days you'll compromise and some days I'll compromise… but both of us will win." — Molly Murphy [104:52]

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8. Timestamps for Key Segments

• 00:00–07:22: Introduction; episode context & why asset owner roles are evolving
• 07:22–19:43: Origin and definitions: Endowment & Canadian models; Lessons from Swensen, Keynes, CPP, Ontario Teachers
• 19:43–31:38: Emergence of the Collaborative Model; new agency/control frameworks
• 31:38–60:03: Detailed breakdown of asset owner investing vehicles & practical/tactical implications
• 61:03–67:32: Halftime interview (Asset-backed lending with Michael Gross, SLR Capital Partners)
• 67:32–113:43: Guest roundtable with Molly Murphy & Scott Chan; organizing, staffing, dealflow, creativity
• 113:43–115:36: Final thoughts on future challenges and areas of focus

For listeners and practitioners:
This episode showcases the journey from tradition-bound, binary decision making to a world where leading asset owners craft highly tailored, multi-level partnerships and platforms. Direct and co-investment, bespoke vehicles, alliances, social capital, agility, and ongoing organizational adaptation define the frontier—and are generating results well beyond mere cost savings. “Tool belt” thinking replaces templates; curiosity, culture, and collaboration become the edge.

Further Reading & Resources:

• “Pioneering Portfolio Management” (Swensen)
• Monk & Sharma on the Collaborative Model (Stanford/CaIA)
• PitchBook, ILPA, and Josh Lerner research on LP co-investments and vehicle performance

For the full episode, find Capital Decanted wherever you get your podcasts.