This is about Scott Malpass, who grew Notre Dame's endowment from $400M to $12B over 32 years. He says only 40-50 institutions globally can successfully use the 'endowment model' (diversifying into stocks, private equity, venture capital, etc.); others should just buy cheap index funds. He picks fund managers based on their 'solid core' (character and values), not just returns. Three key holdings: Sequoia Capital (top VC, partnered since the 1980s), Vanguard (low-cost fund firm, called a 'national treasure'), and Paxos (blockchain company, founded by his former student).
Scott Malpass shared his 32 years of experience managing the University of Notre Dame endowment on the Invest Like the Best podcast. His core argument is that building an outstanding endowment requires long-termism, a differentiated team, and collaboration with top-tier managers. He successfully gre
Scott Malpass, former CIO of the University of Notre Dame endowment (32-year tenure), grew assets from $400 million to over $12 billion, covering 175 managers. The central theme of this issue is the core elements of building an outstanding endowment: long-termism, differentiated teams, and top-tier manager selection. The most impactful judgment in the entire episode: Malpass believes that only 40-50 institutions globally have the capability to successfully implement the "endowment model," and the rest should opt for low-cost index investing — a judgment that directly challenges the widespread imitation of this model.
Malpass argues that the "endowment model" is not a universal solution, with only 40–50 institutions globally possessing the conditions to implement it.
The model originated in the 1970s from meetings of university finance officers convened by Cambridge Associates. Its core tenets are: increasing equity exposure (both public and private), diversifying allocations, hedging against inflation/deflation risks, and maintaining adequate liquidity to support intergenerational spending. Ivy League endowments such as Harvard and Yale were early adopters and promoters.
However, Malpass notes that most imitators have failed: "Most institutions should not try to do this. They cannot gain access to top-tier managers, lack staying power, do not have stable teams, and cannot build long-term relationships." (In other words, the model itself is effective, but the execution bar is extremely high.)
Prerequisites for successful implementation:
> Readers should note: As a successful practitioner of the endowment model, Malpass's assertion that "only a few can play" carries a degree of self-justification—it is also the core narrative underpinning the value of his career.
Malpass shifts the focus of manager evaluation from "numbers" to "people," with the core criterion being a "solid core."
Over 32 years, Malpass has met with thousands of fund managers, developing a unique selection methodology:
1. Exploring the "Pre-Investment Career"
Malpass spends considerable time in meetings understanding a person's life trajectory before becoming an investor—family background, values, interests, and ethical principles. "I want to know who they are, not just their portfolio." (Meaning: a person's essence determines their long-term behavior.)
2. Distinguishing Confidence from Arrogance
Top investors are "very confident, but know how difficult this industry is. They have all been knocked down, gotten back up, remained humble, and are always learning." (Meaning: truly outstanding investors possess both confidence and self-awareness.) Malpass deliberately asks, "What went wrong this year?" to observe whether the person reflects honestly or responds with arrogance and avoidance.
3. Assessing "Skill Durability"
Malpass seeks "partners who can last 10-15-20 years," not "meteors that disappear in two or three years." He focuses on: clarity of investment philosophy, awareness of one's own capability boundaries, and the ability to execute across market cycles.
Key Data: Malpass estimates that the proportion of managers who "immediately stand out" is less than 1%—"You can tell early in the meeting that these people are different."
Malpass believes "innovation" is the only long-term theme worth betting on in his career, making venture capital a core source of excess returns.
The core of Malpass's leadership philosophy is "taking responsibility for the team's success" rather than personal achievement.
Key Principle: "Leadership is a choice. Some people choose not to be leaders. It is a daily intention, and you must be very focused on it."
Malpass holds a cautious yet open stance on cryptocurrency, recommending participation through venture capital and a modest direct allocation.
| Position | Guest Sentiment | Key Data |
|---|---|---|
| Sequoia Capital | Highly bullish (early core partner) | Relationship established in the late 1980s, personally hosted by Don Valentine and Mike Moritz |
| Vanguard | Highly bullish (Malpass serves on the board) | Referred to as a "national treasure" |
| Paxos | Bullish (Malpass serves on the board) | Founder Chad Cascarilla is a former student of Malpass, positioned as a "regulated blockchain infrastructure platform" |
| Catholic Investment Services | Bullish (Malpass serves as Chairman) | Manages over $10 billion in assets, serving 30+ clients |
| Vatican Bank | Neutral (Malpass serves on the board) | Currently advancing asset management transformation |
| Golden Gate Capital | Bullish (Dave Thomas is a former student of Malpass) | Head of the industrial team |
| Apollo | Neutral (mentions former employee) | Demon Gian Giacomo is a former student of Malpass, later founded his own company |
| Summit Partners | Neutral (mentions former employee) | Tom Usher previously worked here |
| Wellington | Neutral (mentions employee) | Jen Netisign-Bird is a former student of Malpass |
| Blackstone | Neutral (mentions employee) | Sean Klimczak is a former student of Malpass |
1. Malpass: Only 40–50 institutions globally can successfully execute the "endowment model" — the rest should opt for low-cost index investing. The threshold lies in: a strong commitment to talent, a complete investment framework, fast decision-making authority, and a stable team.
2. Malpass: The core of manager selection is a "solid core" — he spends considerable time understanding a person’s life trajectory before they became an investor (family, values, interests), believing this determines the quality of long-term collaboration.
3. Malpass: Fewer than 1% of managers "stand out immediately" — "You can tell early in a meeting that these people are different." The rest require long-term observation.
4. Malpass: Scale is a negative factor in any asset class — "When I think about why a firm fails or performance starts to decline, the most common reason is that they raised too much money." (Fixed income is an exception.)
5. Malpass: Innovation is the only long-term theme worth betting on — The University of Notre Dame’s venture portfolio once helped build approximately 35% of Nasdaq’s market cap. Innovation is "accelerating and becoming more global."
6. Malpass: A small allocation to cryptocurrency beats gold — "In economic history, things that lower costs and improve efficiency eventually win." He suggests participating through venture capital and direct holdings of a "small basket."
7. Malpass: Leadership is a "daily choice" — "Every morning, I think about what I need to do for the team today to help them succeed." When mistakes happen, "focus on the problem, don’t blame anyone."
8. Malpass: Young investors in their 20s should "surround themselves with other great investors" — Build a foundation through internships, opening a personal investment account, and reading 10-Ks/10-Qs. Asset management is fundamentally different from investment banking, and this difference must be understood early.