Endowment Management
Hi everyone, long-time lurker, first-time poster here.
I am in a dilemma in terms of my career rn.
I graduated in May 2021 and am currently an analyst at a MM boutique in NYC (started in June). I genuinely enjoy the work so far and learning a ton.
However, my long-term career goal has always been to break into the non-profit/university endowment management industry since I am passionate about both non-profit initiatives and investing - also had few family members who were in the industry and they all really enjoyed the work and always encouraged me to look into that industry.
I was offered an investment analyst role at a ~$3B+ endowment (Not in NYC) and having a little crisis right now.
Of course, it's not ideal to leave your job after less than 3 months but it has always been my goal. Maybe I am having second thoughts on the endowment management industry in general - maybe I was attracted to the industry since I've always been hearing about it as a kid from my family. My current role is great - love the team, learning a ton, and the hours are surprising not bad at all (way better than most people seem to be getting). I will definitely be getting a pay cut by taking the investment analyst role but I won't be in NYC. One other concern is I don't really see much of a career progression (in the organization) in the investment analyst role. People have mentioned that investment analyst positions are usually 2-3 year positions and you have to look elsewhere afterward since most endowment management teams are lean and turn-over is extremely low.
What are your thoughts?
Thanks for reading guys!
E&Fs tend to be structured with a few junior analysts, relatively light at the midlevel, and then have investment directors/portfolio managers across asset classes (privates, hedge funds, long only equities) rolling into the CIO. There is obviously a disparity across investment offices, but I point that out because as you noted, most investment analyst roles tend to be 2-3 years in nature before you recruit elsewhere, go back to school, etc. These are stickier career paths, so there is less turnover and generally less of an opportunity to stay in one office and move up consistently.
E&Fs are definitely a different career then IB. Your analytical experience will be helpful as you make the transition, but working as an LP is more qualitative in nature. Most of what you're doing is interviewing GPs, writing investment memos, and doing some analytics on the backend. Asset allocation modelling and investment pacing models tend to be as technical as it gets. Certainly if you're coinvesting or doing the occasional direct deal, you'll be doing some real underwriting, but let's be honest, coinvesting is pretty light touch in nature--no LP (or very few LPs) are going to be as sharp as the sponsor leading the transaction.
As a former banker, you will be very attractive to different LPs. As such, I would recommend trying to find an LP with a strong reputation (ie top foundation, university, etc) with a strong CIO and meaningful AUM. This will provide you with a greater opportunity to invest across asset classes, do more complex things, and have access to elite managers. I'd also ask questions around governance -- does the CIO or does the Investment Committee have decision making authority. Working for a CIO with discretion will definitely make the job more fun and ultimately means you have more control around what you're investing in.
There will be plenty of E&F opportunities for you if you stay in banking for a year or two. You're in a great position with family in the industry to decide if this is the right E&F for you. If you want this career and this endowment meets your criteria, then go for it.
OP Here. This is great - thanks so much.
How would you define a "meaningful" AUM?
Would you say $1B+ is usually good for junior analysts to get a good experience?
Are you currently in the industry? if you are would love to shoot you a PM not a lot of folks from my school is in the industry and would love to expand my network.
Thanks!
I am in the industry. Feel free to PM. $1bn can big enough so long as the office takes meaningful risk and does its own work (i.e. does privates in a meaningful way/does directs rather than FoFs/makes light use of a consultant, etc.). This will vary--I honestly don't know what some investment offices do all day when I see the size of their team relative to assets, use of consultants, and names in the portfolio. Generally, higher AUM = more interesting work, more diverse portfolio.
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I would say if you're proud of where you went to school, put in a few years and then apply as a legacy to your school's endowment. Make it stick.
OP here. I love my school but went to a LAC in a rural area and don't really see myself going back there haha.
Is it possible to exit to buyout PE or HF from an endowment fund?
It would be quite challenging though not impossible. I have seen VC exits, RE exits and some small buyout. Generally, CFA/coinvest experience helps as manager selection isn't a super technical role in many cases.
RedWhiteAndBlue is spot on with their post. Not a lot of mid-level roles, particularly at E&Fs of the size you're considering here. I'd be candid in your conversations with them and ask if you could have a long-term future at the firm. That being said, many of the larger E&Fs staff their junior ranks with people with 2 YoE, so there is definitely a path to stay in the industry if you wish - I personally know three people who started at an endowment and then got associate roles with larger E&Fs. You have to be willing to take on the uncertainty of recruiting though, and as stated in the other post you might have to move firms to keep moving up.
I agree with RedWhiteAndBlue that you should shop around a bit to find a strong LP and you don't necessarily have to take your first offer. There are recruiters that work with some of the larger E&Fs and FOs, and you could get in touch with them if you wanted to increase the range of your search beyond job posts and cold emails. Considering how much you seem to like your current role, you could consider just staying in your analyst program for now, and then recruiting for E&Fs with 2 YoE. This is not uncommon, and with your banking experience you'll be attractive.
I personally think that it is a great area of the industry to be in, but it's really up to individual preference on what you want from your career, as it is certainly very different from banking. Think about what you want your life to look like (lifestyle = f(comp, hours)) and then how your career interfaces with the life that you want. I'm happy to elaborate on any of this or talk about what the job is like if that would be helpful for you.
OP here. Thank you so much - This is great.
Are you currently in the industry? if you are I would love to shoot you a PM - my school doesn't have many folks in the industry and would love to expand my network.
Do you happen to know the recruiters who specialize in E&F and FOs? - I've only came across HF and PE recruiters.
Thanks!
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