How have you been a change agent at
your organization? What have you done
that you’re particularly proud of?
I am incredibly proud of the team culture
that we have built to support the Foundation’s mission. As a private philanthropy, the
W.K. Kellogg Foundation is committed to
ensuring all children, families, and communities—regardless of race or income—have
opportunities to reach their full potential.
As a small team of generalists, we have
enhanced our effectiveness by focusing on
improving our decision-making process,
investment philosophy by asset class, ability
to collaborate, and our operational capabilities. Given our team-oriented culture, every
success is shared.
Within our team approach, I was a
strong advocate for starting a co-investment
program. The program has grown into a
multi-asset class, global effort that enables us
to improve our net-of-fee portfolio returns.
Our co-investments benefit from the deal
flow generated from being one of the largest
US private foundations, the generalist model
to evaluate opportunities unconstrained by
allocation buckets, a nimble decision-making
process, and a strict investment discipline.
One of our first investments showcases
the potential benefits. We upsized a high
conviction idea under attractive terms and
already monetized it. The manager benefited from a stronger client relationship that
led us to seeding a new strategy. The close
relationship also inspired this manager to
find its own way of making a difference in
the communities the foundation serves.
What is the asset class or investment
that keeps you up at night, and why?
On a long-term view, the auto industry. The
sector is ripe for disruption. Given the size
of the industry, there could be a number of
investment opportunities from the long and
What methodologies have you adopted
within your institution?
I led an effort to implement risk management
tools and processes. These tools let us look at
the entire portfolio in a standardized way for
the first time. Risk considerations have added
a new dimension to our awareness with a
quantifiable impact on our decision making.
Where do you fall in the passive vs. active
Our internal experience supports a bias
towards active management, but it is an arms
race to deliver excess returns net of fees consistently. The average investor without access
to the top active managers is likely better
off investing passively. Passive investing still
reflects a view of the world given the construction of passive benchmarks that overweight
the largest names. You cannot just set it and
forget it if you are investing passively.
What are some changes you’d like to see
the institutional investing community
make in 10 years?
I think LP and GP staffs could benefit from
more diversity to better reflect the world we
Who is a manager you don’t currently
work with whose brain you’d like to pick?
Director of Investments, W.K. Kellogg Foundation
(Battle Creek, MI)
Carlos has the patience and curiosity of a seasoned
investor. He knows markets and can go toe-to-toe
Zhang Lei from Hillhouse Capital.
Ideally, where would that meeting take
David Swensen’s office … you did say ideally.
What is the software investment tool
that helps you most?
The Undo button. Backstop and BarraOne.
What would improve the relationship
between you and managers?
For the most part, we have excellent partnerships. Transparency and occasional unjustifiable fees and/or terms tend to be the issues
that come up.
Why did you choose your current path?
I’ve always been fascinated by the capitalists
that shape our world. There is no better job
to see them in action while channeling some
of that ability on behalf of philanthropy.