
Busting the myths of M&A: 4 steps to success
Finance Busting the myths of M&A: 4 steps to success by Patrick Reinmoeller Published 11 June 2025 in Finance • 8 min read DownloadSave Many mergers and acquisitions are destined to disappoint...
by Raphaël Grieco Published November 29, 2024 in Finance • 6 min read
Traditional pension funds have much to learn from the runaway success of university endowment funds in the US, where Yale and others are reaping the benefits of investing heavily in hedge funds, venture capital, and real estate.
With inflation eating into yields and growing pressure to meet long-term obligations, the need to integrate VC into portfolios has never been more pressing. The results of the endowment model can be spectacular. Yale’s asset allocation is modeled to deliver close to 12% over the decade, twice that of a more conservative 60/40 allocation of stocks and bonds.
An endowment portfolio typically encompasses a wide array of asset classes, including hedge funds (23%), private equity (22%), and real assets (11%) such as infrastructure, timberland, and real estate.
Of course, the reluctance of traditional fund managers to leap in is understandable. Pension funds operate under different structural and governance constraints, with the need to match predictable liabilities while maintaining a strong liquidity position.
Yet, it’s a risk worth taking. Here, I will show how pension funds can adapt the endowment model to their unique contexts, strategically unlocking VC’s potential while managing the risks of illiquidity. Note that this is a high-level framework, and each pension fund has its own dynamics.
“By engaging in secondaries, pension funds can balance long-term illiquid commitments and near-term liquidity needs, enhancing their ability to respond to evolving market conditions while reaping the benefits of private market exposure.”
Pension funds must continuously refine their approach, staying informed on evolving market dynamics, new fund structures, and emerging opportunities.
Adapting the endowment model around VC into pension fund portfolios presents unique challenges and compelling opportunities. No doubt, the illiquid nature of this asset class, combined with the long investment horizons, requires careful planning, robust risk management, and strategic liquidity layering. Yet, given the power law nature of VC, the known potential for outsized returns, or alpha, makes venture capital a valuable tool for pension funds seeking long-term growth.
However, involvement in this space is not static: it demands a deep, ongoing education and an adaptive understanding of venture investing. Pension funds must continuously refine their approach, staying informed on evolving market dynamics, new fund structures, and emerging opportunities, to fully grab the potential of this complex yet rewarding asset class.
Research Associate at the IMD Venture Asset Management Initiative
Raphaël Grieco is a former Research Associate at IMD for the Venture Asset Management Initiative, drawing on over 15 years of leadership experience at the intersection of cross-asset wealth management and technology. Raphael specializes in early-stage venture investing, multi-support educational content creation spanning written and audio formats, as well as building entrepreneurial ecosystems focusing on technology (including crypto and web3).
July 7, 2025 • by Patrick Reinmoeller in Finance
Finance Busting the myths of M&A: 4 steps to success by Patrick Reinmoeller Published 11 June 2025 in Finance • 8 min read DownloadSave Many mergers and acquisitions are destined to disappoint...
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