E294: Endowment Model vs Total Portfolio Approach: The Real Trade-Offs
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What problem did New Republic Partners aim to solve in the multifamily office market?
What is the simplest way to explain New Republic Partners and what problem did you see in the ecosystem that you wanted to go after?
For New Republic Partners, we are a multifamily office founded by a group of seasoned investment professionals and two prominent multi-generational families here in the Southeast. And really our aim is to offer clients the expertise, the resources and scale of a multi-billion dollar family office. And we started that multifamily office because there was a shared appreciation of of the advantages of an MFO between the founding team and those two families where we could offer customization, minimize conflicts of interest, and also attract some top-tier professionals while maintaining and getting that scale that's necessary to access institutional quality investment opportunities and have a deeply resourced team and infrastructure, which we didn't think at the time was in the industry, where if it was out there, I think we would have sought it as a single-family office and
We sought to create it at New Republic.
Give me a sense for where New Republic Partners sits today at an AUM level.
So New Republic today sits at about $2.5 billion in assets under management. Two-thirds of that is discretionary and mandate, a third non-discretionary. And as a firm, we're headquartered in Charlotte with offices across the Southeast. We have 27 employees as a firm today.
You said you wanted to minimize conflicts. In what ways are other multifamily offices conflicted? Talk to me about that.
So for MFOs or RAs more broadly, we're seeking to stand apart from the mix by being open architecture in our investment platform. We don't have proprietary products or vehicles that I'm incented to put a client's portfolio or family's portfolio in. We just think it's a tough argument to hold to say that you believe you have the best growth equity or stock picker in-house. And therefore, we should have our clients' growth equity or U.S. equity allocation only go through those managers. That's just a tough argument to make. And so our platform is open architecture, open scope, such that we are seeking, searching for the best managers and to get the best execution and talent in a particular asset class or sub-asset class.
Sounds simple, but not easy. You say open architecture. Does that mean that any of your clients can send you a fund and say, due diligence on this fund? What does that practically mean?
If you think about how we look at kind of the pipeline investments, we're trying to keep the top of the funnel as wide as possible. And so, yes, we're open in the sense that we would be doing searches in a particular asset class to kind of fill the top of that funnel. Also, it would be the case if our clients or families had brought us different managers that they had seen, we would be looking at doing the diligence on those managers too. So completely open scope in that regard and really trying to aim and find those great managers within specific sub-asset classes and broader asset classes.
Maybe you could walk me through a case study of a $200 million family comes to you or a small foundation. How would you go about building their portfolio?
With each family, we design portfolios that match that family's risk tolerance. It also aligns with their investment time horizon, income, and liquidity needs. Because as you've heard, if you've met one family office, you've met one family office. All can look very different based on how their capital base was built and their journey when exiting the family business and moving into a family office format. So after establishing those risk, liquidity, income, and time horizon parameters, The cleanest way I can bridge to a model portfolio construction for that family is to think about their investment portfolio really in three shades. growth assets, your income assets, and diversification assets. And when I talk about growth assets, that's the span of liquidity within that bucket.
You have global equities, long-only equity on one side, and then private equity venture on the other.
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Chapters
4 chapters
1
What problem did New Republic Partners aim to solve in the multifamily office market?
0:02–9:02
2
How does New Republic Partners' open-architecture model reduce conflicts of interest?
9:02–18:01
3
How do you construct a family portfolio using growth, income, and diversification buckets?
18:01–30:42
4
Why might traditional fixed income fail as a diversifier and what should families do instead?
30:42–32:03
Speakers
2 identifiedMore from How I Invest with David Weisburd
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