Key Takeaways

  • Scott Malpass ran the University of Notre Dame endowment for 32 years, scaling its asset base from $400 million to more than $20 billion.
  • Malpass co-founded Grafton Street Partners with two former students as an evergreen vehicle for family offices, targeting high-teens net returns.
  • Grafton strips out real estate, private credit, and fixed income entirely, holding roughly 60% private equity and 40% public equity.
  • The firm restricts private fund selection to venture capital and lower middle market micro-cap buy-and-build platforms, avoiding mega-buyout vehicles.
  • Institutional endowments suffer from manager sprawl and excess asset buckets driven by career risk rather than pure compounding logic.

The Problem With Endowment Bloat

The standard endowment model has a structural flaw: it prioritizes downside defense and institutional safety over pure equity compounding. Scott Malpass spent more than three decades building Notre Dame into an investing giant. Yet his sharpest critique of the industry is that large pools of capital have spread themselves too thin across asset classes and managers.

“I do agree with that sentiment,” Malpass says. “I think the big endowments had way too many managers, too many buckets, some ways too riskaverse that some ways they should been leaning in more and taking more volatility.”

When an investment committee creates eight distinct asset buckets, each bucket requires its own roster of managers. The result is fee drag, benchmark tracking, and mediocrity. Committees diversify to protect their jobs. If an allocation goes sour in a hyper-diversified portfolio, the loss is muted, but the upside is equally capped. Over time, that conservatism erodes long-term purchasing power.

The Concentrated Evergreen Structure

When Malpass left Notre Dame, he did not recreate the multi-asset university model. Instead, he launched Grafton Street Partners with two former students. The strategy strips out every non-equity asset class to focus on pure compounding for family offices.

“So we have learned from that in this format and been more concentrated and we're not doing real estate,” Malpass explains. “We're not doing private credit. We're not doing any fixed income. We're not trying to diversify that way. It's not an endowment model. It's purely equities, long equities.”

The fund runs an evergreen structure with an asset split of roughly 60% private equity and 40% public equity. The capital splits evenly between external managers and direct co-investments, targeting high-teens net returns.

“I ultimately decided, well, let's actually raise a small fund, all equity, public and private, half managers, half directs,” Malpass says. “And really built some long-term compounding vehicle and long equities by using my rolodex of relationships plus my two very talented investment partners.”

Skipping the Mega-Buyout Trap

Within private markets, Grafton bypasses the large buyout space entirely. Malpass spent decades observing how expanding fund sizes dilute returns, pushing general partners toward financial engineering instead of operational value creation.

“We knew that we were only going to do venture capital in its various stages and micro cap buy and build stuff lower middle market,” Malpass says. “I never did the big bot funds. Never did.”

The firm focuses exclusively on early-stage venture managers and lower middle market buy-and-build sponsors who can double or triple EBITDA through direct operational improvements. By pairing these private bets with concentrated public holdings, Grafton avoids the liquidity traps and fee layers of traditional fund-of-funds while capturing pure equity upside as market cycles normalize.

“Starting to get a little more of a steady state equilibrium in terms of the cycle, which will be helpful,” Malpass notes.

Why It Matters

Malpass's pivot signals a growing divide between institutional capital allocators tied to quarterly committee optics and family offices pursuing raw compounding. By ditching private credit and real estate in favor of concentrated equity, Grafton shows that top-tier access and operational micro-cap strategies can deliver high-teens returns without the bloat of traditional endowment models.