Each year conexust1f.flywheelstaging.com interviews CIOs and executive staff of the world’s largest asset owners, gaining insight into their investment strategy, asset allocation and demands from managers. In 2013 funds were focused on costs, increased portfolio look-through, “partnering” with managers and how to position fixed income exposures. This selection of quotes from CIOs of some of the world’s largest investors reflects the mood of 2013.
“If you give managers freedom to make more decisions, they frequently make more poor decisions. Having said that, I think we have also gone too far in giving them boundaries.”
Chris Ailman, chief investment officer of $170-billion Californian Teachers Fund, CalSTRS.
“For us, we see a particular advantage in focusing on the total portfolio while bringing our investment expertise to bear through deep relationships with our external managers. It helps us avoid getting dragged in to implementation issues in a way that can be distracting and take us away from what we believe we really need to think about.”
David Neal, chief investment officer, the $91 billion Australian Future Fund
A lot of fund manager selection can be about who rings the personal assistant of the CIO the most.”
Alex Gracian, chief investment officer of the London Pension Fund Authority
“Valuation is relatively basic but the majority of investors don’t pay attention to it; they favour glamorous stocks and that’s accepted because of the short-term pressures.”
Ronald Wuijster, chief client officer, APG, which manages €314 billion ($480 billion)
“The secular bull market in bonds, over three decades old now, is over.”
John Skjervem, chief investment officer of Oregon State Treasury’s investment division which runs $80 billion worth of state investments including the $62-billion Oregon Public Employees Retirement Fund
“We do believe that better governance means better returns.”
Michael Brakebill, chief investment officer of the $36.6-billion Tennessee Consolidated Retirement System
“Within a context of increasing water scarcity and adverse water related events, the fund’s long-term returns may be impacted through company specific risks or increased systematic risks driven by these externalities. Mapping and understanding such risks can be a challenge but is fundamental in supporting investment decisions.”
Jan Thomsen, chief risk officer at 4,714 billion kroner ($810 billion) Norges Bank Investment Management
Our philosophy for active or passive management is based on efficiencies of the market, the ease of replicating the benchmark, cost and the ability of active managers to add value.”
Lee Ann Palladino, chief investment officer at the$26-billion Hartford-based State of Connecticut Retirement Plans and Trust Funds
“Good investment ideas draw capital, but so do bad ones. When it comes to investing, there is sometimes a first-mover disadvantage.”
Theresa Whitmarsh, executive director of the $92.1-billion Washington State Investment Board
We primarily invest in price/valuation gaps where we are confident that gap truly exists. We are more contrarian in our investing than trend or momentum driven. We were long equities in March 2009 when the natural position was the foetal position.”
Adrian Orr, chief executive, the NZ$24 billion ($19 billion) New Zealand Super
“We have some old-fashioned economics to ground what we’re doing and why sustainability matters,” she says. “It is ground-breaking stuff this investment beliefs work. We want to be engaged owners. This is a transformation, it’s like the oil tanker turning around.”
Anne Simpson, director of corporate governance at $266-billion CalPERS
“We spend of a lot of time evaluating performance and analysing our costs and fees. It’s prudent and it’s what Project SAVE is all about.”
Michael Trotsky, executive director and chief investment officer of the Massachusetts Pension Reserve Investment Management Board, managers of Massachusetts $53.2-billion Pensions Reserves Investment Trust fund. He refers to a process which has saved PRIM around $29 million in fees this financial year, and should be on course to save approximately $40 million per year once fully in place.
“We will increase our private equity holdings further, no doubt about it.”
Niels Erik Petersen, Unipension’s chief investment officer, of the DKK 95-billion ($16.4 billion) investor Unipension
“We want to take more risk when we can…”
Toine van der Stee, director of the €16.5-billion ($21.2-billion), KLM pension fund
“The hedge fund strategy is an evolving area where we are working with the university.”
Bill Moriarty, the chief executive and president of University of Toronto Asset Management
“If you believe in an emerging market, we feel this should reflect itself in an appreciation of the currency.”
Sunil Krishnan, head of market strategy at $62-billion British Telecom Pension Scheme Management Limited
