Is this a typo or some inside scoop?

Investors in private equity funds are still searching for the ‘holy grail’ where their interests are perfectly aligned with the funds investing their capital, an investor said on Thursday.

Investors are seeing some better terms in their fund agreements since the financial crisis hurt funds’ returns and gave them more clout to negotiate terms.

Still, some question whether their interests are really aligned with the firms which invest their capital, and whether any gains made on terms will just be lost when the economy and markets improve.

Investors, known as “limited partners” (LPs) and private equity executives, known as “general partners” (GPs), have acknowledged for some time a shift since the boom years when GPs had more leverage to dictate terms as investors scrambled to get into their funds.

“I think GP-LP alignment is the holy grail that we all talk about but may never see,” said Collette Chilton, chief investment officer at Williams College speaking at private equity conference Super Return U.S. on Thursday. Chilton oversees the Massachusetts-based college’s $1.6 billion endowment.


1) The last public data on the endowment out its value at $1.36 on June 30, 2009. Could we really be back to $1.6 billion now, even after spending around $70 million during the fiscal year? Could we really be up approximately 23% in a year when the S&P 500 is up 18%? Sure! So, I bet that this is not a typo, that Chilton mentioned the correct value in her talk. (Senior administrators and trustees get a monthly (I think) update on the endowment.)

2) Chilton’s comments on LP/GP conflicts are perfectly sensible. Perhaps some readers could provide more background.

3) Why does Chilton speak at a conference like this? There are lots of reasons. But one of them is that it raises her personal profile in the investment world so that, should she decide to leave Williams and take the rest of the investment office with her, she will have an easier time raising money. Previous rant here. (Highly recommended for new readers and the #1 hit for Collette Chilton on Google.)

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