2023 Knowledge Brokers

Elizabeth Burton

Elizabeth Burton is a managing director and senior client investment strategist in the client solutions group at Goldman Sachs in New York. In this new leadership position, Burton advises Goldman’s institutional clients on their investment strategy and portfolio objectives, working alongside Goldman’s global client advisers and product strategists across public and private markets. She was most recently the CIO of the Employees’ Retirement System of the State of Hawaii, where she oversaw $22 billion in pension fund assets.

In the last five years, Burton was named one of Chief Investment Officer Magazine’s Top 40 Under 40, received the Industry Innovation Award for <$20B plan by Chief Investment Officer Magazine, was listed in the Power 100 for three consecutive years and was added to the list of top 1% of institutional investors by The Trusted Insight. Burton is also on the board of directors of the Chartered Alternative Investment Association.

CIO: What changes are you making to your asset allocation advice given the current state of monetary policy in a post-COVID, deglobalizing world and considering the impact of inflation and rising interest rates.

Burton: I would encourage institutional investors to take advantage of private/public pricing disparities and try to leverage those discrepancies to their advantage. We increasingly see allocators having a bit of competition for capital between public and private opportunities, the two within the same asset class, in particular with credit at public funds and with equities at endowments and foundations. At the very least, the competition between the two should result in more informed allocation decisions.

In addition, I would consider spending more time out of the U.S. While historically, cross-asset correlation dominated diversification discussions, the major trends we are currently facing (demographics, deglobalization, decarbonization, digitization), combined with diverging central bank policy globally, should provide for reduced correlations across regional exposures.

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

Burton: As we come out of new asset allocations, capital market assumptions and asset liability studies, I expect many portfolios will adjust to a post-COVID world. For me, choosing the next “home run” investment has been less an absolute evaluation and more an opportunity-cost assessment. It is somewhat like planning for home renovations: The result could cost twice as much and take twice as long as you thought it would to complete—are you ready for that inconvenience? If it is worth it, prepare to have more liquidity and flexibility than you anticipated and be prepared to have to pivot on the outcome you thought you wanted. You’ll want to make sure you still get a finished kitchen, even if the oven has to be in a different place.

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

Burton: Putting on my former allocator hat and trying to think about portfolio diversification with an unavoidable long-term allocation to growth assets, I believe India warrants consideration for a stand-alone allocation in client portfolios. It has demographic tailwinds, a sector-diverse corporate landscape, a significant share of “unicorns” and increasingly favorable public sector initiatives. Potentially more significantly, and relating to my previous comment on regional diversification, India has a low correlation to the global economy. While we have seen increased interest from limited partners lately, it is still a relatively under-covered market, both from a sell-side coverage standpoint and an institutional portfolio level standpoint.

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