How have you been a change agent at your organization? What have you done that you’re particularly proud of?
It’s been a successful three years here at Textron, but that follows a couple years being involved with the portfolio from a previous consulting role. A new CIO brought a different investment philosophy to our Pension portfolio in 2013, and I’m particularly proud of reshaping our investments to better fit his more direct and active style of investing. This has included pairing high conviction active managers with low-cost, liquid beta sleeves to more easily shape desired portfolio tilts.
What is the asset class or investment that keeps you up at night, and why?
Beta keeps me up at night. It’s so important, but it’s such a fickle friend for all of us. No matter how smart all our strategies and choices can be, there’s this tendency to feel like a turkey that doesn’t know if it’s April or November. We work every day to be prepared to avoid the next major drawdown, and we also work hard to catch every good wave we can.
What methodologies have you adopted within your institution?
We’ve built a good model for core/satellite investing into our portfolio. We’ve also tried to expand our opportunity set for investment decision making. For example, we try to think beyond the given labels of asset classes and maintain a view of how we can balance trickier, less-obvious budgets. Like illiquidity vs. liquidity, long vol vs. short vol, lower fee vs. higher fee, factor exposure, capital stack exposure, etc.
Where do you fall in the passive vs. active debate?
Squarely in the middle. For everything, turn, turn, turn, there is a season, turn, turn, turn.
What are the changes you’d like to see the institutional investing community make in 10 years?
I’m typically not one to prescribe change, I mostly try to learn what exists and why, and try to navigate effectively within the constraints. One obvious candidate is to try to incentivize people to care more about long-term wealth compounding than short-term red or green numbers, but it’s a tall order to combat human nature.
Who is a manager you don’t currently work with whose brain you’d like to pick?
Line ‘em up—so many, it’d be boring to most people. I’d like to mention Patrick O’Shaughnessy and Barry Ritholtz as people that might have found the answer to this question…start an awesome podcast that takes the sting out of a commute!
Ideally, where would that meeting take place?
The golf course, where real people can talk for real without notes while trying to stay active. Also, you get the opportunity to see a person’s reaction to success/failure/challenge happening 72-122 times within three hours.
What is the software investment tool that helps you most?
It feels like an arms race out there in the world of data now. Bloomberg, FactSet, and FinViz each play an important role for me, but that’s alphabetical and there are different price points.
What would improve the relationship between you and managers?
Just enough truth. That’s sometimes different than the right answer, but is typically the bedrock of a long-term, mutually beneficial relationship. I do feel like we have great relationships in our book, hopefully that’s a two-way sentiment.
Why did you choose your current path?
I seem wired to create whole things from individual pieces, I can tend to have a real curiosity for the way things work, and I’m a bit of a second-generation participant, so I’m lucky to be blessed with terrific guidance. It’s a real honor to be able to work with all our peers on every side of the table each day, and that makes it easier to get out of bed in the morning looking forward to the challenge. But, that said, I love weekends, too.