“It’s going to be fun—you have to come!” Hartford Healthcare CIO David Holmgren and Neuberger Berman were throwing a party for the investing elite in the tri-state area—a “September soiree”—and CIO was invited.
No need to twist our arms, David. As soon as he mentioned an open bar and a night of rubbing shoulders with some of our favorite CIOs, we were in. We rented a car, left New York City behind, and headed up to Hartford, Connecticut. Four-plus hours—and painful Friday afternoon traffic—later, we arrived at Hartford’s Infinity Hall to find the party already in full swing. The likes of Aetna CIO Jean LaTorre and Textron’s Charles Van Vleet mingled with asset owners, consultants, and managers in a private balcony area overlooking the venue’s stage, where Grammy-nominated band Roomful of Blues would perform later that evening.
After a necessary stop by the buffet table—featuring tacos, mac and cheese, and chocolate-covered strawberries—we made our way through the crowd of investment professionals to greet our host.
Holmgren, as investment chief of $3 billion in insurance, endowment, and pension assets, is by now well-known for his out-of-the-box investments—including, for example, stakes in a British menswear line and luxury Italian shoemaker via a consumer brand licensing strategy he seeded last year. But as anyone who’s attended Hartford Hospital’s annual Black & Red charity gala (for which Holmgren has been a recurring committee member) could tell you, the CIO is also fond of a good party.
Dressed casually in jeans and sporting a scruffy beard, Holmgren embraced his role as host, offering warm welcomes and introductions to the plentiful investing talent in attendance. Moving from the EY pension’s brand new CIO to consultant Aksia’s portfolio advisors, the Industry Innovation award finalist joked with his guests and connected new acquaintances.
“Building relationships is one of the most important things we do as investors,” he says, when we meet again in midtown Manhattan—this time over coffee instead of cocktails. The Hartford soiree—a gathering of institutional investors devoid of the blatant sales pitches found at virtually every other event catering to the investing industry—embodied this mindset: a party thrown simply for the sake of having a party, where local allocators could socialize, drink wine, and listen to blues music.
“We have a really good community of investors here,” Holmgren says. Hartford—population: 125,000—has been nicknamed the insurance capital of the world, with major players such as Cigna and UnitedHealthcare based in the area. The city is also home to United Technologies (UTC) and its giant $52 billion corporate pension plan, helmed by CIO Robin Diamonte. A smattering of smaller pensions, foundations, and health care organizations rounds out the region’s asset-owning community.
Once a month, a number of these allocators get together to share insights, describe the investment challenges they’re facing, and weigh market opportunities. The latest meeting—hosted by Holmgren just days after the party at Infinity Hall—focused on hedged real estate.
“The purpose is to bring together investment officers in the community to discuss a relevant theme or issue,” explains Holmgren, who compares the group to the CFA Institute in that members attend meetings first and foremost as investors, not as representatives of individual funds. “It’s so helpful and important to get a second set of eyes—not just from friends or peers, but from the perspectives of different types of plan sponsors.”
Art by John Cuneo
Among the investors present at Holmgren’s real estate presentation was Joe Fazzino, a senior manager at United Technologies’ pension fund. Fazzino—who also attended the soiree the week before—agrees wholeheartedly with the hospital CIO on the value of their shared network. “I’m learning from other people’s experiences; I’m hearing what other people are looking for in the marketplace; I’m listening for what other people see as opportunities,” he says. “The group we have here in Hartford is a very vocal group—they are not afraid to ask questions or shoot down ideas. There’s always lots of firing back and forth of conversation and good dialogue.”
The monthly gatherings do have a few rules: Managers invited to present, for example, cannot pitch funds or solicit investors in any way. “We don’t even allow them to give out their business cards,” Fazzino says. Topics covered at the meetings must also focus on investment themes, not specific products. And the presentations themselves are purely oral—there’s no accompanying slides or handouts. “Our goal is to learn from one another, to talk about our experiences, to question one another, and just basically gather insight,” the UTC manager says. Because the Hartford group is composed of a diverse array of fund types, members often have contrasting viewpoints to bring to the table.
“I’m from a corporate plan; I have a large pension liability that I’m constantly managing against, so I’m talking about interest-rate risk, liability-driven investing, and different corporate initiatives,” Fazzino continues. “But an allocator from a foundation will have a totally different spin on what they’re looking at and what’s important to them. It’s valuable to have those different perspectives.”
For Holmgren, having access to different perspectives has helped strengthen his due diligence. He’s even taken to inviting other asset owners along on his manager meetings, bringing corporate CIOs along with him to evaluate fixed-income managers and accompanying sovereign wealth fund CEOs on hedge fund visits.
“It doesn’t matter if they ultimately invest in the fund or not,” he explains. “It’s about getting someone I’m not paying to let me know what they think.”
Not that Holmgren has any problem with paying for advice—Hartford Healthcare has a few investment consultants in its employ. But, the CIO says, “every resource needs to be tapped if we’re to fulfill our goals.”
Take the aforementioned consumer brand licensing play, for example. The strategy, operated by party co-host Neuberger Berman, provides an inflation hedge and secures a guaranteed-income stream—a necessity for a fund like Holmgren’s. But it’s not exactly something you would find in the average institutional portfolio. “It came from having a good relationship with Neuberger Berman—in them knowing how we were looking to express the portfolio,” Holmgren explains. Just as he places a priority on close relationships with asset-owning peers, Holmgren subscribes to the belief that partnerships with managers can be just as rewarding.
“If Neuberger ever needs a limited partner, I want to make sure they come to me first,” he says. “In every single relationship I hope the general partner sees us as partners, or I’ve not done my job. That’s something investment officers in general should spend more time on—thinking about what we can do to be a better investor and a better partner.”
Sometimes that means seeding unorthodox emerging strategies. Other times it means co-hosting a cocktail party at a local concert hall.
Either way, David Holmgren’s your guy.