Episode summary
How the Utah School and Institutional Trust Funds Office stays focused on long-term signals
Summary
Peter Madsen says SITFO’s portfolio is built around a long-horizon objective rather than peer rankings: he wants to meet a CPI plus 5 target with a tight confidence interval while preserving intergenerational equity for Utah’s K-12 beneficiaries. That has led the fund away from a simple public-equity-heavy posture and toward a more balanced mix of growth, real assets, income, and defensive exposures.
He describes the process as highly data-driven and manager-specific. The team uses multiple databases, wide sourcing, and a factor lens to decide what fits the portfolio, then underwrites managers on transparency, humility, and whether they can clearly explain what they do. He argues that avoiding large drawdowns matters more than chasing the highest return, and that diversified, equity-like return streams can improve compounding over time.
On current opportunities, Madsen highlights the growth of private-market access for individuals, re-emergence in activist strategies and global macro, and newer ideas in music royalties and catalog ownership. He is also cautious on China, concentration in AI-linked assets, and the risk that inflation stays sticky while real yields remain low.
Key takeaways
- Madsen says SITFO is designed to hit CPI plus 5 over the long term, not to win short-term peer comparisons.
- He believes diversification can narrow the portfolio’s return confidence interval better than simply increasing equity risk.
- He says manager transparency and the ability to explain a strategy clearly are early green lights in due diligence.
- He sees private-market access for individuals, activism, and global macro as re-emerging opportunities.
- He is cautious on China and on the concentration risk building around AI-linked investments.
Notable quotes
“We're really open-minded about other ways of generating equity-like returns and we're not relying on public or private equity as the most”
“the most diversified or best portfolio diversification strategy is just equal weight everything”
“avoiding those big drawdowns is really effective in improving your long-term compound returns”
“the first lens as I mentioned or you know first part of the process is how would it fit in the portfolio”
“The one, I guess you maybe call it trend that comes to mind that might seem not directly obvious for an institutional investor is the shift of private market opportunities being available to individuals”
How the episode opens
The one, I guess you maybe call it trend that comes to mind that might seem not directly obvious for an institutional investor is the shift of private market opportunities being available to individuals. And I think I think that's somewhat inevitable. You know, it'll be delayed or maybe disrupted and maybe it'll take longer than expected.
But if if you're able to capitalize on that, then I think that's a current opportunity. There aren't many brand new or unique ideas. There's iteration, people looking back to the past or, you know, economic regimes shift and older strategies that maybe have fallen out of favor come back into favor.
And one of those that we've been spending time on originally we we had activist managers in uh Europe and Japan which is you know for hedge fund investors they'll recognize those as long-term opportunity sets but we've increased our exposure to those strategies recently to include other markets and I think that's a strategy that is receiving new life. We look to what we think we can underwrite and understand the market opportunity and if the manager is transparent has you know other characteristics but transparent and helpful in us underwriting that opportunity set not just the the firm and the strategy. I think that tends to be how something gets across the line.
A contrast would be sports investing. We took a look at it. We had some enough questions about liquidity and exiting and we didn't end up going into kind of the early opportunity set of sports but we you know we've ended up having exposure through you know venture managers and others who are participating.
Welcome to the allocators playbook. My next guest is Peter Madson, chief investment officer of the UT schools and institutional trust funds office.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- long-term signals
- private market insight
- defensive portfolio positioning
- data-driven strategy
- trust fund performance
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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