Class of 2017 Forty Under Forty

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Tom Masthay Director of Real Assets, Texas Municipal Retirement System
(Austin, TX) 33
Tom Masthay
(Art by Marcellus Hall)

Tom’s real estate performance has consistently been well above the benchmark.

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

By mixing a little bit of irreverence and impatience, embracing the impractical, and leveraging trust earned among colleagues, our institution has moved from being problematic for asset managers to work with to TMRS becoming a preferred investor—I am immensely proud of this. Taking the next step to being an excellent investor is a challenge yet before us.

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

Real Return (e.g., infrastructure, energy, etc.). The context upon which the “asset class” was largely built, inflation sensitivity, is fallacious. TIPS aren’t leveraged to inflation, natural resources are too cyclical to be valuation agnostic, wage inflation is neither broadly cyclical nor secular in nature, etc… but, insomnia is ok. I rather enjoy staring into dark space whilst considering my career hinges on an asset class that is plausibly a fad.

What methodologies have you adopted within your institution?

Build rather than integrate is the operative word. TMRS has been a tremendous opportunity to build front-, middle-, and back-office functions effectively from scratch. We hope to be the institution we should be rather than the one that came to be.

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

Passive leaning, while acknowledging some types of investments demand active management. There are two principal things as an institutional investor I don’t want to do: 1) utilize heuristic-driven decision-making processes; or 2) invoke the word “strategic” to justify being valuation-agnostic or failing to filter through self-serving BS pitched by asset managers.

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

I’d like to see institutions increasingly bet on themselves. The asset management industry makes money by obfuscating information—simply demanding transparency is not enough to fix this. If institutions will first resource appropriately and subsequently execute better, we may get a more appropriately sized slice of the pie.

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

Allowing for historical figures and utilizing a liberal definition of “manager,” I would say Cornelius Vanderbilt. I’ve frequently considered that were I reincarnated coming back to be a turn-of-the-20th century industrialist or a 1980s investment banker would be appealing. I say this because I consider these careers to be at inflection points in capitalistic society, time periods rife with both compensatory opportunity and a need for ethical leadership. Vanderbilt’s capacity for building businesses, penchant for market manipulation, and hearing stories from his extraordinary life would be an excellent education for either of my fantastical career pursuits (or current one)—and a welcome departure from an otherwise drab and straight-laced existence as a public servant.

Ideally, where would that meeting take place?

On a steamship.

What is the software investment tool that helps you most?

Excel… Balling on a budget.

What would improve the relationship between you and managers?

Blind capitulation (by managers).

Why did you choose your current path?

Because of my otherworldly skills in prediction as evidenced by my fall 2007 pursuit of a financial career.