Exploring Investment Strategy and Asset Allocation Roles in Pension Funds and SWFs
Hi everyone! I’ve spent several years in sell-side roles and am currently considering new opportunities.
I recently discovered openings for asset allocation and strategist positions at pension funds, and I’m eager to learn more about what these roles entail.
- Do these positions primarily focus on asset class, sector, geography, and vintage allocations? Is there a strong emphasis on macroeconomic factors compared to other roles within a pension fund, especially if there’s already a macro economist on the team?
- Some pension funds, like those in Canada, are relatively active in their investment approaches. How does this differ from state pensions, where investment choices might be broader?
- How does working in this capacity compare to roles at outsourced Chief Investment Officers like Mercer and Cambridge Associates?
- Is this type of role versatile enough for easy lateral moves to other firms, or is it a niche area with limited opportunities? What are common and achievable exit paths for someone in this position?
- Can anyone recommend resources or reading materials to help me better understand this sector?
Thanks in advance for your insights!
One response
Hi there!
Your curiosity about transitioning into asset allocation or strategist roles at pension funds or sovereign wealth funds (SWFs) is well-founded, as these roles can offer a unique blend of investment strategy and long-term planning.
Job Focus:
1. Asset Allocation: Yes, the primary responsibility involves deciding how to allocate assets across various classes (equities, fixed income, alternative investments, etc.), sectors, and geographical regions.
2. Macro Focus: The role is indeed macro-focused, especially if you’re allocating across different asset classes. Even if a firm has its macro economist, your insights as a strategist will still be valuable in implementing the asset allocation strategy in line with macroeconomic views.
3. Active vs. Passive Management: Canadian funds, such as Canada Pension Plan Investment Board (CPPIB), are known for being more active and may require a deeper dive into specific sectors or opportunities. State pensions might lean more towards a passive approach due to regulatory constraints and the focus on liability-driven investing.
Comparison to Outsourced CIOs:
– Working for a pension fund can be quite different from a firm like Mercer or Cambridge Associates, which may involve client relationship management and less direct involvement with actual portfolio management. In-house roles typically allow for a closer connection to the fund’s specific needs and objectives.
Lateral Opportunities:
– The skill set gained in these roles is quite transferable, making it easier to lateral. However, the pension fund space can be somewhat niche, which can limit headcount and opportunities. Common exits include positions in private equity, hedge funds, or investment consulting roles.
Recommended Reading:
– “The Essentials of Risk Management” by Michel Crouhy, Dan Galai, and Mark S. Rubinstein for understanding risk in investment strategies.
– “Asset Allocation: Balancing Financial Risk” by Roger C. Gibson to get insight into strategic allocation.
– Research publications from financial institutions or think tanks that focus on pension fund strategy can also be insightful.
Best of luck with your transition, and don’t hesitate to reach out if you have more questions!