Podcast Title: How I Invest with David Weisburd
Episode: E177: How a Small Endowment Invests like Harvard w/Rip Reeves
Release Date: June 20, 2025

Introduction

In Episode 177 of "How I Invest with David Weisburd," host David Weisburd engages in an insightful conversation with Rip Reeves, the Chief Investment Officer (CIO) of the LSU Endowment. Rip shares his experiences and strategies on managing a relatively small endowment by emulating the investment practices of prestigious institutions like Harvard. This episode delves into the decision-making processes, portfolio construction, manager selection, and the importance of building robust relationships within the investment community.

Choosing an Outsourced Chief Investment Officer (OCIO) with Cambridge

Timestamp: [00:00] – [01:32]

Rip Reeves discusses the rationale behind LSU Endowment’s decision to partner with Cambridge Associates as their Outsourced Chief Investment Officer (OCIO). He emphasizes the challenges faced by smaller endowments in attracting top-tier talent internally, especially when based outside major financial hubs like New York or London.

“By using an OCIO model with Cambridge, we are able to access top-notch research and resources that we likely wouldn’t afford internally” ([00:10]).

Rip highlights that leveraging Cambridge’s global team allows LSU to benefit from collective expertise and scale, enabling them to participate in larger investment opportunities and secure discounted pricing due to volume.

Portfolio Allocation Strategy: Emulating the Endowment Model

Timestamp: [03:05] – [08:11]

Rip outlines LSU Endowment’s portfolio allocation strategy: 40% Stocks, 30% Bonds, and 30% Alternatives. He attributes this framework to the endowment model pioneered by David Swensen of Yale University. Rip explains that this allocation represents an evolution from the traditional pension model, allowing for increased income and higher forecasted returns by embracing alternative investments.

“Those are very general allocation guidelines rooted in the endowment model, which allows us to pursue higher income and returns by allocating a portion to alternatives” ([03:18]).

He further elaborates on the flexibility built into these allocation guidelines, enabling Cambridge to adjust allocations dynamically based on market conditions. Rip underscores the importance of giving the investment team autonomy to make strategic decisions, which enhances portfolio performance and risk management.

“We have wide guardrails that Cambridge can play within, allowing for flexibility in allocation across sectors” ([05:27]).

The Primacy of Portfolio Construction Over Manager Selection

Timestamp: [08:11] – [11:23]

Rip reinforces findings from seminal studies, such as the 1986 Brinson, Hood, and Beebower paper, which suggest that 90% of portfolio performance is attributable to asset allocation rather than manager selection.

“The absolute number one priority should be understanding the purpose and circumstances of the pool of money you’re managing” ([09:04]).

He emphasizes that aligning portfolio construction with the endowment’s objectives and governance structures is critical. Rip shares his transition from a portfolio manager to a CIO, highlighting how broader asset allocation decisions ultimately drive performance more significantly than individual manager choices.

Manager Selection Process: Balancing Quantitative and Qualitative Factors

Timestamp: [11:23] – [23:54]

Rip delves into LSU’s rigorous manager selection process, which begins with a comprehensive Request for Proposal (RFP). The process involves narrowing down potential managers based on both quantitative metrics and qualitative assessments. Rip explains how LSU collaborates with Cambridge to evaluate emerging managers, ensuring suitability and alignment with their investment goals.

“Manager selection is as much art as it is science, requiring judgment beyond just the numbers” ([14:11]).

He underscores the importance of reputation and cultural fit, recounting his strategies for assessing potential managers through onsite visits and informal interactions. Rip highlights the value of peer feedback and personal interactions in understanding a manager’s true capabilities and work ethic.

“Spending extended time with managers in various settings provides invaluable insights into their character and operational culture” ([17:17]).

Building and Assessing Manager Relationships

Timestamp: [23:54] – [24:58]

Rip discusses the delicate balance between maintaining professional boundaries and fostering open, transparent relationships with asset managers. He believes that sharing relevant personal insights can enhance partnership effectiveness, although he remains cautious about oversharing to preserve professionalism.

“The more I share with you and how I think, the better job you can do in this partnership” ([23:54]).

Rip emphasizes the role of personal interactions, such as attending sports events or informal gatherings, in building trust and understanding with managers. These interactions help in gauging the genuine character and commitment of potential partners.

Role at Institutional Investor and Networking Importance

Timestamp: [24:58] – [36:37]

Rip shares his long-standing relationship with Institutional Investor (II), detailing how it has been instrumental in his career development. He recalls attending his first II event in 1982, which provided a platform to connect with top-tier asset managers and CIOs.

“I have found it invaluable to my career over the past 40 years, as a portfolio manager, trader, and chief investment officer” ([25:10]).

Rip highlights the diverse range of II events tailored to different segments of the investment community, including single and multi-family offices, corporate and public pension plans, and various geographic focuses. He explains how these events facilitate meaningful interactions and foster long-term relationships that are crucial for successful asset allocation and management.

Best Practices for Building GP-LP Relationships

Timestamp: [36:37] – [46:22]

Rip provides actionable advice for General Partners (GPs) and Limited Partners (LPs) on cultivating successful investment relationships. He emphasizes the importance of being authentic, communicative, and respectful within a professional setting.

“Be cool. The relationship is going to take off or it’s not. You can’t force something like that” ([38:17]).

He describes II’s approach to creating experiential events that encourage relaxed and genuine interactions among participants. Rip shares examples of team-building activities, such as raft-building competitions, which break down barriers and foster camaraderie.

“Building and having that type of experience with an allocator makes follow-up interactions much easier and more effective” ([38:27]).

Rip also discusses the evolving landscape post-COVID, where in-person networking has regained importance. He advises leveraging these events to make warm introductions rather than cold calls, enhancing the likelihood of fruitful collaborations.

Conclusion

Throughout the episode, Rip Reeves provides a comprehensive overview of managing a small endowment with the sophistication of large institutions like Harvard. From strategic partnerships with OCIOs to meticulous portfolio construction and fostering meaningful relationships within the investment community, Rip’s insights offer valuable lessons for institutional investors aiming to optimize their investment strategies despite limited resources.

Notable Quotes:

• “[...] we are able to access various types of investments, especially in the alternative and private sector, that we likely wouldn’t have access to on our own” ([01:47]).

• “90% of portfolio performance can be attributed to portfolio construction, not manager selection” ([08:11]).

• “Spending extended time with managers in various settings provides invaluable insights into their character and operational culture” ([17:17]).

• “Building and having that type of experience with an allocator makes follow-up interactions much easier and more effective” ([38:27]).

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