University of Missouri System
Generated outreach message alignment report
1. They prefer active managers expected to add net-of-fee value versus benchmarks and peers.
A concentrated, high-conviction, owner-managed boutique can showcase clear alpha generation above passive with a differentiated best-ideas process.
Evidence
“Active vs. Passive Management – Active managers are used most often, with an expectation of value added in excess of passive implementation.”
“Over these time horizons, active manager performance, net of fees, is generally expected to outperform the agreed upon benchmark and fall within the top two quartiles of an appropriate peer group.”
2. They allocate to absolute return/hedge fund strategies seeking low correlation and minimal equity beta.
A low-correlation, global long/short or absolute-return profile with controlled beta fits their absolute return and risk-balanced sleeves.
Evidence
“These alpha managers will possess broadly diverse strategies/styles and, in the aggregate, are expected to produce returns that show little or no relationship to the economic environment being experienced at any given time.”
“Broadly diversified, traditional hedge fund and risk premia exposures obtained through long/short positions across global liquid markets, structured to achieve minimal equity beta with a lower level of volatility relative to the rest of the portfolio.”
3. They maintain a global orientation and actively manage currency risk across international exposures.
A global/international mandate with robust FX risk management aligns with their use of global equity managers and currency overlays.
Evidence
“Subject to various limitations contained within the corresponding investment policy, the Endowment Pool is allowed to invest in the following asset sectors: global equity, absolute return strategies, private equity, real estate, sovereign bonds, private debt, commodities, global inflation-linked bonds, and risk balanced strategies.”
“The University enters into forward foreign currency contracts to reduce the foreign exchange rate exposure of its international investments.”
4. They explicitly seek emerging markets exposure in fixed income (EM debt) within global mandates.
An EM-capable manager can complement this interest and provide differentiated EM insights or exposures within a broader global portfolio.
Evidence
“Global fixed income exposures focused primarily on high yield, emerging markets debt and other unconstrained / opportunistic strategies.”
5. They value aligned, owner-like manager structures and are sensitive to AUM that is ‘right-sized’ for alpha.
An entrepreneurial, owner-managed boutique with modest AUM can highlight alignment and the benefits of limited capacity to protect alpha.
Evidence
“Structure: Does the ownership structure align the employees’ interests with those of clients?”
“Assets under management: Are assets sufficient at the product level to accommodate the University’s portfolio and, at the other extreme, has excessive asset growth impeded the firm’s ability to add value in a given mandate?”
6. They emphasize long-term orientation and evaluate managers over multi-year horizons with a premium on stability and persistence.
A long track record with consistent, high-conviction implementation maps to their preference for durable processes and 3–5 year evaluation windows.
Evidence
“These investment objectives seek to prioritize the long-term structural needs of the Endowment Pool over short-term performance comparisons of the investment portfolio relative to peers.”
“An evaluation of performance should focus primarily on trailing three and five year periods, taking into account the manager’s expected tracking error versus the agreed-upon benchmark.”
7. They allow managers to use derivatives, shorting, and active currency management within commingled hedge fund structures.
A hedge fund using futures/FX/shorts to manage risk and express high-conviction ideas fits their accepted toolset and vehicle structures.
Evidence
“conventional derivative instruments commonly accepted by other institutional investors, such as futures, swaps, options, forward contracts and reverse repurchase agreements may be”
“Certain commingled funds may use derivative instruments, short positions and leverage as part of their investment strategy.”
“external managers in any asset class may implement currency strategies to alter the currency exposure of the portfolio when deemed prudent to do so in the context of the particular investment mandate.”