Chief Investment Officer - 2013 Forty Under Forty

Chief Investment Officer - For the world's largest asset owners

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For the world's largest asset owners


Art by John Cuneo
James Kelly, 25Risk and Portfolio Strategist, Wake Forest University (Winston-Salem, North Carolina)

At 25 years old, James Kelly has a deeper understanding of downside risk than most investors gain over a lifetime in asset management. "It was July 12th, in Chamonix, France," he says. "A friend and I had hired a guide to make a summit attempt on Mont Blanc. We spent the night in a mountain hut, and I woke up even earlier than we had to, at about 12:45 AM, so we were one of the first groups out the door and onto the glacier. We got to the second of the summit route's three mountain faces, and our guide, seeing some warning signs, had us stop until sunrise so he could better see the risks above. Some groups went on ahead anyway. After the sun had risen, and we had just started up, I heard our guide yell, 'Avalanche!' We started to run…then the second wave hit us. It carried us down about 600 feet. There were 28 people caught in the avalanche, and nine of them died. It was silent: I wouldn't have seen or heard it coming if the guide hadn't yelled."

Before the trip, Kelly had looked up all the risks and statistics associated with climbing Mont Blanc, and discovered its reputation as one of the world's deadliest mountains. "It's easily accessible, so lots of first-timers like me climb it," he says. "We thought we had mitigated a lot of those risks by hiring a guide, whom I credit with how things turned out."

Kelly was speaking to me from Wake Forest University's investment office, where he's worked for the last three years. CIO Jim Dunn initiated the transition to factor-based allocations in 2009, and Kelly has taken charge of risk-factor modeling. He's also implementing the $1.1 billion fund's first hedging program to offset outsized portfolio risks.

Outside of work, Kelly is likewise hedging downsides: "I wouldn't necessarily go out on a steep glacier again," he says. "The experience has increased my awareness of the more dangerous aspects of snow." And like any good risk manager, Kelly has held onto the upside potential. "Just last week," he adds, "I was back skiing in Vermont." –LO