Prologue xiii Part I: Base Camp - The Adventure Begins 1 Preparing for Base Camp: The must-read chapters to maximize the probability of success 1 Identifying the Summit 5 Setting the Investment Objective 6 Understanding Constraints and Payout 8 Various Approaches to Policy Portfolios 11 Risk Tolerance 13 Time Horizon 16 2 Defining Governance Responsibilities 19 Delegation of Authority 20 Extent of Delegation 21 Governance 25 Assembling the Team 26 Transparency into the Investment Process 30 Settling in at Base Camp: Expanding the toolbox to refine the skill set and broaden the options in the face of changing conditions 3 The Subtlety of Public Markets 35 The Role of Public Assets 36 Capturing Growth in Public Equities 37 Nuances of Fixed Income 41 Hedge Funds Are an Essential Tool 43 4 Perspectives on Private Markets 47 The Role of Private Investments 48 The Illiquidity Premium 51 Duration of Investment Holding Period 52 Leverage 53 Traditional Fund Structures 54 Alternative Fund Structures 54 Reconciling Performance 57 Part II: The Excitement of the Climb 61 From Base Camp to First Camp: Asset Allocation; Developing the road map for the expedition 5 Developing a Policy Portfolio 65 Capital Market Assumptions 66 Optimizer Constraints 70 The Cloud of Efficiency 73 Creating the Policy Portfolio 74 Range of Possible Outcomes 76 Stress Testing 76 From First Camp to Second Camp: Portfolio Management; The art of adapting to the constantly changing landscape 6 Portfolio Construction 85 Selecting Market Beta Exposure 86 Diversification of Alpha Sources 86 Designing Asset Class Strategy 87 Philosophy of Concentration versus Diversified Managers 87 Sizing of Managers 88 Reassessing Sizing 89 Rebalancing Ranges 90 Internal Process 91 Exogenous Risks 93 7 Active Risk 95 Measuring Active Risk 95 Size Limitations to Active Risk 97 Setting Expectations of Annualized Alpha 98 8 Portfolio Hedging 99 Active Hedging Strategy 101 Volatility Management Strategy 104 Alternatives to Hedging 106 9 Liquidity Management 109 Illiquidity Tolerance 110 Unfunded Commitments 112 Modeling Portfolio Cash Flows 113 10 Secondaries 115 Tool in Active Portfolio Management 115 Selection of a Secondary Agent 117 Constructing a Portfolio for Sale 118 Risk Management Benefits versus Cost 120 11 Benchmarks 123 Benchmark Design Options 124 Benchmark Selection 127 Testing the Benchmarks 127 Making Changes to Benchmarks 128 From Second Camp to Third Camp: Manager Selection; Selecting your partners for the climb, trusting your instincts, and learning when to quit with grace 12 Manager Selection 131 Evolution of Manager Selection 132 Setting the Bar 133 Refining the Skills Needed on the Team 134 Due Diligence Process Design 134 Manager Diligence and Selection Process 135 Sizing the Investment 139 Monitoring the Portfolio 140 Identifying Biases in Mature Portfolios 141 Knowing When to Quit 143 Part III: the Summit in View 147 Reaching for the Summit: Managing Stakeholders; The most dangerous part of the climb 13 Managing the Team 153 Team Culture 154 Team Structure 155 Decision-Making Process 156 Size and Skills of Team 157 Leadership 158 Designing an Incentive Plan That Works 160 14 Managing Up 165 Developing Trust with the Board 166 Transparency in Reporting 167 15 Managing Relationships with Fellow Investors 171 Developing True Partnership with GPs 172 Approaches to Diversity, Equity, and Inclusion 174 16 Managing the Self 179 The Value of Integrity, Emotional Intelligence, and Values 179 Honing the Competitive Edge 181 Glossary 187 Index 189.