YouSaid · the spoken record

Anne-Marie Fink

lines on the record: 75
first: 2024-06-03
most recent: 2024-06-03
sittings or episodes: 1
sources: podcast

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“I think the thing I wish I knew earlier was it sounds obvious, but the 8020 rule is that just get 80% of the way there and you don't have to get it perfect. I think that was something I wish I had figured out a lot earlier.”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“Probably Susan Ulich, who is the first manager I had when I was an equity analyst at JP Morgan, and then the other person I would say is Gina Romundo, who was the treasurer at the state of Rhode Island who brought me over and had faith that I could figure out these other asset classes and run a total portfolio for the state.”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“I probably was a nomad in a prior life. I have loved Australia, have loved Japan, China, Europe, Africa, a little bit of everything.”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it's going to be fascinating. I don't have a good answer for it. And whenever I ask managers, I would say I haven't gotten a great answer from them either. It's an interesting challenge because I do believe that the governance model of privately held companies is better than the publicly traded governance model and the difference has only gotten starker over the last twenty plus years that I've been doing this. So I think there are challenges in the public market, which means private's going to continue probably to grow, but there's still this liquidity challenge. So there's going to have to be some solution. The industry has been feeling around for something. What was it five, eight years ago? There was the whole wave of permanent capital vehicles, but nobody really liked that either. So I do think it's something that the industry...”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“Our private allocation at the moment, and we're happy to do that. So when people are giving us a natural liquidity, we're not very excited about it. But I had an aha moment recently where I think these are going to become more and more parts of the universe going forward. They're not going away. So we need to get better at figuring out how to assess a continuation vehicle, how to help do our part as part of the industry to figure out what are we going to do with all these stub positions and where are we going to ultimately get liquidity. So I think there's a lot of stuff around that. And then the third thing I would say is around secondaries recently again because we're in a good position to take on more liquidity. And as those markets continue to develop, we hope to be able to do more.”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“So we talked about our separately managed account platform. The other area that we're spending a lot of time, and I think we'll be spending more time going forward, is on the private sing co-investment, both co-investment as it is, which is an area that we've been good at but really have ramped it probably over the last seven, eight years. And we think that there's more opportunity there. And then there's a bunch of ancillary things that go along with that that I think are going to develop, which is I used to call them unnatural liquidity from private equity. So if you think about private equity firms, we're seeing a lot of selling off partial positions or selling off a majority but holding a stub position. We're seeing continuation vehicles and we're seeing nav loans. All of this is in an effort to get more liquidity, which is a bit of a collective action problem because we don't need the liquidity. We're actually growing.”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“Building up that trust. And that you do incrementally. You can't build 70 years of trust in a couple years. What you can do, though, is make incremental improvements and then have it get a little bit better. And then maybe people will believe you more when the politicians often have their own logic and their own motivations to make changes. And if the system and the participants in the system feel”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“You mentioned that a lot of other states would love to have this model of aligned interests, but Wisconsin started it so long ago that it's worked. A lot of people feel like the public pensions are broken and their ability to invest the way you have. I'm sure you have a lot of these conversations with people at other states. Where does that potential come to improve the model in the way that SWIB has at some of the places that haven't been able to do it?”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“Focus, we understand how important this is for people and for their retirements. And we're going to do what we can to deliver returns for them.”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“Going back to the incentives being aligned and the shared risk model that we have with our pension participants, that only works because there's a lot of trust. And in fact, other states would love to set up a similar system, but there's just not enough trust between the pension participants, the taxpayers, and the investment professionals to set that up. So we understand how important that trust is. We recognize that we've built it up over 70 years and we don't want to do anything that would damage that trust. So one of the ways that we try to keep that trust intact is through the SWIB podcast, is to share with people what we are doing so that they can understand that we're not perfect. We're going to make mistakes, but the mistakes, if we make them, are not coming from a cavalier attitude that we are very...”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it allows us to focus on the investments and be more pure about risk adjusted returns. I think a lot of places will be spending all of their time thinking about, well, can we fund this? Do we have to go to the legislature and ask for more money or things like that? So it just takes away from your ability to focus on the investing.”