Investing Billions - E78: Fmr. CIO of CalPERS ($495 Billion) on Private Markets Investing

Starting point is 00:00:00 If we had been a median performer among public funds for those 35 years, it would have meant approximately a $20 billion difference. It would have been $20 extra billion to the fund. So being extra conservative costs Permanent Fund. Pressure creates diamonds sometimes. So it went from third, fourth quartile into best performing public investment fund over the last 10 years. How did that transition happen at Alaska Permanent? I like very much where we're positioned at 10x Capital to deliver great returns in the private markets. Do you think these pension funds, two, three billion dollars,

Starting point is 00:00:29 should be more fully staffed? In other words, what is the opportunity cost of the understaffing at pension funds? Pension funds are pretty small. There are some exceptions. CalPERS has an investment team of 450. CalSTRS, I think, probably has about 250. The typical pension fund in America, it could have one person. When your calipers today, last report stated $495 billion, half a trillion roughly in assets. How do you invest in the private markets having half a trillion in assets? So I think the lessons we've learned over the decades are... Russell Reed, this has been an episode in the making for a couple of years. You're, in my opinion, one of the top investment managers really in the Hall of Fame, being the former CIO of Calipers, the former CIO of Alaska Permanent,

Starting point is 00:01:17 and of course, in full disclosure, the current CIO of 10X Capital. So welcome to the 10X Capital podcast. Great to be here. Looking forward to it, David. So let's jump right in. What was it like being the CIO of CalPERS, the largest pension system in the United States? The challenge at CalPERS was that it was a large pension system with a storied history, but it was very domestically oriented. So my role in many ways was to globalize, internationalize the portfolio, the benchmarks, the opportunities. How does one go about internationalizing a portfolio?

Starting point is 00:01:52 You know, one of the very first challenges in internationalizing a portfolio really lies with the benchmarks. If you don't change the benchmarks, if your benchmarks remain domestically oriented, then any international investment is outside of your benchmark. You know, you're taking a degree of currency risk or regional risk or political risk that is simply not of your benchmark. You're taking a degree of currency risk or regional risk or political risk that is simply not in your benchmarks. So internationalizing the benchmarks is the first thing. And that forces the teams to take seriously the opportunities, the wider opportunity set. Now you still have to manage the currency risks. You increase the tilt in both international as well as private investments. Why did you do that? So the international piece, the motivation for that was that the rest of the world has a lot of

Starting point is 00:02:28 wonderful growth opportunities. Success in investing is about capturing growth opportunities in some measure. So we wanted to expand the scope of what was available to us in the global portfolio. But on the private side, it was different. There was the opportunity to realize the benefits of an illiquidity premium. And that was across private equities, private credit, infrastructure, real estate. The portfolio already had real estate investments and also had some private equity. However, expanding that was a matter of a fair amount of importance. Namely, if we just invested in stocks and bonds, our realization was that we were unlikely to be able to meet our actuarial

Starting point is 00:03:06 return investment goals. So we needed to be able to capture some of the illiquidity premium that was available by investing in the private market transactions. When your calipers today, last report stated $495 billion, half a trillion roughly in assets. How do you invest in the private markets having half a trillion in assets? Allocating to the private markets requires an allocation to funds and potentially also co-investment opportunities on specific projects that the funds have identified, as well as doing some direct investments. Now, the challenge if you're a large fund is that you can't invest necessarily equally well in all private market opportunities. In private equity, there are large

Starting point is 00:03:45 transactions and focused on large transactions. You can do those, but can you effectively invest into venture capital? That was more of a challenge. We ended up being necessarily concentrated on those funds and opportunities, which were of larger scale. And that's a narrowing of what we would want. If you have a smaller program, you can invest across all of the classes of private market opportunities. Venture capital could be just as important as large cap leveraged buyouts. But if you're a large fund, you're going to be focusing on those larger opportunities only. And that's a narrowing focus. But I'd say it focused us on private equity, large cap private equity, real estate and infrastructure. Those assets that could scale.

