Class of 2017 Forty Under Forty

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David Silber Chief Investment Officer, City of Milwaukee ERS
(Milwaukee, WI) 38
David Silber
(Art by Marcellus Hall)

After the death of his predecessor, he took the reins, hitting return targets and diligently negotiating lower fee schedules.

How have you been a change agent at your organization? What have you done that you’re particularly proud of?

Overseeing the successful implementation of our Absolute Return and Private Equity allocations, along with recommending the adoption of the ACWI IMI benchmark for our entire Public Equity portfolio. The benchmark change has allowed us to evaluate the Public Equity portfolio more efficiently, with fewer managers and less overlap, compared to when we implemented the US and non-US allocations separately.

What is the asset class that keeps you up at night, and why?

Fixed Income and the impact low rates have on the rest of the portfolio. Balancing the allocation tradeoffs between return-seeking and downside-protection asset classes is challenging. I think it’s fair to question whether asset classes traditionally relied on for safety can be considered safe anymore.

What methodologies have you adopted within your institution?

Continually emphasizing and seeking ways to maximize the few competitive advantages we have compared to the average investor, including our scale, funded status, and long investment horizon. Trying to time the market, evaluating managers on short-term performance, and hiring too many managers are things we should avoid; they diminish these advantages.

Where do you fall in the passive vs. active debate?

Active management for the majority of the portfolio, with an emphasis on managers whose philosophy and process align with our long investment horizon. I don’t buy into the ‘active management is dead’ arguments; there are certainly flaws in passive strategies that shouldn’t be dismissed. We’ve had success over time hiring active managers in many areas. It’s the conviction we have with a manager’s philosophy and process that ultimately keeps us with a manager during inevitable periods of underperformance.

What are the changes you’d like to see the institutional investing community make in 10 years?

While I enjoy learning about the successes and challenges of my peers, I don’t spend much time thinking about changes I’d like to see the institutional community make, and I don’t seek validation from them when I make my recommendations. Hopefully readers don’t take that the wrong way. It’s a full-time job for me to attempt to position my employer’s portfolio and governance process for success.

Who is a manager you don’t currently work with whose brain you’d like to pick?

Howard Marks, co-chairman of Oaktree.

Ideally, where would that meeting take place?

Los Angeles.

What is the software investment tool that helps you most?

Morningstar, custodian data, and Excel. I have a wish list of software I’d like to have.

What would improve the relationship between you and managers?

Asset owners and managers should remember that we share a fiduciary duty to the same members. Keeping lines of communication open and viewing the relationship as a partnership increases the likelihood of success for our managers and us. This includes sharing credit with managers during good years rather than just blaming them when things aren’t going well.

Why did you choose your current path?

During a summer internship at a full-service financial planning firm in Memphis, I had the opportunity to see how important it is for people to receive sound investment and retirement planning advice. I also learned about the CFA Program working there. I get great personal satisfaction knowing I play a role in providing retirement security to the City of Milwaukee’s 27,000+ members.