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Published Dec 19, 2022

[REPLAY] - Ana Marshall – Applied Direct Investing at the William and Flora Hewlett Foundation (Capital Allocators, EP.111)

Ana Marshall, CIO of the Hewlett Foundation, discusses team management and investment strategies, emphasizing collaboration, diverse perspectives, and rigorous risk management. She also recounts her journey from direct investor to overseeing a $10.5 billion portfolio, highlighting the impact of mentors and strategic decision-making in her career.
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  • Risk Management

    Ana Marshall, CIO of the Hewlett Foundation, emphasizes the importance of transparent communication in risk management. She collaborates closely with her investment committee, ensuring they understand the portfolio's beta and risk factors. Ana's approach includes frequent discussions with the committee chair and leveraging factor risk analysis to maintain clarity and accountability 1.

    We do it by asset class, the way traditional people do it. We have two terrific partners that help us do factor risk analysis.

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    Her strategy involves balancing risks across various asset classes, including distressed credit and fixed income, to achieve growth with reduced volatility 2.

       

    Asset Allocation

    Ana's asset allocation strategy is marked by a rigorous manager selection process. She insists on a high hurdle rate for managers, ensuring only those with the ability to "see around corners" are included in the portfolio 3. This meticulous approach led to a significant portfolio reassessment, where Ana streamlined the portfolio to align with its intended role, emphasizing conviction over diversification 4.

    It was a far more diversified portfolio. It was before I became really militant about diversification.

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    This reassessment involved reducing the number of managers significantly, focusing on those who could adapt to changing market conditions.

       

    Investment Philosophy

    Ana's global perspective on investing is shaped by her diverse experiences living in multiple countries. She values understanding cultural norms and corporate governance differences, which informs her investment decisions 5. Her philosophy emphasizes knowing one's strengths and limitations, avoiding direct investments where expertise is lacking 6.

    Know what you know, know what you don't, and where you don't have expertise, there is no competitive advantage on sitting in my seat.

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    This approach has led to a unique portfolio structure, avoiding hedge funds and focusing on stock pickers to manage risk effectively.

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