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, Swib for a long time has been fully funded. It's quite different from a lot of public plans, though, and you're catching up. What are the ramifications in your day-to-day, year-to-year of investing with a fully funded plan compared to an underfunded plan?”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, we have 12 pages of private equity funds. I kind of knew that. It's the ability to dig in on things very quickly and look both at a broad level and then drill down has been very helpful.”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“And asked each of them what their pain point was, and by far and away, the biggest pain point was reporting and pulling information together. We now have systematized a lot of that. And so it's given us a lot more time, the ability to look through things. It's really been transformative. I recommend for everybody to get a portfolio engineer.”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“So let me just be clear about one thing. Our internal teams don't see what the positions that are external managers have. So let me be clear about that. There is a Chinese wall there. We're using a number of different tools. So one is we have a risk team that uses primarily facset to look at what the exposures are across the board. Another thing that we have is we added a position we call portfolio engineer about two years ago and it's been amazing. So essentially what our portfolio engineer is, it's an investment professional who sits between me and my investment staff and our technology team. So somebody who can speak both investments and technology and has created a number of systems and reporting that has transformed our lives. So we can see things more clearly now. When I started at SWIB a little over four years ago, I met with my senior folks.”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“So you have these managed accounts that have all this transparency. You've got all your internal teams and all those positions. You have these external accounts across asset classes. When you roll all of that up to look at the risk of the WRS as a whole, what tools are you using to assimilate all of that information?”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“We agreed, and they held it for about a week, and we made a lot of money off of it. It's also been, I think, enormously helpful for our team to watch what the managers are actually doing because it's one thing, again, to see the pretty pages in the flipbook that say this is our philosophy, this is our process. But then when you watch what they do every day, it gives you a much better feel for who they really are.”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“So it's a combination of reference checks. We're talking to as many people as we can to determine whether they really left voluntarily or not. About eight of the ten that we started with actually have been running money for a little while on their own. So we can look at their track records. And then the other thing we really like about the managed account platform is that we can watch them. So we can see every day what they're doing. And I think that's been enormously helpful both for the managers because we can take a slightly longer time frame than maybe some of the multipads can. So for instance, we had a manager recently who there was a situation that they wanted to go above their risk limit. It was something that was going to IPO. So there was a relatively short window on it, though not IPOs can go wrong. But it had a relatively short window on it, but it was definitely above their risk limit. So they could come to us and say, here's the situation. Do you agree?”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“So oftentimes, at least by reputation, when a manager leaves one of the platforms, it's because of a drydown. Certainly have some of the risk rules work. Have you found doing your diligence effectively so that you can get comfort that they'll be able to produce in the future?”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“Part of the reason that we did a separately managed account platform now and not in the past is we feel like now that there's not negative selection bias on the talent. So what we're finding is there's a lot of folks who are high quality managers often worked at those multi-pads and for whatever reason wanted to go out and hang out their own shingles. They tend to be folks that are not very excited about doing the marketing. So if they can get to a billion or so in assets, they're happy just running that. So that's a manager that we really like because the incentives are very much aligned. We can be very important to them. They're important to us and they can just focus on the investing, which is what we want them to do.”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, some of the things that we're most excited about are the separately managed account platform that I talked about earlier. And part of the reason we're excited about that is it also allows us to take a page from the multi-pads and notionally fun things so we can be much more capital efficient. So that's really interesting for us. Another thing that we're”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“Some workout and distressed experience. I'm a little cautious around that though because everybody says they have it. And if it's been 10 years or 15 years, we'll see who's really got it. We're doing more in Mez, more in distress and a lot of the distressed people that we're working with were giving them trigger funds so that we'll give you a certain amount of money today. And if there's a real proper distress cycle, we'll give you more, but we don't want to pay fees if a proper distress cycle doesn't come around. And then interestingly, in our hedge fund book where we're doing specialty finance, some of that also looks like private debt, though it tends to be three years in terms of the tenor and it tends to be a little bit more asset-backed. So that's another area where we're finding some opportunities.”