Chief Investment Officer

Innovation can comefromblendingandmanaging oals that can sometimes be at odds with each other. Tom Joy has done exactly that over the last year. The chief investment officer delivered superb returns, remained vigilant about risks in the market, and did so while hitting the vaunted ethical aims central to his organization.

As for the returns, they totaled 17.1% over the
year “despite maintaining a relatively defensive
position,” Joy told CIO. “There were many factors
that contributed to this, but what I was proudest
about was the successful active management
across the board, particularly in real estate.”
Being on top of signs of complacency in the
market is key. “We see many signs in the markets
of investors focusing too much on the return side
of the equation and not enough on the risks,” Joy
said. “We also feel it is a very good environment for
active management and currently hold very few
passive investments, despite the current growing
popularity of passive.”
The high valuations facing investors after
last year’s run-up in risk assets is another major
consideration. “We retain genuine diversification
across a broad range of assets classes, as a look at
our asset allocation will show. We are defensively
positioned across and within asset classes, holding
high cash balances,” Joy said. “Finally, we focus
on managing stakeholder expectations after such
a great run—the length of the cycle and the level
of valuations of risk assets mean, in our view, that
future returns will be much lower.”
The stellar investment returns come as Joy
supports his organization’s mission. “As the main
national investing body of the Church of England,
we seek to align the way we invest with the ethical
values of the Church,” Joy said. “It is our aim to
be at the forefront of responsible investment and
we engage with our managers across a complex
portfolio on their incorporation of ESG into their
processes.

“We have a head of responsible investment to
lead this work, and received the highest rating, A+,
from the UN-backed Principles for Responsible
Investment this year for our responsible invest-
ment strategy and governance.”
Climate change is a key initiative. “The transi-
tion to a low-carbon economy is our most-important
responsible investment objective,” Joy said. He
noted two major wins this year. The first was the
launch of the Transition Pathway Initiative in
January, developed with the Environment Agency
Pension Fund and the Grantham Institute at the
London School of Economics to track the alignment
of companies with goals of the Paris Agreement and
the National Determined Contributions submitted
by governments. The second accomplishment was
the passing of a proposal in May with 62% of the
Church’s shareholders support, asking ExxonMobil
to improve its climate change-related disclosure.
“This was an unprecedented signal from inves-
tors on the need for businesses to address climate-
related risk,” Joy said.

Having a great team is key to innovation. “As investment is all about people, the thing I’m most proud about organizationally is our ability to attract great individuals to join our team,” Joy said.

Delivering superb results while being highly cognizant of risks was just part of Joy’s accomplishments for the year. Meeting his organization’s mission and expanding his team to keep performance sustainable were also key. —Vishesh Kumar