Episode summary
CIO Greatest Hits: Single Family Offices – Steve Rattner (Willett Advisors)
Capital Allocators with Ted Seides
· · Hosts: Ted Seides · Guests: Dawn Fitzpatrick, Steve Rattner
Summary
Steve Rattner describes how Willett Advisors, Michael Bloomberg’s family office, was built around a straightforward endowment-style model rather than a radical reinvention. The team launched in 2008, just before the financial crisis, with most assets initially in cash, and then developed a structure centered on specialist coverage of public equities, hedge funds, private equity, and real assets. He says the firm has gradually become more integrated across asset classes, but still relies mostly on external managers while using internal teams in private equity and real assets where he sees fee and capital-allocation advantages.
A recurring theme is discipline in manager selection. He argues that performance chasing is dangerous, that persistence is limited, and that the best managers often look like owner-operators with real conviction. He wants the firm to be more concentrated over time, because owning too many managers and overlapping positions can dilute returns into something close to index exposure. He also says the firm keeps a close eye on beta because long-term market exposure matters more than most manager alpha.
Rattner is constructive on China and skeptical on Europe, saying China remains the most compelling major market on valuation and growth, while Europe is fundamentally unattractive even if cheap. He is also doubtful about broad hedge fund economics and uneasy about the rise of stakeholder-driven corporate stewardship, arguing that governments are failing to solve public problems and companies are being asked to fill the gap.
Key takeaways
- Willett Advisors began on January 1, 2008 with an endowment-style framework and mostly cash, then built out specialists across public and private markets.
- Rattner says most capital will always stay external, but internal private equity and real assets can reduce fee drag and improve capital control.
- He believes performance persistence is weak, so manager selection should be methodical and concentrated around owner-operators with real edge.
- Rattner is most bullish on China and most negative on Europe, calling China the cheapest major market relative to growth and Europe a fundamental mess.
- He is skeptical of hedge funds and corporate stewardship rhetoric, arguing that both can obscure the real source of returns and fiduciary duty.
Notable quotes
“we followed a pretty conventional approach of having five or six senior people address each of the obvious asset classes, public equities, hedge funds, private equity, real assets and so forth”
“Most of our money is and always will be managed externally because we do believe in diversification”
“the fee drag of private equity is the biggest of any asset class”
“performance persistence is not that great”
“China is still the most exciting major market probably in the abstract let alone on a ratio to value or pricing”
How the episode opens
Hello, I'm Ted Sides and this is Capital Allocators. This show is an open exploration of the people and process behind capital allocation. Through conversations with leaders in the money game, we learn how these holders of the keys to the kingdom allocate their time and their capital.
You can keep up to date by visiting capitalocatspodcast.com. My guest on today's show is Steve Ratner, the chairman and CEO of Willlet Advisors, which invests former New York Mayor Michael Bloomberg's personal and philanthropic assets. Steve's career has ranged from a journalist for the New York Times to investment banking at Lehman Brothers, Morgan Stanley, and Lazard Fra to founding private equity firm Quadrangle Group and lastly to serving in the Obama administration as head of the successful restructuring of the automobile industry after the financial crisis.
He returned to oversee Willlet advisers after his work in the government. Our conversation starts with a quick tour through each of Steve's careers and then turns to his work investing the assets of Michael Bloomberg's family office, including selecting an investment model, building a team of specialists, using internal management to supplement external managers, and thinking through private equity, hedge funds, public equity, and the manager selection process. We close with Steve's perspectives on China and his ongoing engagement in politics.
Please enjoy my conversation with Steve Ratner. Steve, great to see you. Thanks for having me.
Well, most of the time we go through someone's career. It strikes me you've had five different careers. So, why don't we just start at the beginning and in journalism and maybe touch on all of them and some of the lessons you learned along the way.
Sure. So I was a college journalist as a hobby. Thought I was going to end up in business or law or something like that, some profession at the urging of my father in particular.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- single family offices
- internal vs external investing
- investment approaches
- soros internal teams
- external manager selection
Companies and tickers mentioned
- Soros
- Willett Advisors
- Bloomberg family office
Watch the episode
Watch “CIO Greatest Hits: Single Family Offices – Steve Rattner (Willett Advisors)” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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Capital Allocators with Ted Seides, this episode and its artwork belong to Ted Seides – Allocator and Asset Management Expert. Octagon is not affiliated with the show; this page is an independent summary.
