The Market’s Biggest Whales are Making Huge Changes: Total Portfolio Revolution | Steve Novakovic of CAIA
Monetary Matters with Jack Farley
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Show Notes
This episode is brought to you by CAIA.nxt. Learn more about their alternatives education courses for investment advisors and get 10% off with code MMTEN: https://caia.org/content/welcome-monetary-matters-and-other-peoples-money-listeners
Steven Novakovic, Managing Director of Educational Programs at CAIA, discusses the monumental shift from strategic asset allocation to the Total Portfolio Approach (TPA), a change recently highlighted by major moves at CalPERS. The conversation explores the evolving landscape of private markets, specifically how secondary markets are providing crucial liquidity and entry points for investors dealing with slowed distributions and the "denominator effect". Novakovic also provides a candid look at the friction between hedge fund fees and beta-heavy returns, arguing that sophisticated limited partners will not pay for beta. As alternative investments become more accessible to retail wealth, he emphasizes the critical need for education regarding evergreen funds and the unique risks of private market liquidity. Finally, the episode looks forward to 2026 educational initiatives at CAIA.Follow Steve Novakovic on LinkedIn: https://www.linkedin.com/in/steven-novakovic-caia/
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Timestamps:
00:00 Introduction to Governance Changes in Pension Plans
00:45 Strategic Asset Allocation vs. Total Portfolio Approach
03:24 Early Adopters and Global Trends in TPA
05:06 Benchmarking and Decision-Making Shifts
09:58 CalPERS Case Study: Governance and Tactical Opportunities
17:32 Impact on Managers and Investment Strategies
22:08 Current Market Trends and Private Credit
25:54 Private Equity Distributions and Secondary Markets
35:32 Reinvesting Portfolio Proceeds
36:39 Understanding Secondary Market Buyers
37:09 Benefits of Secondary Allocations
39:14 Challenges and Strategies in Secondary Markets
45:03 Hedge Funds vs. Equity Markets
46:35 Evaluating Hedge Fund Performance
49:02 Active Management and Fee Structures
56:53 Educating Investors on Alternatives
01:03:00 CAIA's Educational Resources
01:05:44 Upcoming CAIA Programs