Investment Approach
Williams’ endowment invests in external investment managers and passive indices. Said differently, the endowment is not directly investing in and owning stocks and bonds. Rather, we hire an external investment manager to invest in stocks and bonds (or private companies, real estate, etc.) on our behalf. A primary function of the Investment Office is to source, hire, and oversee external investment managers (keeping in mind our asset allocation and liquidity needs). This focus enables our small investment team to seek out external investment managers who are the best at what they do. Below, we outline our process for finding such exceptional managers.
How do we select our investment partners?
Sourcing Investments: The path to selecting a manager for the portfolio can take many shapes. Whether we source a manager through a dedicated search, due diligence travel, or the Williams network, certain steps are key to every due diligence process.
Researching Investments: A combination of quantitative and qualitative analysis drives the process. Through in-person and virtual meetings, the Investment Office team becomes familiar with a prospective manager’s strategy and also with the people implementing it. Getting to know the investment manager’s team and conducting reference checks is critical for us to gain conviction around an investment. Careful quantitative analysis and internal discussions at the Investment Office provide context for the entire process and guide areas of research and questioning.
Managing Operational Risk: If the Investment Office continues to find an investment of interest, we conduct operational due diligence to further understand the manager’s key service providers, trading and brokerage operations, operations and administration, compliance environment, and technology administration.
Discussing and Recommending Investments: When the Investment Office has conviction surrounding an investment opportunity, the team seeks advice from the appropriate Advisory Committee and then makes a formal recommendation to the Investment Committee. Upon approval from the Investment Committee, the Investment Office will add the manager to the portfolio.
Monitoring Investments: Adding a manager to the portfolio is far from the end of the story. Monitoring current investments is equally important to sourcing new ones. The Investment Office team participates in regular calls and site visits (in-person meetings at the manager’s office) with each active manager in the portfolio. Through these interactions, we can evaluate manager performance as compared to our original thesis for making the investment. Questions we ask ourselves include: Is the manager following the strategy initially articulated? Is performance in line with what we expected? Is there an inappropriate amount of manager team turnover? How are macroeconomic factors affecting this manager’s strategy? Manager interactions and independent analysis help us track manager progress and evaluate the portfolio as a whole.