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a very interesting space. We're active and I would say a little bit cautious. So on the positive side, if you look at the size of the publicly traded and then bank market, it does seem like private debt is not that huge. So you could say there's plenty of runway to go. On the other side, the private debt markets haven't really been around during a proper distress cycle because they really weren't of any size in 2008, which was the last time you had a real cycle. And even if you look at, there was a mini-cycle in the energy markets in 2014. And there were a lot of distressed folks that didn't do so well in that period. So we're somewhat cautious on that front. Anybody that we're working with on the private debt side, we are looking for people that have”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“With somebody and then try and grow it over time. So it's a combination in our venture portfolio of going after the who's who adventure. And there we're really fighting to just get some capacity. And then we have another portion of our portfolio that's a little bit more speculative. And there's two aspects to that. One is we have a Wisconsin venture portfolio. So we have a portfolio that is designed to either invest in managers that are based in Wisconsin or ones that spend a lot of time with Wisconsin companies. Now, unfortunately, I don't have a lower return hurdle for that. So we can't do everything that comes around, but we do spend a lot of time trying to foster the local venture ecosystem. So that's one thing that we do on the smaller end. And then we also will take a few shots a year on newer managers that”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“So we like venture at the same time, we recognize it's a much more capacity constrained strategy than anything that we're doing elsewhere in our portfolio. So our portfolio is relatively smaller. It's about $2 billion. We've also found that in general there's more serial correlation with venture. So it's even more important in venture to be in the best managers. So there's a few strategies that we pursue to do that. One is the person who runs venture for me is a guy named Presta Giacomo. He's the most friendly outgoing person you've ever met. So he's just really good at making friends with a lot of GPs. And we're also playing very much the long game, actually. That's true in everything that we do. We're playing a pretty long game. But particularly Venture where we will do, we prefer not to, but we will do five or ten million dollar checks to get a total.”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“Because 21 was so amazing. So in that environment, it's particularly more difficult for larger managers because you have fewer ways to exit. You really can only exit through IPO or through publicly traded company making a very, very large acquisition. Those don't happen every day. Whereas in the lower mid-market, where we'd be thrilled with a billion dollar exit or even less, there we've got three avenues to exit. Some of them are big enough to IPO, but we're not dependent on the IPO markets. The other two ways that we can exit is one to a bigger PE shop, so another sponsor. And a lot of these companies are really quite manageable for that. And then three, we can exit to a corporate strategic acquirer. And again, because it's a smaller bite size, it's easier for them to do that.”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“What we're seeing is the mega end of the market, it's harder to get liquidity. We had a period of frothiness there in 2021 where it was easy to go public. Everything was moving really quickly. And then we hit 2022 and we had a denominator effect because all of our portfolios went down. Nobody talks about this, but I think we also had a numerator effect in that everybody GPs and LPs, we were all so excited in 2021 that everybody was raising bigger funds. We were making bigger commitments. It was just getting a little overdone. So now what we're doing is we're dealing with that. So now there's a bit of an overhang. The 2021 liquidity was unusual. And the 2023-2024 liquidity is probably less than normal, but not vastly abnormal. It just feels vastly abnormal.”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“I have a great team and a large team. Whereas I said in Rhode Island, there are three of us basically doing it. I have 28 investment professionals working for me. So we just have a much bigger team. We've seen more stuff before and we talk to a lot of people. It's a lot of hard work.”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“So we have a big enough portfolio that we're doing a little bit of all of the above. We actually are pretty big believers in lower mid-market funds. But we think that the opportunities in lower mid-market, if you've got the skill to really go in and assess people, we think the opportunities for returns are better. So it's place where we concentrated more of our efforts. Now, we certainly still do some mega managers because one, we have a lot of capital to put out. And two, there are some great mega managers out there, but we have tended to go a little bit smaller where we can have a little bit more control, where the opportunities for return, we think, are a little easier to access, maybe a little less competitive.”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“25 million one, you're going to close the fund and stop fundraising and start making investments. And two, we want better terms as a result of this. So that's one way that we've done it. Another thing that we've done is we partnered with one of our multi-pad hedge funds. They basically spun out their technology and created a separately managed account platform. So us and you Timco together basically anchored this new manager. And as a result of that, we were able to both help them to design the systems and the reporting and all of that. And then we also have favorable economics as a result.”