Ryan McGlothlin

Ryan McGlothlin, a managing director in Agilis’ Boston office, works with institutional investors on customized investment and risk management strategies. He has wide experience in helping Agilis’ clients achieve their objectives more efficiently through asset allocation, the prudent use of derivatives and leverage, using risk transfer strategies and through cost optimization.

McGlothlin joined Agilis in 2007 from Barclays in the U.K., where he helped institutional investors utilize derivatives. He holds an MBA from the University of Chicago Booth School of Business and a B.A., with honors, from the University of Texas at Austin.

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

McGlothlin: I think the investment industry will become more cognizant of the inefficiency of mixing market alpha with beta, especially when the beta is just the effect of leverage, within private investments. Separating alpha from beta, and isolating the impact of leverage, will become a focus for institutions. It was easy to just ignore the effects of leverage on returns when interest rates were so low for so long; now that rates are higher, the benefit of leverage within funds will be more muted, forcing institutions to pay more attention.

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

McGlothlin: Most of the time, you should do nothing, and by that I mean stick to your strategy. Investment professionals feel pressure to be “doing something” to justify themselves and their fees. As the financial press is most often focused on what is or might be going wrong, the pressure is to do something to defend. But mostly whatever is worrying people does not happen. Or it happens but the impact on financial markets is far more muted, or even the opposite to what was feared. Sticking to your strategy and doing nothing different is often the best course of action, but it can be the hardest to communicate and justify. Over time, I have become more comfortable and confident in making the “do nothing” call—and this year was a good one to make it—so far!—despite all the recession worries.

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

McGlothlin: Institutional investors are going to have to unlearn the lessons of the past 15 years. Following the global financial crisis of 2008 and 2009, central banks spent most of their time trying to stimulate economies and to keep up. We have had a regime change following COVID, and central banks will need to keep one foot on the brakes to keep inflation at target levels. While the GFC and COVID might have been the proximate causes, demographic effects, particularly in the U.S., are also big drivers of this phenomenon. The risk of deflation produces different market dynamics than does the risk of inflation. Also, many institutions are going to find out how much their portfolio returns have been juiced by cheap leverage. The unwinding of that paradigm will create credit shocks that will drive volatility.