Tribal allocators invest under liquidity and cultural constraints that most traditional family offices don’t have to deal with. Many of these relatively new investment pools are backed by casino revenue, a relatively recent and uneven source of funding that complicate portfolio construction and cash management.
“It’s a lot newer capital because these casinos have gone up in the last 20 to 25 years,” Adam Rogers, chief investment officer for the Saginaw Chippewa Indian Tribe of Michigan’s investment office.
Described as a family office, the tribe’s portfolio is one pool of capital, estimated to be between $1 billion and $3 billion, split among roughly a dozen managed accounts. Now that the portfolio is growing, its investment process is also becoming more sophisticated. “It's not just about picking the right managers; it's about being more efficient with deploying capital,” Rogers added.
When Todd Fridline joined the Saginaw Chippewa Indian Tribe of Michigan’s investment office as portfolio manager in 2023, he found the portfolio had a cash drag problem: While some accounts saw regular income from casino operations, other managed accounts had none. Accounts receiving regular inflows outperformed those without income by roughly 30 basis points.
“I found over time if cash came in, it just sat there and would be a drag,” Fridline told Institutional Investor, adding that despite earning roughly 4.5 percent over the last three years cash “underperformed basically every asset class that you could imagine.”
What began as a fix for idle cash became a broader way to manage constraints. To narrow the performance gap among managed accounts, Fridline built a rules‑based allocation system to determine where best to deploy the capital, subdivided down by asset class, sector, region, and duration.
Rather than rely on ad hoc decision-making each time money comes in, the model automatically identifies where the portfolio is overweight or underweight by asset class, cap size, and duration relative to benchmarks, before determining in real time where to reallocate. When $10 million needs to be allocated, the model identifies the precise trades needed, the analyst enters the orders, and Fridline signs off. The three-person investment team also includes investment analyst Jenna Davis.
"Let's have a systematic, formulaic approach of doing this," Fridline said.
The model also accounts for the Tribe's operational needs. “We need to have the ability to make a distribution at any time," Fridline added. "I don't want to have to sell something that just had a 10 percent drawdown if I can avoid that.”
Since implementation of the model in the second half of 2023, the performance gap between accounts with and without inflows shrank to just 10 to 15 basis points. The system prevents daily portfolio drift, allows faster deployment in both bull and bear markets, and eliminates losses from sitting in cash. It also provides real-time alerts on underweight positions, such as China or emerging markets.
Comparing two accounts with the same benchmark — the Burial Fund, which has only outflows, and the Future Security Fund, which receives periodic inflows from the Tribe's gaming operations — the gap in performance narrowed from 44 basis points to just 11 basis points afterward.
“Immediately we saw numbers were getting closer, so accounts without flows were matching the ones getting flows,” Rogers said in a separate phone interview. “We were getting the performance we were trying to get faster because it was a lot more automated.”
The model also helps with risk management beyond cash deployment. When a position grows outsized relative to its target allocation, the model flags it for a trim. Fridline pointed to international and emerging market equities as a recent example, where the model prompted two trims in late February — shortly before those markets pulled back.