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“One of the ways that we try to leverage both our assets and again the delegated authority is by going into managers relatively early on. We have on occasion done day one, but we often do year one investments. And we are willing to work with managers on what they're looking to achieve from a business perspective and what we are looking for as well. So let me give you a few examples. One, during late 2020 and early 2021, it was hard for some managers, particularly younger managers, to raise money on the PE side because everybody was scared about what was going on in the world. So we had some managers where we had made an initial allocation and we went back to them and said, okay, you're having trouble getting to your final close. What if we give you another 25 million that'll get you close enough? And in exchange for us giving you another...”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“So we do a number of things. Certainly we keep the dialogue open with our internal teams. If managers come to visit us, we make the meetings available to our internal teams and they will come join us. And it's actually helpful on both sides. So it's helpful for them to hear what other investors are doing. And it's also helpful for us to, after the fact, talk to our internal teams and ask them what they thought about the thesis, the thought process behind people's views. Because I said earlier that I used to be able to read back the bear case to somebody. I'm removed at this point, so I'm not as good at that. Bringing our internal team in is often very helpful on that front.”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“So we're not maniacal about taking out all the residual risks. Certainly if you think about macro in general, that usually is directional. What we're looking for is something that's not consistently the same direction. So if it's directional today on long rates and tomorrow I'm short rates and I'm good at it, that's fine. What we don't do is try to take out the betas underneath. Partly we haven't done it because operationally it's difficult. And then partly because if a manager tells us at the end of the month or even the end of the week that they're long something by the time we put an offsetting position on, they might be shorted. So it's too hard to try and offset it. What we do look though is over time does anybody have a bias? And if they tend to have a beta bias, then they're probably a candidate to leave our portfolio.”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“Those strategies, there is a package with a blend of idiosyncratic positions and then some type of market beta. And then manage the risks so that you can just deliver that portable alpha piece when you will have some residual risks in a portfolio like that.”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“So it's pretty much across the board. I don't think there's any strategy that we don't do other than long biased. So we do have long short equity hedge funds. We do have macro funds. We have quant funds. We have multistrats. We have some relative value. And then we also do a little bit of specialty finance in there.”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“So we have a very distinct way that we use them, which is portable alpha. So we do not actually, and you'll notice when I gave you the allocation, there were no hedge funds in there. It's because we actually think of the hedge funds as almost an overlay. So we do that hedge funds is portable alpha. So we're looking for strategies that have little to no beta and really are absolute return type funds. And then we port that on top of equity and fixed income beta. And it works well because we're paying really high fees, but we're paying only on the alpha, the stuff that is hard to replicate. And then the stuff that's easy to replicate, the beta, because we do it passively, it's very inexpensive.”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“Maybe there's a loser that goes with this. So that's one thing. And then the other thing why it's been salient recently is particularly last year with the Magnificent Seven and the stock market being so dominated by seven companies. It's been hard to be active because so much of your allocation gets eaten up by just even having a market weight in those seven. So what we find by loosening the long only constraint and going to extension strategies is it just gives managers more room to put on positions and have more opportunities to make returns.”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“We're actually relatively big believers in active, so we do have about 20 to 25 percent of our portfolio in passive, mostly because we want to do all of our rebalancing in passive space. So we're also very rigorous about rebalancing each month. And we want to be able to do that without hitting our active managers all the time. So we keep some passive around for that. We also keep some passive around to help with the leverage so we can convert it into futures, which gives us the leverage. And then other than that, we are pretty big believers in active. The one thing I would say we've been doing more recently, both internally and externally, is, well, externally more of a 150-50 type strategy. So we are trying to bring in some short exposure to one because we think certain managers have some capabilities to think about if I really like something.”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“Says they're really conscious about rates, and then you look at the regression against rate moves and it doesn't quite foot, then you know there's something a little bit off as well.”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it's always a challenge to figure it out, and it's always a moving target. It's a combination of a lot of things. It's a mosaic. You talk to them about how they're thinking about markets and how they're thinking about tackling different opportunities and how they think they can outperform, seeing if it makes sense, both in terms of what you know about the market structure and the competition, the one advantage that we have is we don't need to be the smartest people in the room, but because we can look at so many different strategies, that gives us an ability to figure out which ones we think are better, making a relative judgment is a little bit easier than making an absolute judgment. So I would say that's the primary place where we start. And then you look at the numbers to see, does that support what they're saying? So if somebody says they're really risk controlled and then you look at their numbers and they have a 40% drawdown, something doesn't quite compute, or if somebody...”