5 Questions with Cambridge Associates Managing Director Michael Pearce

Michael Pearce is a Managing Director in Cambridge Associates’ endowment and foundation practice, tasked with conducting manager due diligence and developing investment strategies for clients with mission-related, ESG or impact investment objectives. He also serves as a member of Cambridge Associates’ sustainable and impact investing group and community foundation committee.

He took the time to answer five questions with FIN News.

1. As the sustainable and impact investing opportunity sets have evolved, where are you seeing the most compelling opportunities today?

The most compelling opportunities today are the ones where sustainability or impact is a true driver of investment alpha, not simply a label. In climate, that includes strategies that can benefit from declining cost curves, growing power demand, the need for innovation across energy, industrials and infrastructure. We have found compelling strategies in both public equities and private real assets that target those themes.

Within social impact, thoughtful approaches to areas like affordable housing can generate attractive returns while addressing a pressing societal need. We have also allocated capital to innovative private credit strategies. While the broader sector has faced negative headlines recently, we continue to see opportunities in providing capital to historically underserved and less competitive segments of the market, where specialization, access and disciplined underwriting can create a meaningful edge.

2. How are endowments and foundations allocating to these types of investment strategies without taking on too much risk or uncertainty given the market volatility and geopolitical uncertainties?

The endowments and foundations that allocate to these strategies most effectively usually have a close understanding of the underlying managers, portfolio companies and the timeline required for the investment thesis to play out. That helps them separate short-term noise from long-term fundamentals and gives them more staying power during periods of volatility or geopolitical stress. In some cases, it also gives them the discipline to play offense when others are retreating. The goal is not to eliminate uncertainty, but to be deliberate about where risk is being taken and to ensure it is well aligned with the institution’s mission, objectives, and time horizon. In the U.S., for example, much has been written about the real and perceived headwinds created by federal policy changes related to renewables. By staying close to our managers, we have been able to understand where opportunities still remain and where portfolios can benefit from the changing landscape.

3. What is your favorite part of your current role? What makes you excited to come into work?

My favorite part of the role is that investing is a complicated puzzle and sustainable and impact investing adds another layer of complexity. That makes the work more challenging, but also more rewarding when we can help clients find solutions that genuinely fit their needs. When we get it right, we are not only helping institutions pursue strong investment results but also enabling them to advance the positive impact they want to have in the world. Working with mission-driven institutions and leaders who are trying to create meaningful change is a big part of what brought me, and many of my colleagues, to Cambridge Associates. Because of that shared motivation, I get to work with incredibly smart, passionate and ambitious colleagues who push me to be better every day.

4. What is your most interesting experience or meeting with an endowment or foundation client either at Cambridge Associates or at previous positions?

One of the most engaging parts of working with endowment and foundation clients is seeing how directly investment decisions connect to institutional mission. With educational institutions, some of the most memorable moments come from interacting with students involved in student-managed investment funds, including those focused on sustainability and impact. I’ve had several “full circle” moments in those conversations, watching students grapple with many of the same questions I have worked on for much of my career.

With community and private foundation clients, the most impactful moments are often hearing the specific, tangible stories of where grant capital goes in response to a current crisis, whether that is support following wildfires in California or assistance for communities affected by federal funding cuts. Those experiences make clear how much the spreadsheet analysis matters in improving portfolio outcomes and, ultimately, in supporting real-world impact.

5. What book are you currently reading or TV show you are currently watching that you’d recommend to our readers?

For a show, I’d recommend The Pitt. I did risk breaking a marriage vow by watching ahead without my wife, but we are now caught up and watching season two together. While it is dramatized, friends in the medical field have told me it does a realistic job of capturing the pressures on healthcare workers and the broader strains in the healthcare system.

For a book, I am working through Rick Atkinson’s Revolutionary War trilogy, in light of the country’s 250th anniversary, and it has been eye-opening to realize how many gaps existed in my own understanding of that period. The books are detailed, but so well written and engaging that they read almost like fiction.