How I Invest with David Weisburd
E156: Inside the Mind of a $1.7B Endowment CIO w/Jim Bethea
18 Apr 2025
Jim Bethea oversees $1.7 billion at the University of Iowa’s endowment—and he does it with a team of just five people. In this episode, we cover how Jim thinks about asset allocation, governance, manager selection, and why Iowa has decided to specialize in certain asset classes like lower middle market private equity. This conversation is full of nuance, clarity, and hard-earned lessons that every allocator, GP, and fund manager will benefit from. Jim pulls back the curtain on how small teams can still invest in niche, high-performing funds, how to manage investment committee dynamics, and why more isn't always better when it comes to diversification.
Full Episode
When we're talking with folks about whether it's low or middle market buy, we're doing it to trade ideas, but everybody's trying to judge, do I think the other person's smart? Am I going to come back to them if I hear that they're in some other asset class to see if whatever school or whatever foundation or whatever is smart enough and thinks like we do? Probably not smart enough.
More things like we do. Our incentives aligned is probably a better way to think about it. But, you know, dealing with committees, dealing with budgeting, resources, things, and that leads to conversations not just about investments, things like that, staffing. You know, the Big Ten CIOs get together.
It's more than just the Big Ten, but we get together so we can have these idea trading sessions about this work for me, this work for you, and how can we build on that. What are the pros and cons of managing $1.7 billion?
The pros is that we're small enough that we can do small and interesting funds. So flexibility is the biggest pro that a small fund has. We're also generalists. So everyone has a view of all asset classes and it sets the team up to be specialists in any asset class if they want. want to go on from here. And it's also easier to transition to a CIO role.
From a con perspective, a small team, we have limited resources. So we can't always do everything that we would like just from a financial standpoint, but also investments too. It's a limited bandwidth that we have. And being a generalist is also a con. We can't get as deep as specialists can, but you're a mile wide and an inch deep rather than a mile deep and an inch wide. And
One of the challenges that your endowment has and a lot of endowments have is picking its shots, picking which opportunities to even diligence, let alone invest to double click on and to diligence.
I think it starts with, is there an interest in it? And so you look and see, is this interesting? Do we think we have some edge to this or can we even understand it? There's a lot of really cool investments that you could do that you have no idea at the end of the day what those funds are doing.
And so if you can't understand what they're doing or explain them to somebody that maybe isn't an investment professional, maybe it's just a little bit too niche-y for what we want to do. And a really quick way to figure out if something's interesting or not is returns. If it doesn't hit the return threshold that we need, we're not going to spend any time there.
Essentially, if what you're saying is true, but it doesn't even hit our return threshold, it doesn't really matter. I'll use Farmland as an example because we're in Iowa. Farmland's great investment potentially. It's very diversifying, but single-digit IRRs just are not interesting to us.
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