From ai5000 Magazine: Eric Upin, CIO, Makena Capital Management

To answer your question directly: The genesis of Makena is twofold, the first being an appreciation of the endowment model, the second being that, while at Stanford, a number of outside entities wanted access to the investment management of the University. The University turned the second down as impractical. The endowment model, as we see it, is for very long-horizon pools of capital, and must meet three objectives: support of current operations through payouts, maintaining purchasing power for tomorrow’s generation, and growing the asset base. The first two goals are often diametrically opposed to each other, which presents a challenge. This challenge is met with certain targets in mind: a 5% payout, 3% to 4% inflation, and 2% to 3% growth per year. You need substantial amount of equity factor risk to achieve this—fixed income alone cannot meet this objective. So, a global, multi-asset-class portfolio with a true focus on diversification is the goal: If you have patience and tolerance for lower levels of liquidity, you can, historically, meet these demands.

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