Starting point is 00:04:26 Exactly right. How were you able to tackle venture and what was the strategy? So venture was something that we had been invested in primarily because of our proximity to Silicon Valley. Being the largest fund in California allowed us to get access to California opportunities. Thankfully, you know, California is a sort of a country sized economy and it has an ecosystem in. Thankfully, California is a country-sized economy and it has an ecosystem in Silicon Valley, which is fairly appealing. So we did get access naturally to our proximity to Silicon Valley opportunities. But I would say venture capital

Starting point is 00:04:55 was always still more of a challenge for us because of the scale issue. Venture capital is an important sector. We call it a sector, not even an asset class. CalPERS, but at a place like Yale University, venture capital was an asset class. They were a much smaller plan, but it represented a much larger percentage of their portfolio. And they were, frankly, more successful at it. They were able to leg into it, devote more resources. So it's sort of interesting that for Yale, that was their best performing asset class over a period of decades. And at CalPERS, it was a lagging performer. Another way to look at it is that where we had our advantage was where we could use our

Starting point is 00:05:31 size to get access to great opportunities. And we didn't have that with venture capital. Speaking of using your size, you ran one of the most successful co-invest programs. How did you structure your co-invest at CalPERS? When I was there at CalPERS, we were primarily fund investors. We had contemplated a combination of co-investment and also direct investment opportunities. And that's an effort that's still underway under development today. When I was at the Alaska Permanent Fund to convert the co-investment capability into a major strength

Starting point is 00:06:01 and competitive advantage. What we did there at the Alaska Permanent Fund to do that is we essentially had six firms that we could rely on that were sort of our partners that enabled us to evaluate an opportunity in a period of one to two weeks and to be able to invest in that period of time. So to be effective with co-investments, you're relying on the due diligence of the fund that's looking at an opportunity. That opportunity is something the fund is investing into, but is too large for it to take down the entire investment. They need to have co-investment alongside the fund investment. So they look for co-investors. But to be able to do that, you need to be able to react, to analyze,

Starting point is 00:06:40 take the information, see how it fits in your portfolio, and be able to seize on it in a pretty quick period of time. So we engaged with six external firms, including BlackRock, some European firms. Our investment staff of three that were dedicated to the private equity venture space was effectively accordioned into a team that could be as large as 30 or 40, when you included being able to use those external firms. So you had a team of three at CalipERS doing private equity, investing how much capital? So altogether, the portfolio today is $85 billion at the Alaska Permanent Fund. And of that, about 15% of the portfolio was private equity. At CalPERS, it was about the same percentage, but now on a portfolio of $495 billion. When I was there, it was $250 billion. So it was a much larger portfolio. And the difference in the size of those programs

Starting point is 00:07:30 meant you were looking at different sizes of opportunities. So let's talk about Alaska Permanent Fund, end of year 2023, that's $78 billion in assets. You were recruited to be their chief investment officer. What was your mandate when you got there? You know, in many ways, the Alaska Permanent Fund was a fascinating case. It had been a success story as a state, but the Permanent Fund itself, from a performance standpoint, had a good 35 straight years. I'm not kidding, 35 straight years of being a third and fourth quartile performer. And how did that happen? Well, it was an artifact of things being really good in the state for a long time. And the mandate was don't lose money. So it wasn't perform as good as your peers or be an outstanding public fund.

Starting point is 00:08:13 It was don't lose money. So things were going so well in terms of the revenues to the state from royalty income from the North Slope that the fund didn't have to take risk. The state didn't have to take risk. Eventually, these things change. and that's what happened. So the curiosity is that the fund did not take risks when it had effectively an infinite, seemingly an infinite or long-term investment horizon. It could have taken risks, but as a state, they weren't poised to take risks. But then the state needed to use income from the permanent fund to fund some of the operations of the state. And today it funds approximately a third of state operations, comes from tapping the earnings of

Starting point is 00:08:51 the permanent fund. So the irony is that if we had been a median performer among public funds for those 35 years, it would have meant approximately a $20 billion difference. It would have been 20 extra billion dollars to the fund. So being extra conservative cost the permanent fund. And I was brought in to take it from its traditional, very conservative orientation into being a competitive public fund. And over the past 10 years, it has been transformed. There's this irony when it had an infinite horizon and ostensibly could have taken more risks. It was a third and fourth quarter performer when it had an infinite horizon and ostensibly could have taken more risks, it was a third and fourth quartile performer. When it had to fund state operations and it did not have an infinite horizon for its investment, that's when the fund could be transformed and could step up to become a very competitive first and second quartile performer. Pressure creates diamonds sometimes.

