Beating Benchmarks

Ash Williams and the $202.8 billion Florida State Board of Administration (SBA) have been beating their benchmarks for the past 20 years. In 2017, the pension plan returned 13.77%. After the crash of 2008, Williams left his position as a managing director of the hedge fund Fir Tree Partners to return to his native Florida and the SBA at one of the most critical times in the state’s financial history. Following the devastating stock market crash, he witnessed the Florida Retirement System’s assets drop from the previous high of $141.3 billion in October 2007, to $83.7 billion on March 9, 2009, and is working to and its storm catastrophe fund. As of July 1, the retirement fund was 84.3% funded.

Now, as the 2018 chair of The Council of Institutional Investors (CII), Williams has also joined in petitioning the New York Stock Exchange and the NASDAQ to limit the listings of companies with dial-class structures, asking them to improve climates to avoid “benevolent dictatorships.”

Williams was CIO’s Lifetime Achievement award winner for 2017.

 

CIO: Your total fund performance has been making significant returns over your benchmarks for the past 20 years. What are your priorities for the end of this year and the beginning of 2019? Also, are you considering a new risk management system?

Williams: Due to term limits, Florida SBA will have two (of three) new trustees (governor and attorney general). Helping our new trustees understand and fulfill our collective fiduciary duty is a priority. Beyond that, keeping our team together and following our investment policies should keep us on track. We continue to optimize our portfolios at the asset class level to reflect changes in valuations, risks, and opportunities. We are also working toward a more holistic approach to risk systems and lower associated total costs.

 

CIO: How is technology changing the way you invest?

Williams: Tech bears more on the investment opportunity set than the way we execute. The intersection of data, AI, and logistics is creating profoundly powerful business models that are redefining commerce. Emerging economies offer especially vivid examples because businesses in those economies are often created de novo, lacking legacy corporate infrastructure and potentially stranded CapEx.

CIO: You’ve been beating your benchmarks in real estate, and you’ve said that real estate investments near transportation hubs may be changing in value due to self-driving cars, and emphasizing experience-living with common areas and amenities. What do you look for in a long-range real estate investment?

Williams: Quality is the watchword. For a long-term RE investment, we want institutional high-quality structures in top locations in the deepest, most liquid markets. Market conditions will drive when it makes sense to buy, build, or sell.

CIO: You’re chair of The Council of Institutional Investors, which is petitioning the New York Stock Exchange and the NASDAQ to limit the listings of companies with dual-class structures. Why have you decided to take a stance on it this year?

Williams: Shareholders own companies and have a fiduciary duty to prudently manage portfolio assets. The link between those two concepts is the proxy, which appropriately holds boards and management accountable to the shareholders. Dual-class structures erode or destroy that link. History offers many examples, some quite recently, of companies going off course, to the detriment of share prices and share owners. As a public pension fund, Florida SBA operates in a governance structure providing ample oversight and accountability. Those attributes are good for public companies too and dual-class share structures work against them.

CIO: Is there a way other CIOs can get involved?

Williams: Of course, on the dual-class share issue, letters in support of CII’s petition should be sent to the stock exchanges. CIOs who want an effective partner to advocate for them on shareholder issues should consider joining CII.