Build and Buy: A More Thoughtful Resourcing Model for Evolving Institutions

As endowments grow in size and complexity, institutions think about which investment capabilities should be built internally and which are better accessed through external providers. This consideration becomes even more pronounced as investment offices navigate accelerating technology developments. Artificial intelligence and a world awash in data introduce new risks of misinformation and governance challenges. These changes reinforce the need for an intentional resource model, one that distinguishes the capabilities an institution must own from those that can be more effectively accessed through specialized external partnerships.

The “build or buy” question is sometimes framed as a stark choice between outsourcing and insourcing. In practice, the most successful model may be a hybrid that combines build and buy choices. Accessing external resources should not be regarded as a compromise or a stopgap measure on the way to full insourcing. When executed well, a hybrid model can be the most deliberate expression of institutional priorities: internal where institutional participation matters most and external when specialization, execution, or operating efficiency can be accessed more effectively through partnership.

This note discusses basic principles of investment resource decisions and outlines the key elements that should be established to develop an optimal resource model to meet the goals of a long-term investment mandate.

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