As everyday consumers, Americans live in a data-rich environment, so why didn’t the $8 billion W.K. Kellogg Foundation have that kind of insight into its investment portfolio? CIO Carlos Rangel posed that question and, ultimately, made it moot.

Over the course of his tenure as CIO, which began in 2021, Rangel has migrated his investment team to a specialist model and added a risk-and-asset-allocation function, enabling it to do more internal trading. Since 2022, that prompted the opportunistic addition of large-cap tech and energy investments during periods of drawdown.

The foundation’s stated intent that every employee should be deeply involved with the organization’s mission—supporting children, working families and equitable communities—led Rangel to develop strategic job descriptions for his team and ensure its members had a clear employee value proposition for every role.

While building out the team, with increased clarity of performance standards and clear expectations for behaviors, values and competencies, the Kellogg Foundation also installed FactSet as a total portfolio risk management tool—automating the data feeds into the portfolio—and implemented the Burgiss investment-decision tool for private equity.

Rangel’s goal in adding those tools was to enable the investment team to have a holistic view of its total portfolio, in “as close to real time as possible,” he said.

Using those tools, when the foundation’s head of risk and asset allocation said the equity-market sensitivity in the hedge-fund portfolio was too low, Rangel said, they were able to use exchange-traded funds to increase it. This approach is one way the new tools enable the fund to be tactical and make opportunistic investments—either homegrown or suggested by their managers, using derivatives on ETFs or using co-investments.

The Kellogg team is using the tools to protect against drawdowns, but also to answer questions like, “Do we have enough risk, in case there is surprise growth?” Rangel said. He believes the move to a team of asset-class specialists with three senior team leaders has enabled each to find “threads of opportunities,” as well as manage risk and adjust asset allocations.

As the foundation is a very long-term investor, Rangel and his team are focused on signals they receive from their portfolio tools and following the road map offered by the Federal Reserve to adjust the portfolio duration accordingly. When they saw the Fed pulling back from buying government mortgage-backed securities, they were able to make a co-investment that enabled them to benefit from widening spreads.

Rangel said his team expects to do more with technology in the coming year and “hopes to have a private large language model by mid-year” to use with both inbound and outbound information as it continues to evaluate different data feeds.

—Amy Resnick