Samantha Foster

Samantha Foster is a managing director at Russell Investments with responsibility for nonprofit solutions. She leads the firm’s efforts in developing and delivering strategic advice and investment management solutions for nonprofit organizations.

Foster works with boards, committees and staff to develop customized investment strategies and help solve unique problems for each client. This work includes direction on investment strategy and implementation, risk management, asset allocation, operations and culture.

She spent 10 years managing total endowment asset allocation and risk for the University of Southern California, as well as making endowment investments and all non-endowment investments (pension plan, charitable trust and working capital). At Pacific Alternative Asset Management Company, she chaired the Risk Management Committee and advised clients on hedge fund investments.

Prior to business school, she was a quantitative research analyst for the international equity mutual fund at Bailard Inc. and holds a certificate in quantitative finance. Foster is an active committee member for the Standards Board for Alternative Investments and Women in Institutional Investing Network organizations. She earned a B.S. from the California Institute of Technology and an MBA from the Stanford Graduate School of Business.

CIO: What do you think will be the biggest innovation in your industry in the next 10 years?

Foster: There is always innovation happening within investing. The next 10 years will bring a very deep level of customization to every institutional asset owner. Investors’ expectations are changing, and better technology enables a richer dataset to be aligned to each unique investor.

In the next decade, a small family office will be able to buy a single share of a venture capital fund; a foundation will have a private pacing model that takes into account a known 20% distribution in three years’ time; and a university will be able to measure Scope 3 emissions metrics and tailor investments in futures and offsets to hedge those emissions across the endowment and operating business.

There will be changes needed to data, systems, primary and secondary markets and ownership tranches. While every size of asset owner will reap these benefits of customization in the next 10 years, it is already happening now for some asset owners that have the means, internal talent and best service providers.

CIO: What macro themes will drive the most volatility for institutional investors over the next 10 years?

Foster: The last few decades have been extremely peaceful due to international cooperation and economic growth. This tide seems to be turning.

Within countries, we see the politicization of corporations and aid organizations. Across international borders, we see governments restricting capital flows, both into and out of countries. Higher overall uncertainty leads corporations to have wider bands around capital allocation and forecasts, which in turn leads to higher uncertainty in equities, which are central to institutional investors.

The low volatility of the past will be disrupted as new alliances form, again, both within and between countries.

All of this undoubtedly will lead to higher implied and realized volatility, as well as shocked, point-in-time volatility. We’re all just going to have to get better at dealing with unknown risks!

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

Foster: “Optimize, judgement and patience”
Optimize: have a plan and aim toward the optimized end state.
Judgement: use judgement, because rarely does the plan go as planned.
Patience: have patience, because sometimes arriving at the optimal solution can take longer than planned.

Something as simple as rebalancing fits into this framework, and it applies across GPs and LPs. From the LPs’ perspective, year-to-date, the S&P 500 is walloping just about every other asset class. For most, this has become an overweight to the model policy portfolio (i.e., the optimal solution). In order to get back towards optimal, you take the unrealized gains and make them realized (use judgment to determine how much and what to sell). Then plow the proceeds into new investments (and have patience).