Sheila Ryan

In her three-decade career in investments, Sheila Ryan has said the one constant is change.

“I’ve seen the private investment asset class really develop,” said Ryan, who has served as managing director of Cambridge Associates, an investment management firm, for nearly 12 years.

Ryan, who is based in Boston, said the most recent evolution has been a shift from a generalist market to one which has become increasingly populated by specialist firms. She has seen this dynamic impact all categories of private investments, including buyouts, venture capital, real estate, credit, and infrastructure.

“You’ll have a firm that all they do is invest in technology companies. Or, all they do is invest in consumer-focused enterprises. Or, all they do is invest in healthcare,” she said. “This industry specialization has created some interesting dynamics and, if leveraged effectively, compelling opportunities.”

Most notably: industry-specialized firms, especially in the buy-out and venture-capital space, with their broad and deep networks, tend to outperform generalist firms, Ryan said.

That’s because, she noted, those firms, “know what to look for; they know what to avoid; they know what they’re good at. They just make fewer mistakes.”

At Cambridge Associates, Ryan is part of the pension practice and works in private investments, which includes buyouts, venture capital, growth equity strategies, private assets, real estate, energy, mining, and private credit strategies, such as loan funds or opportunistic credit funds.

Most of her clients are pension clients, with a few endowments and foundations.

“Anything that’s private in nature, meaning that it’s illiquid, with a two- to six-year investment period, and a fund life of anywhere from seven to 12 years,” Ryan said.

Before joining Cambridge Associates, the investment veteran spent seven years at Intel Capital, as well as another 12 years before that at Salomon Brothers. Her expertise in investing isn’t lost on her colleagues.

“Sheila’s deep knowledge of the private investment landscape is a critical advantage in addressing our clients’ portfolio needs and objectives,” said Sona Menon, head of the North American Pension Practice at Cambridge Associates. “Her ability to identify and gain access to exceptional investment opportunities and ideas from around the world make her a truly valuable member of our team.”

Ryan, who has personally been investing in the private investment space for about 20 years, noted there is a huge dispersion of returns between different managers in the space, which makes her job interesting as she searches the landscape to identify top performers. She said clients can benefit from Cambridge Associates’ history in the sector and their use of an advanced data tracking system to help evaluate the performance of different managers, sectors, and geographies.

“Out of all the managers we see in a given year, several thousand, we end up getting a high conviction and closure on maybe 10% of those. So, 90% of them we’ll say no to,” she said. “We’ve got a pretty high bar.”

One area of focus of late, particularly for pensions, has been the private credit sector. The private credit asset class has expanded dramatically over the last five years as non-bank providers of capital have entered the market in a meaningful way. The number of strategies and funds currently available is remarkable, and varies across the market to include senior corporate bank loans, subordinated capital, consumer finance, transportation leases (aircraft, rail cars, autos), energy finance, infrastructure (debt to finance toll roads, airports, bridges) and distressed opportunities. These strategies are of appeal to pensions due to their income-generative characteristics, which help to offset a pension’s liabilities. Many of the underlying loans are floating rate, which have the potential to generate increasingly higher returns if and when interest rates increase. Many pensions have responded to the increasing opportunity set in private credit by creating a dedicated private credit allocation funded from either their fixed income allocation or a combination of the long equity and/or hedge fund portfolios. The private credit asset class is on a strong trajectory higher, which Cambridge Associates anticipates will continue for some time, to the benefit of its pension clients as they look to diversify sources of return in their portfolios.

By Kellie Ell