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, it's probably a little bit more fixed income oriented than it would be if we didn't have the leverage. So that's where we do the trade-off. But we're about 38% in equities, 26% in fixed income, 19% in tips, 30% give or take in privates. So that's 10 in private real estate and 20 in private equity and private debt. And that gets you to about 112.”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“We're currently at about 12% leverage, so we have 112% invested for every dollar that we have in assets. And that used to be higher when the yield curve was not inverted. It makes much more sense to do this when the yield curve is more normal. So we used to have about 15. The board has given us a range between 0 and 25. So 12 currently, 15 before feels comfortable that it gives us some room if something happens and we want to be able to react. But at the same time allows us to put the position on in a big enough size that it matters.”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“And then this last piece that's quite different is leverage. So you mentioned you can construct a portfolio that has less risk, put on some leverage. How do you think about how much to use and how to be sensitive to the interest rate environment?”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“So it's been equities, develop world, large cap, and then US small and mid-cap. We have some hedge fund strategies that we do internally, some CTAs and then some other Cap ARB and things like that. And then the third area is fixing income. So we do investment grade, high yield, lev loans, and mortgage backs internally.”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“So our default position is to do things internally, but then there are three reasons that lead us to do things externally, and they're pretty reasonable such that the portfolio ends up being about half internal, half external. So the three reasons that we would do something externally are, one, we just don't feel like we can do it from Madison, Wisconsin. So think emerging markets, all of our emerging markets we do externally. Second, we're looking for some diversification from what our internal teams are doing because the internal team may be great, but they're going to have a specific style. And we probably want to have some diversity of style. So for instance, we have an internal team doing high yield. We also have an external manager that just does things a little bit differently. And then the third reason is just to be able to partner with the greatest investors in the world. So while I think Madison, Wisconsin's lovely, not everybody wants to live.”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“Comments about details, it's really helpful to see how people actually do their investing, but we're not going to be able to respond in time. And I think a lot of the managers really appreciated that because some of them came back to us and said, it was great that you said that because all the other people said they would do it and they couldn't respond in time either. That is not true in Wisconsin. In Wisconsin, we really can't respond in time again because it's a very short chain of decision making. We can move very quickly. So that's a key part of the swib edge. And then I think another one is just what we call Wisconsin nice or nice people to deal with, even if we don't want to do an investment. We try to be pleasant about saying no and certainly saying no quickly if that's where we're going.”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“So it all hangs together. Most of the people that work for me on at least the senior level have been there 10 plus years. So we have a lot of longevity. So we have really deep histories with many of the managers that we're working with. That's one place that we do it. A second place is, again, because of this delegated authority, we can be very responsive. When we're shown, for instance, a co-investment, we can respond within a couple weeks. Whereas all contrast that with Rhode Island, we did not have delegated authority. So all the decisions were made by what we call the state investment commission. So when I was there, we would talk to managers and they would say, do you want co-invest? And we would say, yes, we'd love to have co-invest, but I can tell you right now we will not be able to respond in time. So we'd love to see any package you have around the co-investments because going back to my earlier.”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“So we're really looking, it sounds very trite, but to maximize risk adjusted returns. And we do that through a combination of the asset allocation, which, as I mentioned, we actually do use some leverage. We think that over time, it allows us to have a slightly”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“We seek to balance risk and return. When we do an asset allocation study, it's pretty standard efficient frontier. What we're trying to do essentially is find the maximum point that gives the best return for the risk. That's usually actually a little bit less risk than we might want. So we apply leverage at the plant. We do a little bit less risk in terms of the assets that we own. And then we add back a little bit of risk through levering the entire plan.”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source
“So when you have this setup where clearly people want higher returns so they individually can get a higher payout, but then they get hit on the other side if there's a drawdown. How do you balance the risk management part of not wanting the drawdowns with the desire for growth?”
2024-06-03 · Capital Allocators · Anne-Marie Fink - Cutting Edge Pension Investing at SWIB (EP.389) · IDENTIFIED FROM THE TRANSCRIPT · source