University of Delaware

Generated outreach message alignment report
1. They prefer a multi-manager, specialist structure and routinely hire external managers.
A boutique, owner-managed, high-conviction hedge fund fits their specialist manager model and can be added alongside existing managers within an asset class.
Evidence
“The University uses a multiple-manager, specialist structure in order to achieve the asset allocation targets developed by the Investment Visiting Committee.” “External investment advisors will be retained to assist with the management of various portfolio segments.” “The University may retain more than one manager within each asset class or style category based on the size of the portfolio and the nature of that particular market segment.” “All staff in the Investments Office are generalists with a singular focus on the overall performance of the University’s investment portfolios.”
2. They actively allocate to hedge funds for alpha and diversification, and the sleeve has performed well.
A low-correlation, concentrated best-ideas hedge fund with a long track record can contribute alpha while dampening volatility, aligning with their demonstrated use of hedge funds.
Evidence
“Another area where we saw strong relative returns was in our hedge fund investments.” “the return on our hedge fund benchmark. Over the years this allocation has proven to be a strong alpha contributor to the endowment while reducing the overall volatility of endowment returns.” “Hedge funds continue to provide diversification benefits to the endowment but return expectations have diminished compared to historical averages.”
3. They emphasize global and international equity exposure and benchmark against global 60/40.
A global, high-conviction strategy with emerging markets capability can slot into their international/global equity and alternatives mix and be evaluated versus their global benchmarks.
Evidence
“The endowment recorded an annual return of +7.9% in the twenty-seven years ended June 30, 2023, exceeding the +5.8% annual return for a passive portfolio of 60% global stocks and 40% global bonds.” “These funds have been redeployed into the international equity markets and alternative assets such as hedge funds and private investment funds which should not only provide higher returns in a greater variety of investment environments but also help to control overall risk.”
4. They seek best-in-class, active managers to drive long-term benchmark outperformance and are researching new ideas.
An entrepreneurial, owner-managed, concentrated fund with a long record of alpha is aligned with their focus on active, best-in-class partners and long-term outperformance.
Evidence
“For this reason, the Investments Office actively manages endowment assets to achieve incremental positive returns.” “The University maintains an equity-biased portfolio and seeks to partner with best-in-class management firms across diverse asset categories while also managing some endowment assets in-house.” “This global multi-asset class investment framework has proven to be able to exceed public benchmarks over the long term, despite the occasional short-term underperformance.” “we are always researching new investment opportunities that can help us to improve our long-term performance results.”
5. They prize diversification, downside protection, and lower-risk outperformance.
A low-correlation return profile with disciplined risk management and capital preservation will resonate with their emphasis on controlling volatility while beating benchmarks.
Evidence
“We are very proud of the fact that we have achieved these market beating results while taking less risk than our benchmark and our peers, as seen in the chart below.” “focus on capital preservation.” “we are pleased with the downside protection that the endowment displayed in a very challenging market environment compared to our benchmarks and peers.”
6. They actively manage liquidity needs (raising fixed income, annual redemptions of operating funds).
A liquid hedge fund strategy can help meet their liquidity profile while still delivering differentiated returns.
Evidence
“We made the decision to increase our allocation to fixed income from 6.3% at the end of fiscal year 2021 to 21% at the end of fiscal year 2022 to increase the liquidity of the endowment.” “Recently, we have begun to redeem a portion of these operating funds on an annual basis to support important strategic initiatives at the University of Delaware.”
7. They note challenges from heavy allocations to certain privates (VC) and fixed income last year.
A nimble, public-markets, low-correlation hedge fund can complement their privates by providing liquid, diversifying alpha without long lock-ups.
Evidence
“Endowments with above-average allocations to fixed income and private investments suffered from weak returns last year.” “Performance at the largest endowments suffered from an elevated allocation to venture capital funds.”