Key Takeaways
- • Cambridge Associates CEO David Druley, speaking on Barron's At Barron's podcast with Andy Serwer, said the firm now serves about 80% of clients on a fully delegated basis, with roughly 35% of that on discretion, and that discretionary business is growing faster.
- • Druley said the firm is owned by roughly 70 partners and just under 15 client shareholders, with one founder retaining a modest stake, and that it has over 250 private clients.
- • Druley argued that endowments remain committed to the endowment model, and that pressure on private-market holdings stems from higher cash-outflow needs driven by tax changes and reduced research grants rather than abandonment of private equity and venture capital.
- • Druley warned that US equities are about 65% of the global equity index, a record, and that the top 10 US stocks make up roughly 40% of the US market, calling diversification "absolutely crucial."
- • Druley said Cambridge favors Latin America and small-cap managers over large caps, and described the dollar as in a secular bear market.
Summary
Cambridge Associates CEO David Druley joined Barron's editor at large Andy Serwer for an interview that covered the firm's history, ownership, client base, and market outlook. According to Druley, the firm was founded 53 years ago by two founders who pitched Harvard's finance executives on institutionalizing the management of its endowment. The firm began as a consultancy and about 20 years ago moved into investing on an outsourced chief investment officer basis. Druley said roughly 80% of clients rely on the firm for diligence, portfolio construction and execution, with about 35% of that on discretion. Discretionary business is growing faster, though Druley said the firm is indifferent to which segment grows. University and college endowments remain the largest segment at a little less than half of the business, followed by private clients, which Druley described as ultra-wealthy families at institutional scale and which exceed 35% of the business, and retirement, insurance and government clients at about 20%. Druley said Cambridge is owned by roughly 70 partners and just under 15 client shareholders, and described employee and client ownership as a differentiator.
On the endowment sector, Druley addressed concerns about exposure to private markets after the Swensen model was questioned. He said changes in taxation of endowments and foundations and declining research grants at universities have increased the operating budget demands placed on endowments, forcing higher cash outflows that affect private holdings. In his view, endowments still believe in the model and in private equity, venture capital and less efficient market segments. Druley said secondaries have grown as a result, though they remain a fraction of the total market, and noted that IPO activity and aggregate deal sizes have increased over the last couple of quarters.
Druley outlined a 2026 and 2027 outlook centered on diversification and avoiding crowded trades. He cited US equities at about 65% of the global equity index, a record that he said was close to 70% before last year, and the top 10 US stocks at about 40% of the US market, a level he said has not been seen since the 1990s. He said those ten stocks account for roughly 25% of the global equity market. He favors Latin America and small-cap managers over large caps globally, and argued that the US has been among the weakest major equity markets over the past 15 months while emerging markets, China, Europe and Japan have performed well. He described the dollar as in a secular bear market despite a recent rally tied to the Middle East situation. Druley also said the firm does not pitch prepackaged products, and that clients are asking how to find cheaper assets and generate required returns at elevated valuations.
On the endowment sector, Druley addressed concerns about exposure to private markets after the Swensen model was questioned. He said changes in taxation of endowments and foundations and declining research grants at universities have increased the operating budget demands placed on endowments, forcing higher cash outflows that affect private holdings. In his view, endowments still believe in the model and in private equity, venture capital and less efficient market segments. Druley said secondaries have grown as a result, though they remain a fraction of the total market, and noted that IPO activity and aggregate deal sizes have increased over the last couple of quarters.
Druley outlined a 2026 and 2027 outlook centered on diversification and avoiding crowded trades. He cited US equities at about 65% of the global equity index, a record that he said was close to 70% before last year, and the top 10 US stocks at about 40% of the US market, a level he said has not been seen since the 1990s. He said those ten stocks account for roughly 25% of the global equity market. He favors Latin America and small-cap managers over large caps globally, and argued that the US has been among the weakest major equity markets over the past 15 months while emerging markets, China, Europe and Japan have performed well. He described the dollar as in a secular bear market despite a recent rally tied to the Middle East situation. Druley also said the firm does not pitch prepackaged products, and that clients are asking how to find cheaper assets and generate required returns at elevated valuations.
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