a lot of rope,” says Doug Brown, CIO at Exelon. “That’s been a
successful formula for him.”
Brown would know: He was already at Chrysler when Schmid
joined in 1986, and the two had work closely together during their
time at the automaker. Brown followed Schmid into the treasurer role
at Chrysler Canada before taking charge of the corporate finance
and capital markets department in the early 2000s. “We were peers,”
Brown says. “We worked together a long time.” When Schmid left for
Boeing, Brown was the obvious choice to succeed him as CIO.
“One of the things I’m most proud of at Chrysler is that I built a
team that really stood the test of time,” Schmid says. “We did a really
good job training people and moving people around.”
Brown served as Chrysler’s investment chief from 2003 until 2009,
when he left to take the CIO role at Exelon. He was then succeeded by
Bob Watson—another long-time colleague of Schmid.
And three more Chrysler staffers went on to become CIOs at
funds of their own: Robert Manilla at the Kresge Foundation in 2005,
Jay Laramie at PepsiCo in 2009, and Paul Cavazos—after working
under Schmid at both Chrysler and Boeing—at DTE Energy in 2007
(he then joined American Beacon Funds in 2016).
“Mark’s a good mentor to people,” McLean says. “He’s good at
At Boeing, one protégé-turned-CIO stands out in particular.
Andy Ward, the man who eventually succeeded Schmid as Boeing’s
investment chief in 2009, was a 32-year-old running alternative invest-
ments when Schmid came to the fund in 2003.
“I was this young investment professional worrying about my new
boss—just laying in bed at night imagining this fire-breathing dragon
coming in and taking over as the CIO,” Ward remembers. “Lo and
behold, the fire-breathing dragon ended up being Mark Schmid—
and my worries could not have been less founded.”
The two quickly became close, with Ward seeing Schmid not just
as his boss, but as a mentor and close friend. Schmid convinced Ward
to take the CFA exam (“Andy, being the great guy he is, passed it in
one try,” Schmid brags) and promoted him to the fund’s chief strategy
role—essentially making Ward his right-hand man.
“At the time, I was very hesitant,” Ward says. “I was very comfort-
able and confident in the role that I had, and—like everybody—feared
that maybe I wouldn’t be good at the strategy job or that I wouldn’t
like it. But Mark talked me out of those fears. He told me it would be a
great move that would benefit not just the plan and our organization,
but also me as a professional—and he was absolutely right.”
Together, Schmid and Ward developed a groundbreaking
strategy for Boeing’s pension: a hybrid asset-liability management/
endowment model focused on hedging against the fund’s liabilities
while still targeting growth through a combination of equities and
diversified alternatives. “We took the risk book from Chrysler and
blew it out,” Schmid says. The new strategic allocation was fully imple-
mented by late 2007—and was immediately put to the test.
“We had talked about how our strategy would protect the company
from downside risk—and that scenario immediately played out with
the great financial crisis,” Ward recalls. “It was of those are instances
where the strategy’s pros and cons played out right in front of us, and
to our benefit, the pros far outweighed the cons.”
By 2009, Schmid had proven himself not once, but twice: rein-
venting the investment process at both Chrysler and Boeing and
building risk management programs from the ground up while devel-
oping a deep bench of investment talent at each organization.
Leaving Boeing in Ward’s capable hands, Schmid said “yes” once
more—to the University of Chicago endowment.
To his brand new staff and investment committee, Schmid was
the ‘corporate guy.’ His investing background up to that point had
consisted more of asset-liability matching than Ivy League return
chasing. But after his time at Boeing—building out the staff, creating
the new hybrid strategy—Schmid was up to the challenge.
“Running a pension and running an endowment are more similar
than different,” he says. “We don’t have the defined pension liability
with mortality tables and all that, but we do have a requirement to pay
out 5% of the endowment every year in perpetuity.”
And so Schmid approached the university’s then-$5 billion
endowment the same way he approached Chrysler and Boeing’s
pension funds—with risk management in the driver’s seat.
First, he identified the constraints facing an endowment. “Turns
out university fundraising is really correlated to the stock market,”
Schmid says. “You have way more equity exposure than you realize.”
With these limits in mind, he determined how much illiquidity risk
and equity risk they could take without threatening that 5% cash
flow promised to the university—both in the long term and the
short term. “We dialed those risks back to more reasonable levels,”
Schmid continues—decreasing the equity allocation from 90% to
75% (including private equity and private real estate) and lowering the
illiquid portion of the portfolio to 35% from 45%.
“He took the full university financial circumstances into account
in crafting and thinking about investment planning,” Northwestern’s
McLean says. “As a University of Chicago alum,” Ward adds, “I’m
very proud to have Mark there doing great things for the university.”
“I’ve been here seven-and-a-half years now, and it’s been so great
to be at this university and work with such smart people,” Schmid says.
It seems third time is the charm for the veteran investment chief.
After 35 years of saying yes to change, he plans on staying at the
now-$7.5 billion endowment “as long at they’ll have me.”
“I’ve had a charmed career,” Schmid says as the Quadrangle
Club waiters come to take away the empty plates. “The fact that I
somehow landed in investments—I couldn’t have asked for anything
better. The people you work with are really accomplished people who
love what they’re doing, and there’s always something new to learn.
Being a CIO… it’s hard, but it’s not work.” —Amy Whyte