Starting point is 00:09:38 So it went from third, fourth quartile into best performing public investment fund over the last 10 years. How did that transition happen at Alaska Permanent? Some of it was completely intended. It was a redesign of the programs. It was taking the private markets increasingly seriously, wanting to make sure we could earn that illiquidity premium. And some of it happened, frankly, through luck. There was a requirement, for instance, that was imposed on the teams and on the portfolio from the board, which was at first viewed very negatively

Starting point is 00:10:06 internally. And it was that to do co-investments, to do direct investments, the internal staff did not have the authority to do that directly. We had to use a third party in order to conduct the evaluations and to opine on it. And so the staff could only make co-investments and direct investments if we had a third party that was also endorsing it, that had done the analysis and endorsed it. That seemed to be a negative thing at first. In the end, it ended up being a huge positive. Namely, we had these six external groups that knew exactly what we were looking for that could respond in a timely manner to opportunities. It made us effectively act not as a team of three, but as a team of 30 or 40, whenever needed. And that ended up being

Starting point is 00:10:46 a huge benefit. It's sort of funny. What started as the imposition of extra bureaucracy turned into our greatest strength. The bureaucratic layer of extra approvals turned into a great strength of ours. That was a surprise, but in a good way. You had a governance against obligation for you to use external consultants and external resources in order to help with your decision making on private investments. And that unintentionally significantly increased your team from several team members up to 30 at any given time during an active deal. Is that essentially what happened? Exactly.

Starting point is 00:11:18 Exactly. So it was this combination of being actively allocating more for the private markets. We wanted to get, how we viewed it is there was an opportunity to get an extra 2% on a long-term basis versus publicly traded stocks and bonds if we were effective in private equity, in venture capital, in infrastructure, real estate, and private credit. So that illiquidity premium of 2%, as we were looking at it, that made all the difference between being able to be an underperformer versus your long-term goals and actuarial targets versus outperforming them. If you do the math, 2% on $70 billion, if I'm doing my math correct, is $1.4 billion a year.

Starting point is 00:11:55 Certainly pays for some more team members. Do you think pension funds are understaffed when it comes to alternatives? So in general, pension funds are pretty small. There are some exceptions. CalPERS has an investment team of 450. CalSTRS, I think, probably has about 250. But the typical pension fund in America, it could have one person. The investment staff, even at some of the medium-sized state plans, could have 10 people.

Starting point is 00:12:20 So they're generally not large staffs. They have to rely on when they generally are allocators first. And if they're going to do anything like a co-investment opportunity, they have to be able to rely on these external groups and external advisors and consultants. So you're looking at relatively small teams that in order to be effective, have to be able to use external resources efficiently and well. Do you think these pension funds, two, $3 billion should be more fully staffed? In other words, what is the opportunity cost of the understaffing at pension funds? The biggest limitation is, I mean, of course, with a small staff, you can allocate the funds. They rely on external consultants for the plan in order to evaluate fund opportunities. So that is from an allocation perspective, you don't have much of a limitation. Famously, the state of Idaho retirement system has had two people adamantly refuse to have more than two people. And they are effective. They've been effective with two people as allocators.

Starting point is 00:13:15 They're excellent allocators. The Yellow Plan is an endowment. It's a team of 25, not more than that. And they're just fund allocators. Now, they're great fund allocators, and they are considered, the funds love to have them involved. But what you miss out is being able to do the co-investments on specific projects and the direct investments. And that does take people. And you either are going to get that through engaging with third party firms, like we did at the Alaska Permanent Fund, or you're going to have to build out the staff, like what was done at CalPERS, or what we see with the Canadian plans, such as CPPIB or the major sovereign wealth funds, which could have a total staff of 1,000. We'll get right back to the

Starting point is 00:13:54 interview. But first, to stay updated on all things emerging managers and limited partners, including the very latest data on venture returns and insights on how to raise capital from limited partners, subscribe to our free newsletter at 10xcapitalpodcast.com. That's www.10xcapitalpodcast.com. As CIO of Alaska Permanent, you focused your investments on healthcare in Seattle. Tell me about your rationale behind that. We had a very effective track record in venture capital. So I'd say that the success in venture capital at the Perman permanent fund became akin to the success of what was achieved at Yale. It was a great credit to the institution. We were never able to achieve that same level of return on venture capital at CalPERS. We used our size

Starting point is 00:14:34 to a benefit. Namely, at CalPERS, it was a giant fund, so we had to invest in giant opportunities. We were not effective at being able to allocate to medium and smaller scale opportunities. It just wouldn't move the needle. At the Alaska permanent fund, it was quite different. We were not effective at being able to allocate to medium and smaller scale opportunities. It just wouldn't move the needle. At the Alaska Permanent Fund, it was quite different. We were a medium-sized fund. Today, $85 billion or so. And we had a special relationship with the Seattle venture capital community. We were the favorites of theirs.

