With more than 30 years in finance, Molly Murphy, CIO of the $22 billion Orange County Employees Retirement System (OCERS), has seen a lot.

Murphy began her career on trading desks before moving into public pensions. She joined OCERS in 2017. When COVID-19 hit last year, it wasn’t her first experience with extreme market volatility. As markets tried to understand the pandemic, Murphy worked with her team to complete an asset allocation study and make sure the pension would be able to weather the storm.

“A pandemic might not be the most obvious time to do an asset allocation study, but it was important to me to make sure we were very clear about our exposure,” Murphy told CIO. “The board was willing to go with me on it because I have spent time building up trust. It’s also important for CIOs to be willing to flex their muscles during a crisis. Don’t shy away from the contrarian moment because boards are looking to you for guidance.”

That bet paid off. As a result of the study, OCERS moved a significant portion of its investments into equities in April 2020, positioning the pension to take advantage of the significant rebound in stocks that began during the second half of last year. By the end of 2020, OCERS had generated alpha in every part of the portfolio. The pension also implemented an in-house risk management process that is designed to protect the portfolio during market volatility.

Decisive leadership decisions are what made Murphy a top choice for the CIO Industry Innovation Awards.

OCERS makes its allocations once every three years, barring an extraordinary event. That clock started fresh with the asset allocation study completed in 2020. Given that timeline, some CIOs might take it easy and let the dust settle, but Murphy is focused on the future.

“There are always opportunities to work smarter,” she said. To that end, Murphy is working with her team to find new ways of using technology to automate repetitive processes, improve data gathering and analysis, and keep communication flowing with the board.

OCERS is also working on improving its investment sourcing, due diligence, and execution. This year, the pension has implemented a co-investment program within its private equity portfolio. Murphy anticipates that this program will grow over time and a similar strategy may be used in other private market asset classes. The goal, she says, is to improve investment terms and keep a handle on the fees OCERS is paying to managers.

“I used to say that investing was a paper and a people business,” she explained. “Now I think it’s a technology and people business. CIOs need to have risk management software, dealflow software, and trading operations technology in order to be effective. Relationships are still very important and technology can help those too by allowing investment professionals to focus on decisionmaking. With co-investments, for example, we’re working closely with managers—those relationships are very important. But without the right technology in place, it would be difficult to manage all of the data that goes into dealmaking.”

—Bailey McCann