16 Signs You Were a CIO in 2016

Risk management started to mean, “How will my portfolio perform in a Mad Max Beyond Thunderdome scenario?”

2016 was an… interesting year to say the least. The last 12 months brought two shocking political contests (Note to self: Never trust another poll), a revolving door of people moves (Goodbye, Stephen Blyth; Hello, Narv Narvekar), and more interest rate-themed ‘hot takes’ than anyone could possibly care to read (Central banks: Get your sh*t together). And regardless of your fund type, strategy, or size, you were more than likely stuck with the unenviable job of reporting sub-par returns for the fiscal year period—or even worse, a loss.

Sound familiar? Keep reading.

1. The annual summer barbecue was fueled by coal and economics textbooks. Negative real rates are impossible, they said. Nobody would ever pay to borrow overpriced bonds from an eye-wateringly indebted government, they said. Invisible hand, my a**.

2. …And yet you were still inundated with backtested data. Seriously, fund managers? We’re up to our necks in quantitative easing (QE) and the European Union is about to collapse, thanks to British voters. And yet you’re testing your strategy with 1990s data. Why? Back then a smartphone was a desktop landline NOT covered in apple stickers. Let’s all just admit we’re in uncharted waters here.

3. You definitely weren’t upset about not making the Power 100 this year.  Seriously, it’s no big deal. Despite getting friendly with the new management at CIO… And the emails you sent… And the Scotch you had delivered… As for those of you who did make it, yes, we know: We should have given you an extra point or two for innovation—you and 99 others.

4. Risk management started to mean, “How will my portfolio perform in a Mad Max Beyond Thunderdome scenario?” With Brexit, the end/middle/beginning of QE (depending on the current policy of your local central bank), China’s slowdown, and America’s decision to elect a beauty pageant owner with no political experience as its next president, you might find out pretty soon.

5. You scoured the Wall Street Journal and the New York Times every day in hopes of more Bridgewater gossip. Just when you thought it couldn’t get better than a couple of hedge fund billionaires publicly duking it out over a succession plan, the Times goes and uncovers a sexual harassment complaint. “Radical transparency” may not have been such a good idea after all. But not to fret: the claim was settled a few months after it was filed.

6. April—and the annual Forty Under Forty list—brought back memories of the good ol’ days. Oh, to be under 40 again. Those youngsters get all the best portraits.

7. You lost count of all the times you fielded calls from outsourced-CIO firms. Yes, they were welcome to buy you a coffee. No, they couldn’t persuade you to part with a $100 million mandate. Not even one disguised as an “absolute return bond fund.” One sugar, please.

8. A trip to London to visit managers suddenly became a whole lot more attractive. Thank you, Brexiteers. In fact, while you’re visiting the UK, why not buy an office block or two? Don’t mind that sound, that’s just the (former) European Editor crying into his rapidly devaluing wallet.

9. There was one people move that really did shock you. After criticizing that company for so long, he jumps ship to work for them? What gives? Those darn disloyal Canadians. That’s right: Mark Wiseman left the Canada Pension Plan Investment Board for BlackRock, leaving Mark Machin to take the helm. What… you thought we were talking about someone else? For the record, we’ve no idea if Wiseman ever criticized BlackRock really. But he might have. 

10. You were puzzled as to why cannabis mattered more than experience or education on CIO’s list of 50 Things That Matter. Whatever happened to “don’t do drugs, stay in school”? What exactly is in Angelo Calvello’s cigar anyway? And while we’re on the subject of Things That Matter: “Lunch with CIO”? Seriously? Your travel budget matters more than sushi with some journalist.

CIO1216_Landscape_SH2_John-Cuneo.jpgArt by John Cuneo

11. You seriously considered cutting your entire hedge fund portfolio—if only for the peace and quiet it would bring you. Yes, you may have just secured that massive management fee discount and a well-aligned incentive structure, but with headlines like “Are Insurance Giants Giving Up on Hedge Funds?”, “Are E&F Investors Abandoning Hedge Funds?”, and “Hedge Funds’ Latest Defector: Family Offices”, convincing your trustee board of the strategy’s worth is going to take some serious persuading. Rhode Island, New Jersey, New York, and Kentucky public pensions all cut back on hedge funds in 2016, so why haven’t you? Sigh. Looks like you’ll be returning that call from Vanguard after all.

12. Every time your talented young portfolio manager’s phone rang, you prayed it wasn’t Greg Williamson trying to poach him or her for the American Red Cross investing dream team. Who doesn’t want to work for a man in a double-breasted jacket with the investing Midas Touch? With the University of California’s Jagdeep Bachher on a hiring binge of his own, nobody is safe. And speaking of hiring…

13. …You played “Guess Who” with the new Harvard endowment CEO. After the university lost its fourth investment chief since 2005, speculation immediately began over the $36 billion endowment’s next leader. Maybe you scoffed at a financial blogger’s imagined short list. Maybe you threw your own hat in the ring. One thing is for sure: when the announcement finally came in September that Columbia University’s Narv Narvekar would be the next CEO, you wished him the best. Lord knows that fund could use some stability.

14. Managers kept calling you up peddling ESG, SRI, and CSR strategies. (CSR? Isn’t that a TV show with Ted Danson?) Turning them down would be a whole lot easier if it weren’t for the likes of the California State Teachers’ Retirement System and those flashy Europeans pumping billions into low-carbon strategies. Okay, save the polar bears—we get it.

15. You lay awake at night in fear of becoming Jerry Schlichter’s next defined contribution (DC) litigation target. Hope you never hired multiple record keepers… or charged more than the bare minimum in fees… or attempted to secure retirees a lifetime income… As the DC lawsuits spread from corporate pensions to universities, it’s time to start being nice to your general counsel again.

16. February’s cover story, “The Departed,” brought you face to face with the realities of your job. The compelling story of the financial advisor who defrauded his clients reminded you just how many people are counting on you for their livelihoods. Back to work, everyone.

—Nick Reeve & Amy Whyte