Alpha Edge Recognition - Endowment of the Year
This year, Allocator Intel is recognizing leaders in the allocator community, acknowledged by their peers, for exceptional leadership in the key areas of portfolio construction in the Alpha Edge Recognition Awards.
Brown University, nominated for Endowment of the Year, is represented by Chief Investment Officer Jane Dietze. She attended Princeton University, where she graduated cum laude with a bachelor’s degree in politics with a concentration in Soviet studies. After two years as a financial analyst at Goldman Sachs, she earned a master’s degree in economics and Russian studies at the Johns Hopkins School of Advanced International Studies.
In the 1990s, she applied her studies throughout Europe. Starting in 1992, she spent four years at International Finance Corp.: As an Investment Officer, she sourced and structured investments in Albania, Macedonia, and Turkey; as a Project Manager in Russian land privatization, she hired and managed a staff of 230 people to implement the privatization of state and collective farms in Russia. In addition, she advised federal Russian officials and assisted government officials in 29 Russian cities, in implementing municipal privatization programs.
In 1996, she co-founded and led software company TORSO, managing all financial and operational activities, developing and executing the firm’s marketing, development, and raising venture capital funds. She sold the company in May 1997 to Wayfarer Communications, where she worked as Director of International Business Development. She spent 1998 to 2012 at asset management firms — Columbia Capital, NextPoint Partners, and Fortress Investment Group — before joining the university space, at Bowdoin College, as Director of Private Equity.
Outside of work, she has volunteered as an Investment Committee Member for the U.S. Soccer Federation and National Geographic, among others. At Brown University, based in Rhode Island, she joined the $6.5 billion endowment as a Managing Director in 2013 and was promoted to her current role as CIO in 2018.
The following is edited for length and clarity.
Can you share an overview of what your portfolio looks like today?
We have a diversified portfolio where the vast majority of the capital is managed by outside managers. We have a real-return mandate with an annual payout of close to 5%, so we have a high cost of capital.
As a result, we tend to take a fair amount of equity risk to generate high returns. We try to manage that risk through diversification, time horizon, and seeking out the highest-quality partners we can find.
What have been the most significant changes over the last few years?
As interest rates have come off the mat, it has really changed the dynamics of where you can invest in the capital structure of any given asset. Today, you can achieve a high rate of return while managing your risk in the capital stack, you don't always have to be in equity, which has opened up ways to achieve our return hurdles that haven't been available in recent years.
What factors influence you most when evaluating opportunities in your investment space?
Persistent excess returns are always the product of competitive advantage: That is the common thread that ties together every strategy we pursue.
Once we've identified that, we seek out integrity and alignment in our partners; we want to win alongside them. Finally, over time we have developed a strong preference for underlying businesses that create and deliver value to their customers, rather than extract or capture value from counterparties.
When looking to form a strategic partnership with an asset manager, what are the key areas on which you focus?
The basic premise of any client-manager relationship is the same: We deliver capital, and managers deliver returns on that capital, and we split up those returns in an equitable way. As an industry, we throw around the term “partnership” a lot, but really it only becomes a partnership in the truest sense if you are going beyond that basic premise.
It is a strategic partnership if the manager can help us be better investors — for example, by delivering unique insight that can help us make better investment decisions in other parts of the portfolio — and conversely, we seek to help our partners achieve their goals in a differentiated way, through flexible capital provision or access to resources.
What investment opportunities are you focusing on over the next 12 to 18 months?
It seems exceedingly likely that over the next 18 months there are going to be opportunities to provide liquidity to businesses and assets that are viable but illiquid in a way that could threaten the equity.
When those opportunities arrive, everybody who has capital to provide is going to be rewarded. There's a good chance that the question isn't going to be, “Where is the opportunity?” it is going to be, “Do I have liquid capital to take advantage of it?"
What challenges do you anticipate for your team over the next few years?
I can't say enough good things about our team here. The university has allowed us to invest in our people, and the wonderful thing about a high-performing team is that it compounds: Everybody makes each other better.
I would keep them all here forever if I could, but there are so many good missions that deserve smart, diligent investors working on their behalf. I think that we have a bunch of future CIOs on this team.
What would you say is your office’s greatest accomplishment since you joined?
We haven't won Brown's university wide staff cornhole tournament yet, so I really don't think that we should be talking about our accomplishments at all, actually.
What do you like to spend your spare time doing?
You don't want to see me across the net from you on a pickleball court. Just sayin’.
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