Power—specifically, who should wield it—is back at the top of national and international agendas. If it had ever really gone away.
Who should be the next leader of the free world: a property mogul-turned-reality TV star, or a former First Lady and Secretary of State? And who holds the power to decide when and how the UK will exit the European Union?
CIO doesn’t have the answers to these questions (but buy us a drink and we’ll sure tell you what we’d like the answers to be). What we do have is a pretty reliable formula to determine who holds the power in the asset-owning universe.
By power, we don’t mean the ability to send in tanks to crush your enemies—although imagine what a little bit of military hardware would do to those fee negotiations. In asset management, brains triumph over brawn.
Power for asset owners is influence: the ability to shape a portfolio, implement new ideas, share those ideas with peers, and encourage and develop others to do the same. New entrants this year—including Employees Retirement System of Texas’ Tom Tull (#25) and the Rockefeller Foundation’s Donna Dean (#59)—have demonstrated some or all of these abilities.
Also this year, CIO has identified a few of the asset owners who best demonstrate our five power ‘factors’ of innovation, talent development, collaboration, tenure, and fund size. From Canadian innovators to Dutch collaborators, these investors exhibit real power—without a wall-builder in sight.
THE EQUATION (Click for more information)
- 30 Innovation
- +30 Collaboration
- +20 Talent Development
- +15 Fund Size
- +5 Tenure
- =100 Overall Score
The Innovation Factor
Power in institutional investing stems from ideas, not brute force. Thus, ideas and innovation factor massively into our ranking of the world’s most powerful asset owners.
30for the invention of a new system of investing, examples being the Yale model or liability-driven investing.
20for a wholesale change of asset allocation, risk management, portfolio construction, and manager selection methods at the institution.
10for the beginnings of change to the portfolio, through one or more of the traditional CIO job responsibilities.
0for inheriting a traditional portfolio and—out of laziness, not conviction—doing nothing with it.
TIE BREAKER In case of a tie in total score, asset owners with a larger sum of innovation, collaboration, and talent development scores took the higher rank.
The Collaboration Factor
Influence is multiplied when ideas are shared, which in this industry most often occurs by co-investing, sitting on the investment committees of other institutions, actively participating in industry trade groups, publishing, and through ongoing engagement with other CIOs.
30for those that aggressively participate across all major collaboration outlets.
20for those that actively participate in knowledge sharing via some, but not all, collaboration outlets.
10for those that occasionally collaborate with their peers, but are generally insular.
0for complete insularity
TIE BREAKER In case of a tie in total score, asset owners with a larger sum of innovation, collaboration, and talent development scores took the higher rank.
The Talent Development Factor
The development of future CIOs is essential for this industry—and for anyone who claims to have power in it, for there are few better ways to expand your influence than by having strong teams and team alumni.
20for the continuous development of talent that either departs to lead other institutions or stays to enhance a team’s strengths.
10for moderate levels of talent development, defined as occasionally seeding the leadership of other institutions.
0for working in a one-person shop, where (by definition) talent development is not an option.
TIE BREAKER In case of a tie in total score, asset owners with a larger sum of innovation, collaboration, and talent development scores took the higher rank.
The Fund Size Factor
1 – 2<$1B (USD)
3 – 4$1B – $5B
5 – 6$5B – $20B
7 – 9$20B – $50B
10 – 11$50B – $100B
12 – 14$100B – $250B
15>$250B
TIE BREAKER In case of a tie in total score, asset owners with a larger sum of innovation, collaboration, and talent development scores took the higher rank.
The Tenure Factor
Time spent as an asset owner carries weight—the longer the better.
10 – 4 years
25 – 9 years
310 – 14 years
415 – 19 years
520+ years
TIE BREAKER In case of a tie in total score, asset owners with a larger sum of innovation, collaboration, and talent development scores took the higher rank.