Most of the best investment firms in the world are closed to new investors.

This is a problem for endowments that are trying to post exceptional returns to fulfill their mandates.

One way endowments try to solve this problem is by arguing that their capital is not a commodity.
This argument is most persuasive for emerging managers - young firms looking to raise their first institutional capital.

To emerging managers, an allocator can offer not just enough capital that the manager can afford to build out a bigger & better team, but also...
...advice on building IT, compliance, and team necessary to support a robust investment process (and become an “institutional quality” manager that will pass through consultants’ screens).

In other words, it offers the manager a chance to focus on investing and speed up growth.
In exchange, the endowment (or foundation / pension fund / family office) gets preferential terms such as lower fees or sometimes a stake in the manager itself.
These terms boost the investor’s net return.

Perhaps more importantly, it also gets the investor in the door (as an established, supportive partner) before the manager stops taking new money.
Finding talented, emerging, unknown managers is difficult, which is where advertising comes into play.

If you can get emerging managers to come to you, the job of finding them becomes way easier (even if you have to take some not-as-great meetings along the way).
I really respect what MITIMCO has done from this perspective.

They write a great annual letter, have a really informative website, some of their staff have investment blogs, others have done interviews at managers’ annual meetings. They have even advertised on @InvestLikeBest.
All of those things send a signal to emerging managers: We’re open for business. We’re a long-term oriented LP. We don’t take usurious terms. If you’re fit with our criteria, please reach out.
They’ve built a better funnel than most allocators, which is a huge, huge advantage.
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