Even as endowments loaded up on private equity, David Greenberg, who left the California Endowment last year for a role at the Virginia Tech Foundation, kept his eye on public markets.
“I am a believer in active management, number one,” he said in a recent interview. “Number two, I am a believer that there are skilled managers that can take excess risk in public equity markets to get you access to returns.”
He’s been reworking Virginia Tech’s $2.8 billion portfolio since he joined last year, improving investment reporting and adding to the small team.
The endowment’s prior chief investment officer, Dan Ward, had been with Virginia Tech for 15 years before leaving in 2022. That year, the foundation launched simultaneous searches, one for a CIO and one for a nondiscretionary consultant.
“There’s a whole host of kind of transition from people who’ve been there a long time because that’s just kind of how the tenures were,” Greenberg, who joined in 2023, said. “The objective is to effectively have a reset and set things up moving forward in a way that it puts the foundation in the position to maximize performance.”
Ward had been running a value-oriented equity portfolio with a low private equity allocation. The portfolio had also been invested in Treasuries amid the prolonged period of low-rates. According to VTF’s 2023 financial report, this tilt toward value — and an underweight position in technology stocks — dragged performance down.
In response to the current market regime, as well as a renewed focus on the foundation’s long-term goals, VTF is swapping out some of its long-running investments for a new allocation.
Some of Greenberg’s first additions to the portfolio were market-neutral and fundamental equity hedge fund strategies. He emphasized that the foundation has not invested in multistrategy firms that operate so-called pods — but has instead opted for traditional managers.
In the hedge fund bucket, he has looked for non-correlated returns with a target of 10 to 12 percent. Among the additions is an allocation to Elliott Management, he said. He’s targeting a beta of 1.1 in the equity portfolio, increasing from 0.8, where it currently sits.
“I have a firm belief that my job is first and foremost as a risk manager. I’m putting pieces together of risk-return profiles to get to where I want to go.”
Greenberg’s next focus is to add more private equity managers. The allocation to private equity currently sits at 11 percent. “We’re looking at the best way to get that exposure without forcing it,” he said. The foundation believes that adding private equity exposure could improve overall performance, which on a long-term basis has been strong. In 2023, though, the endowment returned 7.6 percent, underperforming its policy benchmark by 2.1 percent. Over the three-year-period, it outperformed the benchmark by 4.5 percent, and by 0.7 percent over ten years.
Virginia Tech is based in Blacksburg, a small college town. Endowment CIOs in far-flung locales are quick to share that being in a small town isn’t conducive to attracting investment managers — or talent.
Mindful of that, Greenberg and his counterparts in foundation leadership were careful to choose a location that could do both. His predecessor had been based in Charlotte, but that isn’t close to VTF. Northern Virginia seemed like a possibility, but there are fewer allocators than one might expect in the area.
Greenberg settled on Richmond, and has since begun rebuilding a team, which is now a group of five, including an investment operations manager.
“There’s a good amount of movement between institutions in the region, which is rare,” Greenberg said. “Here people are excited that somebody got a new opportunity. It’s great.”
