“Ben is an accomplished and thoughtful investment professional who has added substantial value to our plan over the years. Ben’s responsibilities include leading our liquid strategies team with oversight of our global public equity, fixed income, and hedge fund classes. Ben brings significant experience in manager diligence and portfolio construction. He is skilled in balancing the quantitative with the qualitative in finding the best investment opportunities.
“Ben is our on-site macro economist. He has a keen understanding of market dynamics and their effects on our investments. Ben is a skilled presenter with a particular talent in communicating complex investment issues (combined with a touch of humor) to our board and investment committee. He is well respected by his peers and our investment managers. It has been my privilege to work with Ben for nearly a decade. He is well deserving of this recognition.”
—Scott Simon, CIO, Fire and Police Pension Association of Colorado
Ben Bronson, CFA, CAIA, joined the Fire and Police Pension Association (FPPA) of Colorado in 2012, and has risen through the ranks to lead the team in charge of global public equities, fixed income, and hedge funds. “We want to take on more risk, but not over-diversify,” he said. “We don’t want to have 1,000 different investments and finish 200 basis points [bps] below benchmarks.”
After graduating from the University of Colorado Boulder, with a bachelor’s in psychology, Bronson worked as a hedge fund analyst at Agile Group, a fund of hedge funds. Next was Highland Wealth Services, where he focused on portfolio construction for wealthy clients. At Charles Schwab, he built and managed the firm’s first operational due diligence process.
Moving to FPPA, Bronson has overseen shifts such as shifting some assets to passive from active investing, adding emerging markets, and splitting fixed income into rate and credit components.
CIO: How would you deal with rising inflation and interest rates?
Bronson: Building a resilient asset allocation strategy is the first line of defense. To me, that means a mix of traditional and alterative asset classes, each of which should be composed of a balanced set of strategies and styles. Some can handle rising inflation and rates better than others, but even these relationships may not be as reliable as in the past—today’s energy cycle is not that of the 1970s or even 2000s. From there, I’d encourage investors to think more in terms of ranges of outcomes to better identify what risks you’re willing to live with, and which ones you aren’t. I’d be wary of blunt force, top-down solutions because of their cost to a plan in a low return environment, but considering such options can be useful in sharpening your own understanding of your asset allocation.
CIO: What is the best way to bring more diversity to the financial industry?
Bronson: It starts by internalizing the vast amount of evidence that more diverse groups can improve decisionmaking and outcomes. If you accept that, then the economic argument for broadening a firm’s perspectives becomes pretty clear. Allocators should consistently ask asset managers about their approach, and compare that to their improvement (or lack thereof) over time. One or two slides in a broader deck is a good start, but I would want to see concrete, results-driven approaches that aren’t limited to a small set of departments.
CIO: What are your favorite alts, and why?
Bronson: I’m tempted to say private equity since everyone wants more of it and I’d love to live in a world of quarterly marks, but that raises too many questions about my career/life choices as a liquid asset class investor. I would say discretionary macro from a purely informational and conversational perspective. Macro folks tell good stories, and there are a handful of managers that always make me think more critically about various relationships between government policies, events, data, and asset prices, which has a lot of utility as generalist allocator. And some of them even make money!
CIO: How will the pandemic have changed the economic/financial world?
Bronson: Beyond watching all my managers become armchair epidemiologists overnight, it’s amazing to see just how quickly firms and individuals adapted to a remote environment with little notable disruption. From an allocator’s perspective, videoconferencing has become a powerful tool in our diligence and monitoring tool kit—particularly with respect to operational due diligence. It’s not a replacement for in-person meetings, but I expect many of our quarterly calls will rely more heavily on video than in the past.
CIO: How will ESG change investing going forward?
Bronson: ESG [environmental, social, and governance investing] is rapidly evolving from a check-the-box exercise to a potential differentiator for asset managers. I think the biggest impact right now is from a risk management perspective, and smart investors integrate the impact of an ESG rogue wave (or not-so-rogue wave) into their downside for security or industry exposure. More critically, the pace and breadth of ESG’s impact is only going to increase from increased government involvement, climate change-related disruption, the growing importance of diversity among workforces, to societal pressures for a more balanced and equitable approaches to wealth. It’s hard to want to be passive as these trends play out, given how much potential there is for disruption, value destruction, and innovation.
CIO: Where do you see the most exciting areas to specialize further over the coming years?
Bronson: I think there is always a place for improving one’s interview skills, particularly with respect to asset managers. Everything we do is externally managed at present, and we give managers a wide degree of responsibility in helping us meet our goals; at its core, that means we’re investing in a firm’s people, and developing a detailed understanding of how they operate is essential to making informed judgments. To that end, I’m always interested in ways we can improve our ability to extract information that helps verify or challenge our thesis for a manager. This isn’t about trying to catch a manager in some contradiction; rather, I believe building a strong rapport can help you dig much deeper than you can with a handful of spreadsheets or set of rote questions. The pandemic has further challenged this by moving people to a tiny box on our screens, but building such connections is no less important. These connections have had direct impact on our ability to a) have higher conviction with our managers, and b) be more responsive to unique ideas in times of dislocation.
CIO: What asset class or investment troubles you most right now—and why?
Bronson: Fixed income has been increasingly challenging given where rates are, and lower ability to count on duration as an equity ballast. We have responded by lowering our overall allocation to the class, and splitting it between more defensive rates exposure and return-seeking credit, but it only increases the importance of getting the allocations to alternatives ‘right’ in order to make up for what fixed income has historically provided.
CIO: What investing decision have you made that you’re most proud of?
Bronson: Increasing the autonomy and responsibility of my teammates. It may seem like a cheat since I’m talking people, but it’s been extremely gratifying to see people that started as analysts become seasoned and thoughtful investors themselves. I’ve been extremely fortunate to work for an organization that gives people the ability to take risk—and make mistakes. That’s a culture I hope to promote at all stages of my career.
CIO: Who is the manager you don’t currently work with whose brain you’d most like to pick for an hour?
Bronson: I really want to say Jim Simons [of Renaissance Technologies] but I can barely use a calculator and probably wouldn’t maximize my time with him.
