Deals Are My Art Form

Institutional investors control trillions in capital. Their allocation decisions rest on sophisticated models, performance analysis, and fiduciary responsibility. Yet year after year, they funnel massive sums into private equity and private assets while rejecting active liquid strategies. The disconnect isn't about returns. It's about something more fundamental: what feels like a deal.

• Board members who approve major capital allocations are politicians, lawyers, and businesspeople. They built their careers through deals, negotiations, and transactions. When presentations about private equity come up, they lean forward. When complex quantitative strategies get described, their eyes glaze over.

• Private assets feel like investing because they resemble what these board members have done their entire careers. They look like businesses being built or fixed. They look like negotiations. They look like deals. Liquid strategies, even when they're mathematically sound, don't trigger that same recognition.

• Strategic asset allocation decisions aren't made by individual portfolio managers constantly reoptimizing. They're made through formal processes involving boards, consultants, and CIOs working within governance constraints. Once those constraints are set, the structure locks in place and shifting course becomes extremely difficult.

• The models used to justify these allocations assume targets that make private equity and emerging markets look indispensable. When consultants tell boards that reaching return targets requires allocating to these assets, the conversation is already framed. The prudent choice feels obvious.

• Performance crashes could theoretically reset this dynamic, but board psychology is structural, not cyclical. The preference for deal-like strategies isn't a temporary market fad. It's wired into how the people making these decisions understand what investing even means.