Starting point is 00:14:58 There's a significant venture capital community, and it was especially true with healthcare. There are a number of companies that were either financed from Seattle or developed through Seattle that have Alaska sounding names because of the role that the Alaska Permanent Fund and the retirement system had in around that Seattle ecosystem. What were the practical benefits to focusing geographically on Seattle and the venture community there? They got to know us, we got to know them. That meant that not only could we discern what the opportunities were on a fund allocation basis, but when it came to co-investments, we were just much closer to the opportunities. We could react much more quickly, decisively. We were their investor of choice, you know, so we'd get the phone call first on co-investment opportunities or direct investment opportunities. So I would say that the repeated play, the proximity really made a big difference on the co-investment and direct investment opportunities that we saw.

Starting point is 00:15:53 Co-investments, I don't want to oversimplify it. Are they almost entirely a function of concentration into the fund? If you have a higher concentration, you're the first call. Is there more to it than that? How do co-investment opportunities arise? It arises from specific opportunities that are simply too large for a fund to undertake itself. So a fund, if you have a fund that might be, say you have a $500 million fund and it wants to make at least 10 investments, that might have a limitation that we cannot, that fund may not be able to make an allocation

Starting point is 00:16:22 from that fund more to more than $50 million per opportunity. If they see an opportunity that's $150 million, if they really want to invest in it, but they can only invest 50 from the fund, then they have to be able to get 100 million elsewhere from, and that's where the co-investment comes in. What's the market for co-investment economics today? This is one of the biggest benefits. When you allocate to a fund, particularly in venture capital and private equity, the standard is what's called the 2 and 20 structure, namely a 2% management fee and 20% carried interest, the upside beyond an 8% return. That's the typical economics 2 and 20. When you invest as a co-investment, it can be quite different. Generally, it can be as low as or even better than one in 10, namely half of the management

Starting point is 00:17:07 fee and half of the incentive. So in terms of being fee efficient for a plan like the Alaska Permanent Fund, you literally saved half of your transaction costs to the extent that you could invest into a co-investment opportunity versus a fund opportunity. And you've been investment management for many decades. Let's say that you were tasked with starting an investment program for scratch for a new sovereign wealth fund or a new pension fund. How would you go about allocating that money today? So I think the lessons we've learned over the decades are that you don't want to fight the

Starting point is 00:17:41 tape regarding outwitting very efficient markets. If you have a very efficient market like large cap US stocks, you largely want to index toward, you want to be an allocator and you don't want to try to outsmart and find extra value in very efficient markets. However, inefficient markets are something different. It's worthwhile digging in, having extra resource to be able to identify the opportunities in inefficient markets. So in the public markets, that's sort of like the emerging markets. It pays to have active management in the emerging markets, whether you're doing it

Starting point is 00:18:14 internally, workforce, or whether you're outsourcing it. And being active with the emerging markets makes sense in a way that it doesn't with U.S. stocks. And on the private market side, it's a little different still. The private market side, it's a little different still. The private market side, which can be extremely inefficient. What we've seen is that plans succeed in the private markets according to their expertise. A good example of this is with Ontario Teachers. Ontario Teachers has been an outstanding investor, allocator and investor into infrastructure opportunities. They have allocated in their

Starting point is 00:18:45 plan up to 25% of their entire portfolio just to infrastructure opportunities. And again, they had annual returns for a contracted period of time in excess of 10% through the allocation. They were very successful. Now, was the lesson that everybody should be investing 25% of their portfolio into infrastructure? It's not. Other plans were not as successful in infrastructure. Rather, the Ontario Teachers Plan had developed an expertise, had a team, set of relationships, access to direct investment opportunities, and also ability to evaluate co-investments better than other plans. The lesson for success in the public markets was largely one of allocation. In the private markets, it's one of expertise. You know, you want to get good at specific asset classes and you want to add value there.

