2016 Knowledge Broker

Nolan Bean

Ask Nolan Bean about investment opportunities in today’s markets, and you’re in for a depressing conversation. The Fund Evaluation Group (FEG) managing principal—a self-proclaimed “cheapskate”—says just about everything is too expensive right now. “We’ve stolen returns from the future,” he explains. “I’m hard-pressed to see how we’re going to deliver good returns out of the S&P 500 going forward.” Bean believes now more than ever is the time to be disciplined as an investor. “You can’t just reach for yield or ramp up risk because the market isn’t giving you the returns you need,” he says. “You need a disciplined risk management approach so that when there are good opportunities in the market you have the wherewithal to actually take advantage of them.” That disciplined approach plays an important part in Bean’s role at FEG, where he sets strategy for the overall firm and runs discretionary assets through its outsourced-CIO arm—as well as working directly with some of the biggest consulting clients. “I believe in being intellectually honest with yourself about where you have a competitive advantage and where you don’t,” he says. FEG’s competitive advantage? Bean calls it the Goldilocks effect: “We’re big enough to cover a lot of opportunities, but small enough that we don’t have to find the biggest manager or asset class to cram a lot of assets into.” That sweet spot allows Bean to look beyond pricy valuations for more niche opportunities. “If you’re a small or midsize institution, you can make good money in these areas,” he says. Not bad for an expensive market. —Amy Whyte