Working in his home state, Scott Davis, CIO of the Indiana Public Retirement System, has massively expanded its assets.

A long-time IPRS official, Davis took over as CIO in 2016 after David Cooper left to run investments for the Purdue Research Foundation. Over the past seven years of Davis’ tenure in the top investing spot, he has steadily built up the fund’s asset base, by 51%, to $46.7 billion from $30.2 billion. The IPRS serves 517,149 members, representing 1,303 employers, including public universities, school corporations, municipalities and state agencies.

A native Hoosier who has lived and worked in the state almost his entire life, Davis knows the turf. After graduating from Indiana University’s Kelley School of Business in 2006, he worked for a while at the Indiana Finance Authority, then moved to the IPRS in 2010. There he worked his way up from head of public equity to deputy CIO and then CIO.

At the Indiana Finance Authority, Davis had to deal with the aftermath of the global financial crisis of 2008 and 2009. He managed debt issuance and management, facing the volatility and dislocations that slammed municipal bonds. That experience imbued him with a strong appreciation for handling risk.

“True risk is when the unexpected becomes reality,” he says, reflecting on those harrowing days. “Risk management is not just about forecasting bad events, but also about preparing for the storms that we can’t predict to ensure we meet our ultimate objectives.”

As the new CIO of the IPRS, Davis ended a silo mentality he felt hindered performance, and he set up a collaborative culture. Manager meetings, for instance, are now open to all staffers. “We wanted the entire team to focus on the total portfolio return for the plan, because that is ultimately what matters to our stakeholders,” he says.

Over the past two fiscal years, the stock and bond markets’ double-digit meltdowns have weighed heavily on Davis’ organization, but the fund has held its own, gaining 2.5% in fiscal 2023 (ending June 30) and losing just 6.6% the fiscal year before that. His five-year average return is 7.1%, beating the 5.6% target—a goal the fund’s board in 2021 lowered from 6.75%. The reason: Low interest rates and outsized equity returns over the preceding 10 years suggested riskier times lay ahead.

As befits the investing chief of a retirement fund, he proceeds with judicious caution. For instance, the fund is gradually divesting its Russian assets, which totaled $147 million when Moscow invaded Ukraine in 2022. The fund has stressed that it does not ditch securities for political reasons, but for fiduciary ones. Indeed, Russian stocks have fallen by about 50% since right before the war.

But Davis does not want to unload everything at once, which would fetch a poor return. “We no longer thought it was prudent to hold such exposure,” he says.

—Larry Light