Rockefeller University’s Paula Volent is moving some of the $3 billion endowment to cash, hoping to temper the effects of an impending recession.
“Cash is king right now, so I’m going to be holding a lot of cash,” Volent said.
The chief investment officer spoke Thursday at a CAIA Association panel in New York, where she revealed how Rockefeller University’s investment team is managing the market downturn, rising interest rates, and inflation.
Underlying her rationale is a belief that the market will enter a recession: gross domestic product will fall for at least two consecutive quarters. Her focus is on adding liquidity to Rockefeller’s portfolio.
To do so, Volent’s team recently sold off a $200 million buyout investment on the secondary market. She was pleased with the valuation: the fund sold for 95 percent of its net asset value as of December.
Rockefeller University’s team has also been spending time with the endowment’s existing managers, having one-on-one meetings to determine how they plan to manage current market conditions. But the team is also keeping an eye on potential investment opportunities that emerge as their peers sell off assets.
“I’m still a believer in privates and alternatives,” Volent said. She added that she believes innovation is happening right now in the private markets, as founders continue to avoid going public in part because of the onerous process of quarterly reporting.
Of course, she noted, the Securities and Exchange Commission is looking at this issue closely, with an eye toward regulating privately-held companies further. But that doesn’t affect the attractive nature of the asset class.
In Volent’s view, valuations are starting to become more reasonable, especially as Series A and B rounds in venture have seen valuations decrease. But there’s still too much money on the sidelines in buyout strategies.
For Volent, cryptocurrency and gaming companies may present interesting opportunities for investment in a down market. Distressed credit, commodities, and global macro are also potential options.
While she had initially considered opportunities in Europe due to improved valuations, Volent noted that she’s “less excited about that” these days. China, too, is not attractive to the endowment head. “I'm very negative on China now due to geopolitical concerns,” she said, adding that “Xi has his own agenda. I don’t want Taiwan risk in the portfolio.”
Moving forward, Volent is focused on quality investments, along with preparing liquidity.
“We need to be more discerning,” she said, adding that she’s “less optimistic” than some of her peers that the market has already reached its bottom.
