Chief Investment Officer: Words of Wisdom
NEPC’s Bill Ryan and Allan Martin, both featured on CIO’s 2023 Knowledge Brokers list, were recently quoted in an article to discuss what lessons they’ve learned over the course of their careers. View the full article on Chief Investment Officer’s site here.
The most fascinating periods in history were filled with tumult and upheaval. 2023 is no different. When selecting CIO’s 2023 Knowledge Brokers, we asked the candidates to tell us what lessons they learned over the course of their careers and how those insights apply in the latest interesting times.
Among the 10 Knowledge Brokers, nine answered CIO’s question about what specific guidance they could offer, and that guidance falls largely into four categories. Paraphrasing what each said, they counseled patience; stressed the importance of both questioning conventional thinking and of holding fast to your convictions; and, lastly, these professionals advised the need to maintain empathy for and connections with colleagues and clients.
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Bill Ryan, a partner in and the head of defined contribution solutions for NEPC, reflected on the value of having patience in the face of change. “Being comfortable with uncertainty and the many things we simply cannot control allows me to maintain focus on the end result for plan participants who put their trust and retirement savings into the hands of plan sponsors and their consultants,” said Ryan.
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Allan Martin, a partner in NEPC, pointed to the importance of insight, the knowledge of fundamentals and constantly incorporating new research into the mix of ideas, but also of having the “fortitude to stay the course when short-term disruptions occur and the courage to act when others are in distress.”
“In volatile and stressful times, it is important to remember that a well-reasoned long-term asset allocation plan, appropriately diversified to provide protection in adverse environments, is the best protection against long-term capital loss,” Martin said.
FIN News: Forthcoming Children's Book Provides Access, Confidence In Financial Literacy
NEPC’s Sarah Samuels was recently featured in FIN News to discuss her forthcoming Children’s book, Braving Our Savings: Holland and London Learn to Invest. Excerpts from the article are shown below. View the article in it’s entirety on FIN News’ site here.
An institutional investment industry veteran has penned a new children’s book that aims to give children the confidence and access to become financially literate.
NEPC Partner Sarah Samuels came from a non-traditional career path, had no guidance, financial education or family history in the industry and understands that many others come from a similar dynamic. So, the mother of two little girls took matters into her own hands in publishing her first children’s book, Braving Our Savings: Holland and London Learn to Invest, to help change the lives of young kids that do not have control over what is put in front of them.
“Unfortunately, many schools are not teaching any personal finance or a general financial education. What’s not being taught at home and not being taught in school gets left by the wayside. These are some very basic life skills that can empower people to break generations-long cycles of making ends meet,” she said.
The concept and underlying theme of bravery is woven throughout the book, whose target audience is children in the first and second grade, and Samuels started a movement called 30 Seconds of Bravery as she believes that if you can do something that is difficult – whether it’s asking for a raise or promotion or doing something big in your personal life – it will change the path of your life.
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“I’m having some really interesting discussions with different nonprofits across the country and I’ll be raising money at some point. I’ll be looking for ways to get as many copies of the book in kid’s hands as we can,” Samuels said.
A GoFundMe is live for donations to children on the 30 Seconds of Bravery movement website and Samuels is looking for people that are willing to provide ideas in order to “amplify the message and get involved.”
“This is a wonderful industry and it should be available to all. Everyone deserves to have [the] type of career path that I was lucky enough to have, but they need our help,” Samuels said.
Braving Our Savings has a target publication date of April 16, which falls during Financial Literacy Month and will be published by Forefront Books, which caters to successful men and women in their respective fields, of publisher Simon & Schuster.
FinancialPlanning: Is Private Equity's AI Gold Rush Happening Too Soon?
NEPC’s Joshua Beers recently wrote an article for Financial Planning that discusses artificial intelligence and the impact it’s having on the private equity space. View the article on FinancialPlanning’s site here.
The private equity AI gold rush is on, with PE and venture capital firms pouring more than $10 billion into the artificial intelligence and machine learning sector in the first half of 2023 alone, according to S&P Global Market Intelligence.
