Sunday, May 01, 2016

While Legislators Plot Raiding Permanent Fund, Russell Read, The Fund's New CIO, Starts May 9

 image from Professional Pensions

It looks like the Alaska Permanent Fund Corporation has done a pretty good job of hiring a new Chief Investment Officer.  Russell Read, who is due to begin his duties in Juneau May 9, has had an
illustrious career and  Alaskans should be pleased with the man who's coming to manage our $52 billion fund.

But I suspect few have any idea of who he is or what he brings to the job.  Here are a couple of positions he's had at important funds,  and below is more information about these funds and about Read.  There's also an excerpt from a recent interview regarding his new position.
  • Chief Investment Officer of CalPERS - the California Public Employees Retirement System, the largest one, with some $300 billion (two years)
  • Chief Investment Officer and Deputy Chief Executive of the Kuwait City-based Gulf Investment Corporation (GIC) ($7 billion) which is the Development Investor created and owned by the six GCC countries of the Arabian Peninsula. (four years)

Here are more details about CalPERS from Wikipedia:
As of June 30, 2014, CalPERS managed the largest public pension fund in the United States, with $300.3 billion in assets[1] CalPERS is known for its shareholder activism; stocks placed on its "Focus List" may perform better than other stocks, which has given rise to the term "CalPERS effect". Outside the U.S., CalPERS has been called "a recognized global leader in the investment industry",[6] and "one of America's most powerful shareholder bodies”.

The Security and Exchange Commission's bio of Read described his duties at CalPERS and at a previous position:
Russell Read is [I'll leave their present tense of the original bio]  the Chief Investment Officer for the California Public Employees’ Retirement System (CalPERS). He oversees all asset classes in which CalPERS invests, including domestic and international equity, Treasury and agency debt, high yield bonds, mortgage backed securities, CDOs, real estate, corporate governance, currency overlay, securities lending, venture capital, leveraged buyouts, and hedge funds. Mr. Read is responsible for the strategic plan for CalPERS’ Investment Office including tactical asset allocation, risk management, business development, budget authority, new investment programs, trading technology, staffing, and back office operations. Mr. Read joined CalPERS on June 1, 2006 after previously serving as Deputy Chief Investment Officer for Deutsche Asset Management and Scudder Investments. He was responsible for more than $250 billion of retail and institutional investments in equity, fixed income, and commodity-based products. He also was Chairman of the Deutsche’s Americas Investment Committee and principal investment representative to the firm’s retail mutual fund board of trustees. He previously served as Global Head of Quantitative Investing and Research at Zurich Scudder and has held senior investment positions with the OppenheimerFunds, CNA Insurance, Prudential Insurance, and First Chicago.
Here's what Bloomberg says about the Gulf Investment Corporation:
Gulf Investment Corporation is a venture capital arm of The Cooperation Council for the Arab States of the Gulf specializing in direct investments in private companies and new business ventures. The firm prefers to invest in the utilities sector with a focus on power, water, telecommunications, and other infrastructure; chemicals and metals; diversified industrials; materials; healthcare; agriculture, consumer staples; Industrial Development; consumer discretionary; financials; financial services, petrochemicals, steel, and electricity. It seeks to invest in GCC countries. It also invests in corporate finance projects. Gulf Investment Corporation was founded in 1983 and is based in Kuwait City.
Investeurope has a bio of Read when he was a speaker and it includes some additional information:
Dr. Read has been a resource for regulatory agencies internationally, state governments, the US Congress, and the US Senate for over two decades and served as Chairman of the Investors’ Committee of the President’s Working Group on Financial Markets under Treasury Secretary Henry Paulson.
He is currently a Governor of both the Hedge Funds Standards Board (London) and the New York Academy of Sciences (NYAS). He was named as one of America’s 30 most influential players in business and finance by SmartMoney (November 2007) and #35 on Institutional Investor’s list of the 75 most effective chief executives.

That Dr. before his name came with a Phd in Political Economy from Stanford.  His prior education includes an undergraduate degree in Statistics and an MBA in Finance and International Business, both from the University of Chicago.  He has a second masters in Economics from Stanford.

And here's an interview with Read, published a couple of days ago, about what he's thinking as he approaches his Alaskan job.  Here's the end of the interview:
Skorina: APFC earned 4.9 percent in FY 2015; maybe not as strong a performance as they would have wished?
Read: Real estate did well, 9.8 percent on about 10 percent of the portfolio. And private equity was up 16.5 percent. U.S. equities were up 7.2 percent. But the more pertinent question is: where are the income and growth opportunities to come from in the years ahead, given this strange bond environment.
For a century, bonds were the bedrock of investments and retirement income. Since 2008 that has been turned on its head. Now, bonds are low-yield and high-risk. So, at a fund like APFC, we need to look for opportunities where size matters and we have an edge, things like real estate, infrastructure, or geographic opportunities.
Skorina: What do you mean by geographic opportunities?
Read: Well, let’s look out over the next twenty to thirty years. We’re long-term money, so where are long-term opportunities? Where is the growth to come from? Sixty 60 percent of the population growth over the next 35 years—to 2050—will come in Africa and south Asia, mostly in cities.
My job in Kuwait kept me hopping around Africa and Asia looking at infrastructure projects, and I’ve been able to see a lot of this growth first hand. There are all kinds of frustrations and obstacles you can’t imagine compared to the developed world, but the cities are still going up.
So what sectors and companies will benefit if you’re going to build new cities? It will be technology, communications, and infrastructure.
Skorina: I seem to recall that you’re an ardent musician. Do you still play the trumpet and sax? I imagine those long, cold winters in Juneau should give you plenty of time to keep your lip in shape.
Read: Funny you should mention that Charles. I’ve been looking into it and, as it turns out, Juneau has an active and sophisticated music community. I’m looking forward to my new home as well as my new job.
The original announcement of Read's appointment by the Alaska Permanent Fund Corporation said he was starting on May 9, though Skorina says he gets to Juneau on May 1.

I'd also note that I have never met Mr. Read, but he is a good friend of a friend of someone I know well.

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