Moving to an Endowment Fund from IB
Has anyone successfully made the transition to an University's Endowment Fund early in their career? I'm a 2nd-year IB analyst that is interested in making the transition within the next 12-months. In particular, I'm curious about the following:
- How do you find available jobs? Is there a headhunter I should get in contact with? Is it pure networking / word of mouth driven? Is there an "oncycle" recruiting period like PE?
- Given I have ~2 years of experience, is it appropriate to aim for Investment Associate roles or would I likely come in as an Investment Analyst?
- Most of my deal experience is with debt financings, would this limit me to focusing on the Fixed Income / Capital Markets side of the business? Or would I still be attractive as a generalist / other asset classes?
- Besides Pioneering Portfolio Management, are there any other key resources I should be aware of (books, websites, podcasts, etc.)?
- What major funds focus purely on manager selection vs manager selection + Direct/Co-invest?
Thanks!
Based on the most helpful WSO content, transitioning from Investment Banking (IB) to an endowment fund early in your career is indeed a path some professionals have taken. Here's how your queries break down in light of the insights gathered:
Finding Available Jobs: The search for roles within university endowment funds can vary. While some positions might be listed on the university's career page or on job boards, networking plays a crucial role. Reaching out to alumni working in endowments or connecting with professionals in the field through LinkedIn could be beneficial. There isn't a standard "oncycle" recruiting period like in PE, as hiring needs can be more sporadic and based on the fund's specific requirements.
Role Level: With approximately two years of experience in IB, targeting Investment Associate roles could be appropriate, depending on the size of the endowment and the complexity of its investment strategies. Some funds might consider your experience suitable for an Analyst position initially, with the potential for rapid progression.
Deal Experience Relevance: Your experience with debt financings could indeed be valuable, especially for endowments that actively manage their fixed income portfolios or are looking to diversify their investment strategies. However, endowments value a broad understanding of various asset classes, and your analytical skills gained in IB can make you an attractive candidate for generalist roles as well.
Key Resources: Besides "Pioneering Portfolio Management" by David Swensen, which is highly regarded in the endowment management world, staying informed through industry reports, and following relevant podcasts and websites focused on institutional investing can be beneficial. Engaging with content from major investment management forums and publications can also provide insights into the latest trends and strategies in endowment management.
Focus of Major Funds: The focus between manager selection and direct/co-investments can vary significantly across endowment funds. Some of the larger university endowments might have the capacity and expertise to engage in direct investments alongside manager selection. In contrast, smaller funds might primarily focus on selecting external managers to diversify their investment portfolios. Understanding the specific investment philosophy and strategy of each fund you're interested in is crucial.
Networking, leveraging your IB experience, and continuously educating yourself on the nuances of endowment fund management are key steps towards making a successful transition.
Sources: Career in Finance - Reality or Reach?, Q&A - Analyst at $1.5B Endowment Fund, Q&A: BlueWing Part 2: Endowments, Foundations, & Asset Allocators, Direct Invest to FoF/Co-Invest?, Career in Finance - Reality or Reach?
1) There is not really an on-cycle like for PE. Many smaller firms use DSP but the larger shops (HMC, Yale, PRINCO, DUMAC, MITIMCO, UTIMCO, UVIMCO) all have websites with yearly-ish postings. When I left IB I created a list of around 2 dozen endowments/universities I wanted to work for, and each week checked their websites and reached out their staff via cold emails.
2) Really depends on the team, smaller teams want associates to be more of sourcing (finding new emerging managers) so you would likely be entering as an analyst, but large teams like HMC, PRINCO, etc, you could become an associate.
3) No you would not be limited; if you are smart, ambitious and interested in learning, everything else can be taught. You should definitely prep hard prior to the interviews though because you be asked a lot of markets/fund allocation related questions (and all asset classes are fair game).
4) I am a big fan of Stephen Blyth, although he is a bit more on the technical side (not super helpful for the job, but a great book written by a top 5 E&F investor of all time). Foundation and Endowment Investing has some great case studies. Fooled by Randomness (and the whole Incerto series) is also great, (although not going to be helpful for the day to day work).
5) Nearly all (>$5 billion endowments) are 90%+ manager selection. Directs are not really a thing, although for co-invests DUMAC and Wash U (I think) have a rep for them (IDK about that though, I don't have any current contacts at those managers anymore).
Thanks! This is super helpful. Two follow-up questions, 1) What is the Interview Process / Timeline like (i.e. is it a fast process, is there a lot of case studies, etc.)? 2) Are there any non-NYC area schools that house their team in NYC or in the surrounding area?
Thanks again, this is a great writeup!
Happy to assist, it is a great space and I am very glad to have made the transition from banking to an endowment.
1) The interview process is definitely long (~1 to 1.5 months). Since teams are small and the endowment model emphasizes a slower more methodically/academic approach compared to other LPs, they really want to know how you think, what your motivations are, how long you are planning on staying, and if you will be a good cultural fit. Most processes I have been in had one case study. Typically it is a screener call, behavioral interview, case study / market knowledge / thinking like an investor or allocator, then meeting everyone in the office as a final round.
2) There are a lot in the NYC and Boston area, although most are pretty under the radar (schools like Middlebury, Williams, Swarthmore - although I don't know if those schools' endowments are based in NYC). Reaching out DSP will be best way of finding those type of opportunities. As an aside, Dartmouth's is based in Boston and has an incredible team.
I interviewed at UVIMCO, DUMAC, and Vanderbilt a few years back. UVIMCO flew me to Charlottesville for a super day where I met with all their Managing Directors and got asked about Allocation and Behavior all, followed by a Case Study (gave me an investment memo from a GP and asked for my thoughts after 30 minutes). DUMAC was 3 rounds and never heard back (Was via OCR and I went to Duke)
Can't mention endowment investing without mentioning Pioneering Portfolio Management by Swensen! Can definitely find a free PDF of it online.
Thank you - this is really good information. I am currently a mid-level in PE but am considering moving to Endowments for the WLB benefit.
I thought DSP only did recruiting for HFs (and maybe 5-10% PE), so that's good to know, though it sounds like cold emailing might be the move, especially for non-entry-level roles. Do you have a sense of how often they hire and comp/career progression at these places?
Correct - DUMAC and Emory are LPs in our fund and tend to coinvest more than other endowments.
For non-entry level roles, hiring is done entirely as needed. Headcount is very rarely added so most of the time you need to wait for a seat to open up. If you have a specific city you want to be in, you may need to be very patient and let the game of musical chairs play out.
Career progression is mostly just getting slowly promoted over the years. Being an allocator is the exit, not a stepping stone to something else. Comp can vary wildly for the same title as it is generally tied to the AUM of the organization, so you can expect a director at Yale to get paid more than a director at a $1B endowment. You can get a sense of what this can look like by looking at the roles posted on Allocator Jobs since base salaries are frequently posted with the job descriptions. You can also look at organizations’ 990 tax forms to see how much the senior people get paid.
https://allocatorjobs.com/
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