Ultrahigh net worth individuals, families and family offices are playing a key role in this story. These investors place a large portion of their wealth in private equity, providing a significant share of the assets that are funding AI’s development. In some notable cases, family offices are making a direct play on AI — for example, the Duquesne family office recently invested nearly half a billion dollars in AI-focused companies.
It’s easy to see the appeal of AI technologies and the desire to capitalize on them — it is reasonable to expect companies that successfully integrate AI into their business processes to be better positioned for future success. Likewise, firms that create superior AI platforms today will become essential partners for virtually all global businesses. For this reason, a huge number of new ventures in the private equity environment include at least some aspect of AI technology.
Click here to continue reading the full FinancialPlanning article.
The Wall Street Journal: Pension Funds Go Cold on Private Equity
NEPC’s James Reichert, Senior Director of Portfolio Strategy, sat down with The Wall Street Journal to discuss whether alternative investments have fallen out of favor for corporate pensions. James suggests that in today’s inflationary environment, plans may find it more advantageous to invest in publicly traded investment-grade, high-yield bonds and bank loans, without the added complexity and uncertainty of alternative assets. View the article on The Wall Street Journal’s site here.
Locking up funds for a long period is unpopular now because for the first time in years, easy-to-trade corporate bonds and bank loans offer appealing returns, thanks to rising interest rates. That has upended the retirement calculus for America’s corporate giants, after many spent years chasing nontraditional investments whose managers promised they could earn a lot more than stocks and bonds.
Companies now increasingly want quick access to cash so they can buy higher-yielding bonds or sell off retirement obligations to insurance companies. Long lockup periods on private equity and other private market investments mean they can’t easily unwind those complex bets, though.
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The past couple of years have been rocky for private equity. Benchmark private-equity returns turned negative for the year ending March 31, for the first time since the 2008-09 financial crisis, according to a Burgiss Group index that excludes venture capital.
Today, a closed corporate pension plan can likely get the returns the company wants from publicly traded investment-grade and high-yield bonds and bank loans without the uncertainty and complexity of alternative assets, said James Reichert, senior director of portfolio strategy at investment consultant NEPC.
“You don’t necessarily need it,” he said.
Click here to continue reading the full Wall Street Journal article.
FundFire: Energy Transition as a Buyout Theme? Morgan Stanley, TPG Say Yes
NEPC’s Matt Ritter was quoted in a recent FundFire article to discuss how investment managers are reacting to shifts in opportunities in energy transition investing, as well as the importance of risk compensation and manager selection. View the article on FundFire’s site here.
The rapid growth of energy transition investing – focused on deals facilitating the shift away from fossil fuels and climate change-inducing technologies – has largely been an infrastructure asset class phenomenon, but now is increasingly sparking private equity transactions and funds.
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“Certainly, there are growing investment tailwinds,” said Matt Ritter, head of real assets at NEPC. “Energy transition… used to mean solar and renewable utilities. Now, there’s a broader set of opportunities… and the investment manager landscape is reacting to that shift.”
A new subset of deal types is complementing hard asset solar arrays and wind farms with companies specializing in power grid improvements, electric vehicle components, battery storage and carbon capture or sequestering, Ritter said.
“Those are investments that span the risk-return spectrum,” he said. “Some don’t look like traditional infrastructure investments, because maybe it’s an investment in a company. It’s also a different risk profile and cashflow profile.”
Read the full article on FundFire’s website here.
Pensions & Investments: DC Funds Get a Much-Needed Rebound
NEPC’s Emma O’Brien was quoted in a recent Pensions & Investments article to discuss how fewer contributions are leading many providers to take another look at their core menu options. View the article on Pensions & Investments’ site here.
Providers of mutual funds and target-date funds for defined contribution plans saw their assets under management rise during the year ended June 30, thanks to the market recovery that allowed them to partially make up for the previous year’s losses.
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Emma O’Brien, senior consultant at NEPC, said in a phone interview that about 63% of participant contributions go into target-date funds, and that has led some of their clients to take another look at their core menu options because they’re seeing so many fewer contributions than in the past.
“They have been offering a complementary menu of active and passive options as core options,” said O’Brien. “We’re taking a look at certain asset classes, whether offering an active option, a passive option or both.”
One such asset class is large-cap equities, where offering only a passive option would be the way to go since active managers have struggled to add value, she said.
