Russell Investments Changes Up Leadership Structure

Kate El-Hillow

Russell Investments has appointed a new global chief investment officer and president, amid other leadership changes at the firm.

The consulting firm appointed Goldman Sachs’ Kate El-Hillow as its new global chief investment officer, as well as Kevin Klingert, previously at Morgan Stanley, as its president. Both appointees will report to Chairman and CEO Michelle Seitz and serve on the executive committee.

“Kate and Kevin join us at a critical time,” Seitz said in a statement. While Russell Investments is an 85-year-old investment firm, the company is looking to expand its global franchise. Seitz noted that just one in four asset owners with less than $10 billion in assets have outsourced their investments.

Kevin Klingert

The new hires will “enable Russell Investments to capture the industry’s growth while leveraging our expansive global franchise to provide a frictionless experience to our clients,” Seitz continued.

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As investment chief, El-Hillow will oversee portfolio management, implementation, and research at the investment division. She’s taking over the role of Pete Gunning, who will be the new vice chairman and strategic relationships officer at the firm. Gunning is going to explore responsible investing practices with the firm’s global clients.

Gunning has held the investment chief position at the firm more than once. In 2018, he took over the role when Jeff Hussey stepped down after 27 years in the organization. Before that, Gunning held the seat from 2008 to 2013, after which he headed up the outsourced CIO’s Asia-Pacific division. He has been with Russell Investments for 25 years.

As president, Klingert will oversee the daily business execution at the firm. He is taking over operations from former Chief Operating Officer Rick Smirl, who left the firm last month for asset manager Virtus Investment Partners.

Both El-Hillow and Klingert have extensive prior experience in the finance sector.

El-Hillow previously spent 17 years at Goldman Sachs, where she was most recently the deputy chief investment officer of its $150 billion global multi-asset solutions business. Before that, she was a senior portfolio manager for the firm’s outsourced CIO portfolios and head of portfolio management and trading.

Prior to her career at Goldman Sachs, she spent eight years at JPMorgan Chase, where she was in the bank’s asset allocation business as client portfolio manager and chief operating officer.

Most recently, Klingert was an independent trustee of Six Circles Funds, a suite of mutual funds designed for discretionary portfolios at JPMorgan. Previously, he was at Morgan Stanley Investment Management for a decade.

He served in several roles at the firm, including chief operating officer, chief investment officer of fixed income, and head of liquidity and managed futures. Previously, he spent 15 years at BlackRock, where he launched its tax-exempt fixed income business in 1991.

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Tags: Asset, Asset Management, Investment, Jeff Hussey, Kate El-Hillow, Kevin Klingert, Michelle Seitz, Peter Gunning, Russell Investments

The Ohio Retired Teachers Association (ORTA) is suing the $80 billion Ohio State Teachers Retirement System (Ohio STRS) to force it to turn over documents in an ongoing audit launched by the association. ORTA says Ohio STRS has not released public financial information required for the audit.

ORTA has raised $75,000 to contract pension audit expert and former Securities and Exchange Commission (SEC) attorney Edward “Ted” Siedle to conduct a forensic audit of Ohio STRS. In February, the law office of former Ohio Attorney General Marc Dann submitted a public records request on behalf of Siedle to Ohio STRS requesting records related to the pension’s investment managers, investment consultants, performance compliance auditor, investment cost monitor, financial auditor, custodians, board, and staff.

“STRS Ohio received the public records request in late February and to date has provided 140 documents, totaling thousands of pages,” Ohio STRS spokesman Nick Treneff told CIO. “STRS Ohio has fully complied with the law in response to this request and will vigorously defend any lawsuit filed in this matter.”

ORTA said that although Ohio STRS provided hundreds of pages of documents, it has refused to include key documents about the pension fund’s investments in private equity and hedge funds. ORTA says the documents it is seeking are critical to Siedle’s ability to understand the value and appropriateness of the investments. The association said many of the public records were withheld at the request of the investment managers and that Ohio law requires that the records be provided to the public on request.

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“After months of denials of requested information and slow walking the responses, the decision has been made to file a lawsuit to compel transparency,” ORTA said.

One of the reasons the association is seeking to audit in the fund’s management is because of the revelation in March that Ohio STRS lost at least $525 million from an investment in private equity firm Panda Power Funds.

Robin Rayfield, executive director of ORTA, said he reviewed the investments of Ohio STRS and found that the losses from Panda Power could be even worse than expected. He said the pension fund invested in five other funds that may have also put additional money into Panda Power, and that, as a result, Ohio STRS’ losses from the investment could be as high as $1.5 billion.

While Ohio STRS says the loss is insignificant compared to the total asset value of the retirement fund, Rayfield said the loss had been unreported for years and would have paid for more than two years of cost of living adjustments (COLAs) for retirees, which were eliminated in 2017.

Rayfield also said that Wade Steen, a certified public accountant (CPA) appointed by Ohio Gov. Mike DeWine to serve on the Ohio STRS Board, asked the pension fund’s officers “some difficult questions” during a recent meeting.

Rayfield said that based on their responses, Steen concluded that the pension’s audits are not actual audits, but merely reviews of the information that Ohio STRS feeds the company performing the service. And when Steen sought facts to back up Ohio STRS’ claims that fund manager bonuses are based on performance benchmarks, Steen determined that there are no actual benchmarks used to determine bonuses.