Episode summary
Michelle Knudsen, NYU – How Decision Rights Are Split Between Committee and Team
Investment Management Operations
· · 5 min · Hosts: Ted Seides · Guests: Michelle Knudsen
Summary
Michelle Knudsen describes how she quickly rebuilt NYU’s endowment process after arriving as CIO, starting with a deliberate effort to earn trust through preparation and speed. Within three months, she says the team had a new governance structure, a new asset allocation framework, and a triage process for re-underwriting every line item in the portfolio.
The core governance change was a clearer split in decision rights. The investment committee now focuses on big-picture oversight: portfolio risk, strategic direction, and frameworks for areas like co-investments and secondary sales. The investment team handles manager selection because it has the deepest knowledge of the landscape, but that authority stops at a defined threshold.
Knudsen says NYU set that threshold at 3% of the portfolio, because beyond that size a manager becomes a meaningful nexus of risk. If a position approaches that level, she takes it to the committee early. She says the committee has been supportive and tends to pressure-test the role a manager plays in the portfolio, rather than second-guessing the team’s day-to-day judgment.
Key takeaways
- Michelle Knudsen says NYU rebuilt its governance, asset allocation framework, and portfolio review process within three months of her arrival.
- The investment committee now focuses on oversight, risk levels, and strategic frameworks, while the team handles manager selection.
- NYU set 3% as the cutoff where a manager becomes large enough to require committee buy-in because the position becomes a significant nexus of risk.
- Knudsen says she takes positions to the committee before they reach the limit, and the committee has generally deferred to the team after asking tough questions.
Notable quotes
“within 3 months, we had a new governance structure. We had a new asset allocation framework. And we had started triage triaging and re-underwriting every line item in the portfolio”
“It was really important to me that we be able to leverage the strengths of the investment committee”
“We set that level at 3%. Um but we said above that level, we want the committee's buy-in on the manager allocation”
“And so, if we're starting to get close, we take it to the investment committee”
“So again, I would say pressure testing more of the thinking of the role that the manager plays in the portfolio versus the individual manager decision”
How the episode opens
Because once you have a manager that's a certain size, that becomes a significant nexus of risk for the endowment. — In your early days, how did you earn the trust of whether it's the committee or the board so that you could start to create a plan of action?
Started with a plan of action on how to create a plan of action.
The committee and the team wanted to know that there was a plan. And I over-prepared for every conversation. I tried to absorb as much information as I could so that in every conversation I was going in with a very clear set of questions for whether it was a colleague or an investment committee member or uh an an official at the university to come up with the medium-term plan.
And then we hustled. I I got in the weeds with the team. And within 3 months, we had a new governance structure.
We had a new asset allocation framework. And we had started triage triaging and re-underwriting every line item in the portfolio. And I think when the committee and the team saw how much we could do in a short period of time that gave them a lot of confidence in the medium-term plan.
Let's walk through each of those. What was the governance structure that you created? — It was really important to me that we be able to leverage the strengths of the investment committee. And NYU has a powerhouse investment committee. That meant making sure that we were engaging where on oversight and the risk level of the portfolio and big themes. We all I also wanted to make sure that decisions were being made at the level where those who had the most information could actually do their jobs.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- endowment governance
- decision rights
- investment committee vs team
- asset allocation framework
- portfolio underwriting
Companies and tickers mentioned
- GS
- New York University
- Mellon Foundation
- Partners Capital
- Goldman Sachs
Watch the episode
Watch “Michelle Knudsen, NYU – How Decision Rights Are Split Between Committee and Team” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
More from Investment Management Operations
-
Charlie Rose: Real Estate Credit Over Yield at Invesco's $85B Platform -
Daylian Cain on the Theory of the Pie -
Frank Danieli – Roadmap for Private Credit from Australia -
Dambisa Moyo: Economic Growth, Governance, and Capital Allocation (Capital Allocators, EP.510) -
Holding a Hedge Fund Manager Through a 50% Drawdown — to a 5X | Nicholas Csicsko -
Abigail Wattley on Learning to Underwrite Managers — Starting With the Asset Classes Nobody Wanted
Investment Management Operations, 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.