Click here to continue reading the full Pensions & Investments article.
FundFire: Small Endowments to Outperform Large Peers in FY23, Consultants Say
NEPC’s Kristin Reynolds was quoted in a recent FundFire article to discuss the impact that the lag in private equity valuations and venture capital returns will have on endowments this year. View the article on FundFire’s site here.
As universities begin to release their year-end results, investment consultants and outsourced chief investment officers expect small endowments to post better returns than their large counterparts.
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The poor venture capital returns are due to a lag in valuations, the same delay that caused them to outperform public equities in 2022. Now, private equity’s valuation lag has hurt the overall value of the asset class in the year-end results, while public equities posted strong results, NEPC Partner and Practice Group Director Kristin Reynolds said.
“I expect that endowments with higher levels of private markets will trail those with higher levels of public markets by a pretty large margin,” she said.
Read the full article on FundFire’s website here.
FOX Business: Chevron CEO: Oil Will Break $100 per Barrel 'Soon'
NEPC’s Jennifer Appel was quoted in a recent FOX Business article which focuses on how rising crude prices could create a new inflation headwind. View the article on FOX Business’ site here.
Chevron CEO Mike Wirth told Bloomberg that the price of oil “probably is headed for the $100 mark soon amid tightening supplies.”
Production reductions from Russia and Saudia Arabia have West Texas Intermediate (WTI) trading above $90 per barrel, while the global benchmark Brent Crude is hovering at $94 per barrel.
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“Higher energy prices have a significant impact on headline CPI, and we expect these pressures to flow through to other aspects of inflation in the coming months,” Senior Investment Director of Asset Allocation at NEPC Jennifer Appel told FOX Business. “A sustained uptick in inflation resulting from gasoline prices will complicate the Fed’s efforts to curb inflation and may introduce an upward bias into interest rate expectations.” The Federal Reserve will announce its decision on interest rates Wednesday at 2 p.m. ET.
Click here to continue reading the full FOX Business article.
Pensions & Investments: Sarah Samuels Named to Influential Women in Institutional Investing List
Congratulations to Sarah Samuels, CFA, CAIA, Partner at NEPC, on her inclusion in the inaugural class of Pensions & Investments Influential Women in Institutional Investing. Read more about how Sarah’s non-traditional background has driven her desire to help others rise up in the industry: View the article on Pensions & Investments’ site here.
Despite being in the industry for 19 years, Sarah Samuels said she had a “non-traditional career path.”
After graduating college as a German major with no industry internship experience, she started out as an administrative assistant at Wellington Management Co. She worked her way through several roles and companies before becoming a partner at NEPC LLC in 2019. In her current role, she leads a 45-person investment manager research team representing $1.5 trillion in assets under advisement and management.
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“Extremely hard work” was another factor to her success, she said. “I was told no many, many times for different roles or requests,” so “tenacity was important.”
Ms. Samuels said her non-traditional background is what drives her desire to help others rise up in the industry.
As a member of TBD Angels, Ms. Samuels invests in early stage ventures to help them grow. “For me, I have a focus on diverse founders, or organizations that have missions to improve diversity or social equity in our world,” she said.
Click here to read Sarah’s full Pensions & Investments profile.
Pensions & Investments: Need Career Advice? Here’s Hard-Won Wisdom
The inaugural class of Pensions & Investments Influential Women in Institutional Investing shared career advice they’d give to their younger selves. Our very own, Head of Investment Manager Research, Sarah Samuels, explains what she calls “30 seconds of bravery.”: View the article on Pensions & Investments’ site here.
P&I’s inaugural class of Influential Women in Institutional Investing shared what advice they’d give to their younger self, if they could go back in time.
What follows are some of the top answers:
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Sarah Samuels, NEPC, is a big believer in what she calls “30 seconds of bravery,” which she learned about nearly a decade into her career. “If there’s something that you’d like to do, but you’re too scared to do it — think about asking for a promotion, asking for a raise. So it’s something big in your personal life even, that it makes you sweat to think about doing it… Just do it for 30 seconds. It can hurt that bad. Only so much pain can happen in 30 seconds if you do that hard thing. And I promise you it’ll change your life.”