How have you been a change agent at
your organization? What have you done
that you’re particularly proud of?
It’s been a successful three years here at Textron, but that follows a couple years being
involved with the portfolio from a previous
consulting role. A new CIO brought a different investment philosophy to our Pension
portfolio in 2013, and I’m particularly proud
of reshaping our investments to better fit his
more direct and active style of investing. This
has included pairing high conviction active
managers with low-cost, liquid beta sleeves to
more easily shape desired portfolio tilts.
What is the asset class or investment
that keeps you up at night, and why?
Beta keeps me up at night. It’s so important, but it’s such a fickle friend for all of us.
No matter how smart all our strategies and
choices can be, there’s this tendency to feel
like a turkey that doesn’t know if it’s April
or November. We work every day to be prepared to avoid the next major drawdown,
and we also work hard to catch every good
wave we can.
What methodologies have you adopted
within your institution?
We’ve built a good model for core/satellite
investing into our portfolio. We’ve also tried
to expand our opportunity set for investment
decision making. For example, we try to
think beyond the given labels of asset classes
and maintain a view of how we can balance
trickier, less-obvious budgets. Like illiquidity
vs. liquidity, long vol vs. short vol, lower fee
vs. higher fee, factor exposure, capital stack
Where do you fall in the passive vs.
Squarely in the middle. For everything, turn,
turn, turn, there is a season, turn, turn, turn.
What are the changes you’d like to see
the institutional investing community
make in 10 years?
I’m typically not one to prescribe change, I
mostly try to learn what exists and why, and
try to navigate effectively within the constraints. One obvious candidate is to try to
incentivize people to care more about long-term wealth compounding than short-term
red or green numbers, but it’s a tall order to
combat human nature.
Who is a manager you don’t currently
work with whose brain you’d like to
Line ‘em up—so many, it’d be boring to
most people. I’d like to mention Patrick
O’Shaughnessy and Barry Ritholtz as people that might have found the answer to this
question…start an awesome podcast that
takes the sting out of a commute!
Ideally, where would that meeting take
The golf course, where real people can talk
for real without notes while trying to stay
active. Also, you get the opportunity to see a
person’s reaction to success/failure/challenge
happening 72-122 times within three hours.
What is the software investment tool
that helps you most?
It feels like an arms race out there in the
world of data now. Bloomberg, FactSet, and
FinViz each play an important role for me,
Director of Pension Investments, Textron
In questioning conventional wisdom Erik elevates the
conversation; he’s a second level thinker. I think he’s
a great investor.
but that’s alphabetical and there are different price points.
What would improve the relationship
between you and managers?
Just enough truth. That’s sometimes different than the right answer, but is typically the
bedrock of a long-term, mutually beneficial
relationship. I do feel like we have great relationships in our book, hopefully that’s a two-way sentiment.
Why did you choose your current path?
I seem wired to create whole things from
individual pieces, I can tend to have a real
curiosity for the way things work, and I’m a
bit of a second-generation participant, so I’m
lucky to be blessed with terrific guidance. It’s
a real honor to be able to work with all our
peers on every side of the table each day, and
that makes it easier to get out of bed in the
morning looking forward to the challenge.
But, that said, I love weekends, too.