|Creating Sustainable Funds to Handle Unforeseen Investment Risks
marcus evans Summits (ACN Newswire)
2012-05-23 New York, NY, May 23, 2012 - ( ACN Newswire ) - "Knowledge is the finest risk management tool in the endowment space," says David Holmgren, Chief Investment Officer, Hartford Healthcare. We will never be able to control all risks, so knowing our limitations prevents becoming prey from stagnant approaches to safety. Our ultimate job as Chief Investment Officers (CIOs) is not to create funds but to create sustainably, he adds.
A speaker at the upcoming marcus evans Foundations & Endowments Investment Summit Spring 2012 in Wheeling, Illinois, July 23-25, Holmgren discusses manager selection, obtaining higher returns and the fiduciary role of CIOs.
- Given the low rates in the market, where are investors able to obtain some return?
There are attractive investment areas that can be sourced for any institutional investor depending on their fund's framework and mission. Traditional long-only equities are being ignored given the lack of returns but hold extremely promising pockets of opportunity. Within the credit markets there are dislocations showing potential for secured loans and within the real assets there are many interesting monetary inflationary hedges.
There is no silver bullet. If CIOs do their homework, they will find promising areas to invest. There are multiple roads to get to the same destination. We are looking for the road that best aligns with the policy framework we have mapped out.
- What risk management strategies would you recommend?
First off, investors must get back to the basics. Are all internal policies and procedures up to best practices? Have valuation systems been checked recently? Have holdings been stress tested recently? We must remove the old rigid control mentalities and understand that the market is a lot more broad and intangible than previously thought. We will never be able to control all risks but a strong framework is very helpful.
Secondly, knowledge is the best risk management tool in the endowment space. Avoid the trendy flavors of the month; if you do not understand the investment, then it is not for you. We must fully comprehend every dollar being committed, how the investments are being managed and who is managing them.
- How should investors select managers?
Very carefully. It is a rough environment and investors should be cautious as pressure builds to generate returns. CIOs serve a fiduciary role and must improve due diligence across the board. The manager sourcing game is a lot harder nowadays and some of the shortcuts that have traditionally been taken are no longer tolerated. I am biased towards active management and within manager selection protocol I feel strongly about qualitatively measuring up the caliber of the management.
- What is your outlook for the future?
The endowments space is rather competitive. The top quartile performers will be those that are the most self-aware; those without blinders will best navigate in today's turbulent investment environment.
Better alignment to the portfolio and endowment's mission is crucial. CIOs must re-address from the ground up what best practices mean and continually build upon it.
About the Foundations and Endowments Investment Summit Spring 2012
This unique forum will take place at the Westin Chicago North Shore, Wheeling, Illinois, July 23-25, 2012. Offering much more than any conference, exhibition or trade show, this exclusive meeting will bring together esteemed industry thought leaders and solution providers to a highly focused and interactive networking event. The Summit includes presentations on the rebounding investment market, developing innovative asset allocation strategies and forging groundbreaking tactics for the future. For more information please send an email to email@example.com or visit the event website at www.foundations-endowmentssummit.com/DavidHolmgrenInterview
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marcus evans Summits are high level business forums for the world's leading decision-makers to meet, learn and discuss strategies and solutions. Held at exclusive locations around the world, these events provide attendees with a unique opportunity to individually tailor their schedules of keynote presentations, think tanks, seminars and one-on-one business meetings. For more information, please visit www.marcusevans.com.
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