Starting point is 00:19:34 Meaning you don't necessarily want to allocate if you're a medium-sized plan or a small plan. You don't necessarily want to allocate to all private market asset classes. You want to be able to focus and get good at some. In what ways can size be an advantage when it comes to alternatives? In what ways is size be an advantage when it comes to alternatives? In what ways is size a liability? So size, it matters a great deal in terms of being able to target the opportunities where you can add value. If you're a very large scale plan, you can use your size to an advantage by getting access to large scale, say infrastructure opportunities that the small plans may not be able to get access. They might get the second call on it, not the first call. So you want not be able to get access. This is the second call on it, not the first call.

Starting point is 00:20:05 So you want to be able to identify where your size can be an advantage. So if you're a large-scale plan, the large-scale opportunities are ones that you can get access to first. Get the first call, and that can be an advantage. However, as we saw in the CalPERS case, that could box you out of some of the smaller-scale but potentially extremely high returning opportunities. We had, for instance, a very difficult time at CalPERS accessing opportunities with Sequoia for venture capital. Sequoia at the time was always highly successful, but a smaller program. Their funds were at most a few billion dollars. They were not particularly interested in CalPERS money. With scale, it worked against us because we had reporting requirements.

Starting point is 00:20:45 We were very public. Things that Sequoia actually did not want to cozy up to us with, they did not like the transparency requirements that we had as a public plan. That's a tale of two routes. With Yale University, they had these wonderful relationships with the Sequoias in a way that at CalPERS we didn't. It was so there were reporting requirements of the big public plan. I think a fund like Sequoia at the time viewed money from CalPERS as not nearly as valuable as investments

Starting point is 00:21:11 from the large endowments. The large endowments being a 10th or 20th the size of a CalPERS at the time. Is that still an issue today with pension funds and the freedom of information, right? Or has that been mitigated? It still exists. It still exists. If you're in a public plan, there is a level of transparency that you're just subject to. Now it's most acute with the largest plans. I would say that if you're at CalPERS, the level of transparency and scrutiny is different than if you're at the state of Kansas pension fund. You're just not going to have the same amount of scrutiny and eyes, not only nationally, but on the state level. In that sense, the smaller pensions, even the state pensions in the United could be small or medium sized. I have a bit of an advantage in terms of disclosure.

Starting point is 00:21:52 It seems like all these large pools of capital have shown an ability to outperform due to the liquidity premium. Is it not rational for a part of Social Security to be privatized regardless of your political affiliation? This is an important question. Social Security is a pay-as-you-go system. There's no fund. There are no investments underlying Social Security. It's paid for current contributions by active employees. So there is no pension concept at all in Social Security. CalPERS was created in the first place in 1929 in anticipation of Social Security coming into being, and that state employees in particular and municipal employees would not be part of the Social Security system. So CalPERS was created at its inception in order to provide retirement benefits for state and municipal

Starting point is 00:22:39 employees. It's a funded program. So I think the answer is that we are and need to move to more of that. Social security in and of itself, I think will always be there, but we're seeing some transformations. When I was at CalPERS, we were the largest public investment plan in the Americas. It's not only in the US, in the Americas. Today, it is the second largest plan in the Americas. And the first one being a federal plan. So a federal plan, federal retirement plan has become a funded program and it's larger than CalPERS. And that's a change. And I think what we're seeing is that social security becomes part of an overall retirement package, but is not the alpha and the omega as it was sort of viewed in the past. So I think what we're seeing is if you can have funded programs for defined benefit,

Starting point is 00:23:24 and if you have a combination of some defined contribution plans where the employees can make allocations to funds, that ends up being important. And so Social Security becomes an addition to your other retirement funding options. And certain adaptations to Social Security are also kind of likely you can see retirement ages being pushed up a bit. Also, there's even the possibility of changing some subtle things, seemingly subtle things like the benefits in Social Security are indexed to wage inflation, not price inflation. Wage inflation generally is higher than price inflation. If you make that switch back to price inflation, it actually does a lot in terms of improving the solvency of the Social Security system, but at the expense of having benefits that are not going to be quite as high as people had anticipated. You joined us 10X Capital CIO

Starting point is 00:24:10 several years ago. What is your strategy for 10X Capital's asset management business? At 10X Capital, we have a built-in advantage in that we have success and history in the private markets. Private markets' success is viewed as increasingly important by the major LP investors. As I mentioned before, there's a realization that if you just allocate the stocks and bonds, you're not going to generally meet your long-term investment objectives or actuarial objectives. You're going to have to allocate to the private markets. So tax capital has staked out ground and success in the private markets in particular through venture capital. And we believe also, my view is that we can gain access to and realize, deliver the illiquidity premium that the LP investment plans are looking for from the private markets.

