Press

Liquidity, valuations and private credit were key themes at the Greenwich Economic Forum, an annual gathering of alternative investors that took place in Greenwich, CT., from 5-7 October.

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Late last year, NEPC adjusted its pacing model to reflect this longer hold period. The firm extended its fund life assumption for VC vehicles to 17 years. Other assumptions include 15 years for buyout, 16 years for fund-of-funds and eight years for private debt.

Without these adjustments, actual fund lives and net asset values extend beyond the model’s assumptions and reduce LPs’ capacity to commit to future funds, said Sarah Samuels, the investment consultant’s chief investment officer.

“Don’t try to time vintage years, and don’t skip funds. If you do need to pull back, pull back in check size. Don’t skip a high-conviction GP,” she said.

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U.S. college and university endowments are beginning to post their returns for the fiscal year ended June 30, with at least two citing their investments in SpaceX as a major driver of outperformance, but experts warn the high concentration of their portfolios in a single stock creates asset allocation and risk problems.

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Colin Hatton, principal and senior consultant for endowments and foundations at NEPC, said concentration risk becomes more acute as a holding grows. One of the clearest warning signs for investment committees is when a single company reaches roughly 5% of total assets, he said.

Such concentrations are uncommon in modern endowment portfolios, which generally rely on diversification to generate steadier returns and support annual spending, he said. Still, large single-company positions are not unprecedented: Some institutions with sizable venture portfolios are approaching 5% exposure to individual companies, and a smaller number have exceeded that level.

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Rated note feeder structures continue to gain traction across private markets, as institutional investors seek more efficient ways to allocate capital while managing regulatory constraints.

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“Rated note feeder structures can improve capital treatment by allowing a portion of a private market investment to be held on Schedule D rather than Schedule BA,” Colton Lavin, principal and senior investment director in private debt at NEPC tells SCI. “As a result, we have observed some investors, particularly insurance companies, view these structures as a potential tool for expanding private market allocations while managing associated capital charges.”

Plan sponsors increasingly want advisers to play a bigger role in investment decisions, and the recent Department of Labor proposal on investment alternatives in defined contribution plans could further fuel that appetite.

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Aaron Chastain, partner and corporate solutions leader at NEPC, said the firm’s corporate-client discretionary assets have increased about 4.5 times over the last five years.

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Chastain said he expects some sponsors to keep a 3(21) adviser for most of the plan, while handing off manager selection or operations for a specific sleeve — such as alternatives — to a 3(38) manager.”

“Using an external party or outsourcing doesn’t have to be an all-or-nothing type approach,” Chastain said.

Several state pensions have benefited from the surge in non-U.S. equities, including emerging markets.

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According to NEPC’s head of marketable equity research Nedelina Petkova, strong performance from financials, industrials, and defense-related businesses and ongoing improvements in Japan have helped international developed markets. Plus, Petkova wrote that EAFE (Europe, Australasia, and the Far East) performance “has been less dependent on a small number of technology companies and reflects a broader set of economic drivers than the U.S. market.”

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Like borrowing from a 401(k), the tactic can help short-term but carries big long-range risks.

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“Once you get much over a spending rate of 7%, consistently, you are an at-risk endowment,” said Kristin Reynolds, who advises endowment administrators on their investment strategies at consulting firm NEPC. She was speaking generally, not about a specific college.

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The ongoing challenges of active management were reflected in 401(k) plan fund changes in 2025, as concentration in large-cap equities and poor performing quality small-cap equities forced some plan sponsors to replace funds, according to defined contribution plan consultants.

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Mikaylee O’Connor, partner and head of defined contribution solutions at NEPC, said among their clients, active growth funds have faced more challenges than active value funds, because of the hurdles of the extreme concentration of the growth index with the dominance of tech stocks.

“(Retirement plan) committees really have responded in different ways. I will say some have moved to passive large-cap growth while retaining active largecap value, and I think that’s a recognition that this has been one of the top performing asset classes, and so they’re reevaluating how (to) actually deliver that to participants,” O’Connor said.

Others, she said, have moved to eliminating any style-specific large-cap funds and simply moved to a passive core allocation.

“I think the main theme there is that committees are revisiting their menu structures. We actually did a little bit more digging into this, and in the last five years, approximately 30% of our clients have made structural changes to their large-cap lineup,” such as swapping out active managers, she said.

“So it’s not just in the last year, but over the last five years, we’ve seen this trend of making some sort of (large-cap) change.”

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Fewer fiduciary risks, greater access to private markets investments, improved corporate governance and lower costs are among the reasons retirement plan sponsors choose outsourced chief investment officer services, producing an asset surge under OCIO management plus predictions that there’s more to come.

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Fiduciary risk is a “commonly cited reason” when DC sponsors consider OCIO services, said Aaron Chastain, partner and corporate solutions leader for the NEPC consulting firm.

Hiring OCIO services doesn’t eliminate fiduciary risk because sponsors have a fiduciary duty to monitor OCIO activities, and sponsors’ ERISA lawyers are “very involved” in making sure sponsors understand their responsibilities, he added

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For many sponsors, OCIO is “a more efficient way to access alternatives investments,” Chastain said. “It allows sponsors to focus on policy decisions” about which — if any — private markets investment they want to offer. OCIO handles the manager selections, he said.

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 “Employers first embraced OCIOs to outsource investment oversight, and PEPs are emerging as the next evolution, enabling them to offload much of the administrative burden of running a retirement plan,” Chastain said. “It allows organizations to focus on their core business while retirement plan experts handle the rest.”

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