Art by Chris Buzelli

Kim Lew has rightly gained a reputation for innovative investing during her tenure as CIO of the Carnegie Corporation of New York. She says it’s driven by a willingness to put in the legwork—literally.

The year 2017 has been a big one for Lew. After five years of working alongside co-chief investment officer Meredith Jenkins, who left in 2016 to become Trinity Wall Street’s first CIO, Lew took over solo management of Carnegie Corporation’s portfolio. In the intervening year, Lew has made a name for herself, winning awards and building on her reputation as an innovative investor.

“Because of our size and our mandate, we have been able to do things that are perhaps a little more innovative or off the beaten track than some of our peers,” Lew tells CIO, to explain why her team has caught the eye of so many of her peers.

“For example, we have been very early investors in some funds, even being willing to do first-time funds. We’ve been able to work with managers on investment opportunities that you don’t often see a foundation getting involved in. That’s not to say they are wildly exotic, but we do like to be early sometimes to an opportunity or a theme. We are willing to put in the resources on diligence to be able to do that.”

The performance of Carnegie Corporation’s investment portfolio shows that having the freedom to get in early can lead to significant upside. The foundation has outperformed its peers and even the Yale endowment.

Lew and her team take a hands-on approach to sourcing investment ideas and managers. The investment team travels the world speaking with managers, CEOs, and other investors to understand what’s happening in the market.

When they aren’t on the road, they are working with the managers they invest in to understand what they see in the market and gain new insights.

By investing with first-time fund managers, Lew can add exposures to niche ideas and strategies that add diversity to the overall portfolio.

Lew says that having a team that is curious and willing to take a deep dive into investment themes has been critical to the Foundation’s success, and is part of what attracted her to Carnegie. For her, being an innovative CIO is about being involved with every investment idea, understanding how asset classes can work together, and being able to take a view on the total portfolio rather than simply following trends or headlines.

“I think there is a tendency broadly for limited partners to find comfort in the herd,” Lew explains.  “We will move together in and out of asset classes, or be overly cautious when things look bad. And to me, it is worth it to really get in the mix and talk through ideas with managers and others so that we can be contrarian and brave. This is the key to meeting our return hurdle.”

Lew explains that some of those contrarian moves have included taking high-conviction positions, like being almost 10 years ahead of other foundations regarding African equity opportunities. Lately, the foundation’s investments in opportunistic credit and research into Latin America have yielded positive results. “Our team is really focused on trying to understand what’s next so that we can translate that into our portfolio, and position it well,” Lew contends.