2020 Knowledge Brokers All Stars

Russ Ivinjack

Senior Partner, Head of Fund Management
Aon Hewitt Investment Consulting
Chicago, Illinois

It’s been quite a year for Russ Ivinjack, senior partner, AonHewitt Investment Consulting. When markets went haywire in mid-March, and there was illiquidity even in Treasuries, he went back to plans set with clients beforehand in the event of a “really bad scenario.” Plans that were already on the books helped to redeploy capital into equities and opportunistic areas. They helped investors navigate illiquidity issues and eventually cash in on the eyepopping returns from Treasuries that were never expected, and reinvest into areas of long-term higher returns and prepare a plan for opportunistic credit strategies due to the anticipated dislocations to come.

In 2017, Aon advised the Federal Thrift’s board to increase diversification by shifting to the MSCI ACWI ex-US Investable Market Index from their benchmark of the MSCI EAFE Index—a move that would enable the $600 billion Federal Thrift Savings plan to increase its exposure to China and other emerging markets. Of course, it came under fire in October, when more investment in China would have undermined the administration’s trade and tariff leverage. A bipartisan group of senators tried to block the decision. Ivinjack was quoted in the New York Times, saying, “You definitely would be an outlier by not providing access to emerging markets.”

A 2017 Aon analysis showed a $1 investment in the recommended index would have bettered the former index by 23 cents over 23 years. Yet skeptics pointed to reduced scrutiny and subsequent higher risk for investors in Chinese investments. The index shift was halted in May.  When asked what was under-reported during the controversy, Ivinjack noted, “I think what was maybe missing from that conversation was just how thoughtful the board and staff were. I would say there was passion just making sure they did the right thing for participants: Fiduciary discipline.”

Now as Aon begins preparing for a merger with Willis Tower Watson, Ivinjack calls the changes ahead a “great opportunity to bring two teams together.” Beginning his career as a performance analyst and “learning from the bottom up” has proven itself to be very helpful to the consultant who earned his MBA from DePaul University after starting at EnnisKnupp 26 years ago. He went on to build its private equity team, real estate team, helped acquire Townsend, and built out the firm’s hedge funds research team while recruiting senior leadership.

CIO: What (actionable thing) have you learned over the course of your career that has proven itself this year?

Ivinjack: The key lessons learned over the course of my career that proved valuable and actionable this year were:

  • Embrace diverse thinking and experience sets

  • Apply previous lessons learned to new circumstances/environments

These career lessons paid off in 2020 thus far as we worked with clients to play both defense and offense with their portfolios during the COVID-induced market volatility and create an Opportunistic Credit strategy.

As volatility and illiquidity hit full force during the first quarter, we convened our senior team of investors with different experiences sets—i.e., consultants, economists, traders, portfolio managers, and manager research across public, private, and alternative markets—to work through the actions clients should take. The broad range of experience amongst our team and an environment that allowed for robust debate and discussion (e.g., to rebalance or not as “it is different this time” and “time to buy gold”). The varied points of view and experience set resulted in advising non-discretionary clients and implementing on the behalf of our discretionary clients our strategy of playing defense and offense.

The defense strategy was to ensure adequate liquidity in portfolios over the coming months as no one knew when markets would return to some semblance of normal liquidity. Our defensive strategy also included recommending rebalancing trades to our advisory clients and selling billions in US Treasuries for our discretionary clients, and re-allocating to equities and credit.

Our offensive strategy was redeploying our playbook from the Great Financial Crisis (GFC) as we learned that dislocations and high levels of uncertainty lead to potentially outsized returns (you get paid very little when certainty is high). As such, we focused on credit opportunities and reviewed credit specialist managers that have the skillset to execute in environments where numerous dislocations are expected.

Lastly, we reviewed why our clients were not able to more fully take advantage of credit opportunities resulting from the GFC (e.g., PPIP) and recognized this was not an investment issue, but primarily a result of asset allocation policy (”bucket”) restrictions, resource constraints, governance limitations, and logistical/bandwidth limits. This led us to create an Opportunistic Credit strategy and assist clients to allocate capital directly and via our solution to credit dislocation strategies such as TALF 2.0, distressed credit, rescue finance, public and private corporate, and securitized and real estate credit (e.g., non-AAA CMBS).

Aon Investments is focused on creating client-centric solutions that fully utilize our broad experience set and allow clients to implement in a “do-it-yourself” or “do-it-for-me” solution framework.

CIO: What investments (specific securities or sectors) look good to you now? And why?

Ivinjack: We find opportunistic credit attractive as it appears to be one of the areas where it a world of “have’s and have’s nots.” Areas of the market where the federal reserve or US Treasury have not stepped in and the economic impact of COVID is still playing out will likely provide attractive risk-adjusted returns. Sectors impacted such as retail, travel, and energy will require credit support with bridge loans, rescue financing, and/or debtor in possession financing.

CIO: What ones don’t? And why?

Ivinjack: The areas we find least attractive include investment-grade fixed income, such a Treasuries and high-grade corporate credit, as neither will likely earn investors much of a real return in the years to come.

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