Starting point is 00:24:55 And we have history of doing that, particularly with private equity and venture capital. What do you wish you knew before you started as CIO of Alaska Permanent, Calipers, or 10X Capital? The objectives of success are so different among those different organizations. So the standards of success make a great deal of difference. I would say that before joining any of those three organizations, when I was simply a private sector investor working for investment management companies before, it was all about delivering returns, mitigating risks. So delivering a great risk adjusted return was underscored your success as an investor. Well, at DeCalvers, there was a public investment imperative that included governance. Part of my priorities became being an activist investor. It was to not only invest

Starting point is 00:25:39 into a company, but also it'd be able to change, potentially alter the governance to try to add value through corporate governance. That had not been a factor when I worked for mutual fund companies before. At CalPERS, it being an activist investor became more important. So governance mattered. When I was at the permanent fund, again, the objectives had changed. You went from a fund that for decades had been underperformer. They did not mind being underperformers because they don't lose money. If you didn't lose money, that was okay with them. It was changing with the objectives. I think, you know, the challenge with each of these organizations is that you want to understand what their objectives are and do not assume that they're the same. You know, it can be extremely different objectives. And so to succeed in each of the entities,

Starting point is 00:26:21 know what the objectives are, if there is a change, and oftentimes there is a change, help them develop a portfolio and the teams to meet that new challenge. Well, this conversation did not disappoint. What would you like our listeners to know about you, about 10X Capital, or anything else you'd like to shine a light on? You know, the wonderful challenge and opportunity in finance is that it is dynamic. You know, I've been around for quite a while. And the opportunities that we had three decades ago are not the same as they were a decade ago and what they are today. So we're much more international. The private market opportunities are essential to your success. This is not the message that we would have had decades ago. What I love about where we're positioned at 10X Capital

Starting point is 00:26:58 is that we're viewed as nimble, sort of medium-sized. We have access to opportunities that can make a difference, particularly for, I think, those medium-sized. We have access to opportunities that can make a difference, particularly for, I think, those medium-sized plans. Smaller to medium-sized plans can be effective with us, just like what we had as the permanent fund. We liked investing with the medium-sized firms because we could get access to better opportunities. So I think we are right-sized to be effective for a pretty wide swath of investment plans and deliver an illiquidity premium that can be very compelling for the LP investors. So I like very much where we're

Starting point is 00:27:30 positioned at 10X Capital to deliver great returns in the private markets. Bonus question. I'm too compelled. Obviously, you know, the 60-40, 60 public, 40 private investment model popularized by David Swenson. I see a lot of the most innovative LPs today going more towards 50-50 or 40-60, 40 public, 60 privates, especially endowment style investors that only really have to liquidate 5% a year. What do you think about the 60-40 model? Do you think it's arbitrary? Do you think there should be more flex for kind of more evergreen limited partners? The limitation there, I mentioned that there's this, if you're doing things well, you're looking to get sort of a 2% premium kind of premium

Starting point is 00:28:09 with your private market investments over the public market. So why wouldn't you keep on stretching toward 70-30 or 80-20? And it's liquidity. You actually have a need for liquidity in the portfolio. And around 50-50, you're sort of reaching your limits as to be able to have a sufficient liquidity to meet your objectives. So you mentioned something important there around the 50-50 is what your limits are if you have an endowment-like portfolio where you have a limited amount of withdrawals. The greater the draw on the plan, the less able you are to allocate the lean strongly into the private markets. So the sort of irony, when we had a seemingly infinite horizon at the Alaska Permanent Fund, ostensibly, we could have been 75% privates. The irony is that our allocation to privates went up

Starting point is 00:28:53 when the portfolio horizon and liquidity requirements actually became greater. So there are these ironies, but I think where the LPs have wound up for good reason is that beyond a 50-50 mix, a 50-50 is starting to push what you can do in terms of having reasonable liquidity, even if you don't have significant withdrawals, because you have to manage the liquidity associated with meeting capital calls on your private market portfolios and other items. So I think it's all in figuring out how much liquidity do you need. I appreciate you taking the time to walk me through everything. Thanks for jumping on the podcast. Thank you, David.

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Investing Billions - E78: Fmr. CIO of CalPERS ($495 Billion) on Private Markets Investing

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