E444: NEPC President on AI Portfolio Risk, Finding Top Funds, and Preparing for a Downturn

What if the biggest advantage in institutional investing isn’t finding better managers, but building an organization that can make better decisions over decades? In this episode, I sit down with Tim McCusker, President of NEPC, which advises on approximately $2 trillion in assets, to discuss what separates the best institutional investors from everyone else. Tim explains why even sophisticated endowments and pension funds fall into peer-driven investing, how governance and incentives shape long-term returns, and why the strongest allocators are willing to invest when others are retreating.

Highlights:
- What advising on nearly $2 trillion reveals about institutional investing
- Why sophisticated investors still fall into herd behavior
- How governance and investment committee support can determine long-term returns
- Why the best LPs stay committed to managers during market downturns
- How endowments and pension funds construct portfolios differently
- Why the best co-investment programs focus on manager selection rather than re-underwriting every deal
- Why venture capital deserves a place in portfolios beyond its return potential
- How AI concentration, changing correlations, and portable alpha are reshaping portfolio risk

Guest Bio:
Tim McCusker is President of NEPC, an institutional investment consulting firm advising on approximately $2 trillion in assets across more than 400 clients, including pension funds, endowments, foundations, and healthcare organizations.

Sponsors:
Juniper Square:
Juniper Square is trusted as the operations partner by more than 2,300 private markets GPs worldwide, connecting technology, data, and fund administration services to help GPs fundraise efficiently, streamline operations, and improve the investor experience. Their unified platform centralizes data and connects LPs and GPs across every workflow, including fundraising, investor onboarding, compliance, treasury, and reporting. Today, more than $1 trillion in LP capital is managed through Juniper Square. For more information, please visit https://www.junipersquare.com/howiinvest.

AlphaSense:
AlphaSense is the AI-powered market intelligence platform trusted by 85% of the S&P 100, helping investment professionals make faster, more confident, data-driven decisions. Built for hedge funds, asset allocators, private venture capital firms, and investment bankers, AlphaSense uses advanced AI and powerful search across premium proprietary content to surface the insights that matter most—before the market moves. Elevate your research and stay ahead of the competition. Visit https://www.alpha-sense.com/howiinvest to learn more.

AlphaSummit Discount Code: AS26HII50

Are you interested in sponsoring the How I Invest Podcast? Please email David Weisburd at david@weisburdcapital.com.

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Stay Connected with Tim McCusker:
LinkedIn:https://www.linkedin.com/in/tim-mccusker-76174278/

Questions or topics you want us to discuss on How I Invest? Email us at david@weisburdcapital.com.

Disclaimer:
This podcast is for informational purposes only and does not constitute investment, financial, legal, or tax advice. Nothing in this episode should be interpreted as an offer to buy or sell any securities or to participate in any investment strategy. All opinions expressed by the host and guests are their own and do not represent the views of Weisburd Pierce. Participants may hold positions or have financial interests in the companies, funds, or investments discussed. Any references to specific investments are for illustrative purposes only. Investing involves risk, including the potential loss of capital. Past performance is not indicative of future results, and any forward-looking statements are subject to risks and uncertainties. Any third-party data or opinions have not been independently verified. Listeners should conduct their own research and consult their own advisors before making any investment decisions.

(0:00) What Advising on $2 Trillion Reveals About Investing (3:07) The Biggest Mistake Sophisticated Institutional Investors Make (7:15) Why the Best CIOs Stay in Their Seats for Decades (10:10) What Separates the Top Institutional Investors? (16:00) How the Best Endowments Construct Their Portfolios (20:14) The Biggest Mistake LPs Make in Co-Investments (25:48) How NEPC Finds the Next Generation of Venture Managers (31:22) Why Venture Capital Belongs in Institutional Portfolios (36:33) Is Portable Alpha Worth the Risk? (43:34) Why AI Concentration Keeps Tim Up at Night