Maintaining a long-term focus is key to building high-quality, durable portfolios. Being a long-term investor requires the consistency, patience and discipline to weather short-term market volatility without shifting strategy or portfolio positioning.

Elite performance in any field requires an understanding of one’s own strengths and vulnerabilities. Our investment philosophy is uncompromisingly bound to this understanding. Makena’s core strength is our manager selection and access. Due to our industry network and reputation as a sought-after investment partner, we have a track record of accessing high-performing, capacity-constrained managers. This access is available through a variety of avenues, including co-investments.

Equally beneficial to our LPs is Makena’s ability to identify and seed the next generation of investment talent, what we refer to as “emerging managers.” By seeding emerging managers, Makena can both negotiate preferential economics and earmark scale capacity in future funds.

Capital markets have become increasingly efficient over time, and we expect this trend to continue, meaning it will be increasingly difficult to generate outperformance.

While we acknowledge this trend, our scale and expertise allows us to identify opportunities and allocate capital to less efficient (and often uncorrelated) investment opportunities, which complement our bottom-up approach in order to outperform.

Diversification is key to successfully managing the inherent risks of managing long-term capital.

To Makena, diversification means thoughtfully allocating to a variety of asset classes, strategies, sectors, and geographies, to build a portfolio that balances both short-term risk (market volatility) and long-term risk (failing to meet our investment goals). Critically, while diversifying our sources of risk, we must not “over-diversify,” which could dilute our returns; we are seeking balanced diversification.

A benefit to investing with a long-term focus is the ability to maintain conviction throughout market cycles. This conviction underlies our value discipline: seeking to own high-quality assets at opportunistic valuations given our fundamental, bottom-up analysis. While we acknowledge that we can’t time markets, we do believe that price matters. There are times when markets overreact to market variables, causing asset prices to disconnect from their fundamental value. These periods of overexuberance or overcorrection can be short episodes of market volatility or can sometimes persist longer than expected.

Our most important core principle is that people matter; we focus on building a team of the right people and investing with the right people. We seek team members who are collaborative, intellectually curious, humble, ethical and passionate. Most importantly, we seek to build a team of diverse backgrounds and perspectives, which we believe leads to the best investment decisions for our LPs.