2018 NextGen

“I have historically performed strategic shifts somewhat ad hoc —something catches my attention as being unusually risky or highly opportunistic, which leads to analysis and action. I wanted a more consistent, full-time effort in this arena that required expanding on past efforts. Kristina has fulfilled my vision admirably and is dedicated to adding asset allocation alpha to our predominately security selection-oriented approach.”

— Ronald D. Schmitz, CIO, Virginia Retirement System

Over the next year, the Virginia Retirement System (VRS) will be focused on integrating new partnerships into the plan. As director of portfolio strategy, Kristina Koutrakos said she’s preparing for the road ahead by also developing resources for the late-stage business cycle. In the midst of funding three new strategic partnerships that will launch within the summer months, the Cornell MBA grad has a goal to increase the plan’s connectivity and cross-functional viewpoints. Fascinated by big data analytics and machine learning, before joining VRS, she worked at large management firms such as BlackRock, and familiarized herself with the resources available. The experience helps her bring ingenuity to VRS.

Koutrakos has more than 15 years of experience deploying capital and investing across market cycles and asset classes. She started her career as on the portfolio management teams at Western Asset Management and then BlackRock, went on to become a managing director at Manchester Capital Management, and a managing partner at Kyria Capital Management before joining VRS in 2015. She is a passionate advocate of a diverse workforce and the benefits it can bring to her team.

CIO:  What are the accomplishments you are most happy to have achieved recently, and why?

Koutrakos: We are in the process of funding three new strategic partnerships for the Plan. The goal is to increase the connectivity across our investment programs and continue to integrate more cross-functional viewpoints into our investment processes. We have been building out this effort with the help of our management committee for the better part of the past year and I am incredibly excited to see it launch this summer.


CIO: What would you be most excited to accomplish in the year ahead, and why?

Koutrakos: I’m excited about the same thing every year—finding new ways to improve our processes and diversify our returns streams. We’re very lucky to be building off of a strong base given the VRS’s commitment to innovation and advancement. Over the coming year, we will be focused on integrating our new partners into the portfolio. We believe their insights across a range of topics will help us better manage the Plan for our beneficiaries. As we move into the later stages of the business cycle, we are focused on continuing to develop resources to navigate what is typically a challenging period for investors.

CIO: What’s the most rewarding aspect of being an asset owner?

Koutrakos: I truly love the direct connection to the beneficiaries. My neighbor, several friends, and of course the teachers at my children’s school, are all members of the retirement system. I tell my kids that I work for them. It gives me a tremendous sense of purpose.

CIO: What’s the most challenging?

Koutrakos: Early in my career, I was lucky to work at some of the largest asset management firms in the world and was able to take advantage of their vast resources. As I said above, working in the public sector is extremely meaningful, but resource constraints can present challenges at times. It requires a bit more ingenuity to get certain things done as a result. Luckily, our board is incredibly supportive, we have strong partnerships, and are adept at leveraging the information and resources we do have to benefit our members.

CIO: What are you most hopeful about in the future of the industry?

Koutrakos: Technological change. The advancements we are seeing right now have the potential to reshape the way we live. And how we invest. We are especially interested in looking for ways to integrate new technologies into our processes and seek to align ourselves with firms that are committed to staying ahead of these advancements. The ways in which our managers are incorporating things like big data analytics and machine learning into their processes is fascinating. I am hopeful that these innovations will unlock new sources of both return opportunities and risk mitigation as they develop.

CIO: What are you most cautious about?

Koutrakos: The same thing, technological change. The pace of advancements we are starting to see can be very disruptive. It is a challenge as a long-term investor to think through the potential winners and losers, and position our portfolio accordingly. Artificial intelligence has disappointed people for decades, but the rate of progress in the past few years has been astounding. The implications are significant and far-reaching, in both positive and negative ways. I spend most of my time thinking about the positive, but historically periods of change like we are currently seeing have led to periods of great uncertainty before all of the benefits are felt.

CIO:   As a leader, what are the most important aspects of the industry you hope to change over your career?

Koutrakos: If I could in some way help to increase participation of women and minorities in senior investment positions, I would be very happy. It is surprising to me that our industry cannot seem to change in this regard. The legal profession, medicine, even the military have seen the share of women and minorities in senior positions increase, in some cases by orders of magnitude, over the past 20 years. Investments has barely changed. Diversity helps returns, increases creativity, and is a useful mitigant against groupthink on investment teams. Quite frankly, it just makes us better collectively. There is a degree of irony that our industry is in many ways the epicenter of capitalism and yet we continue to constrain our potential in this manner.

CIO:  If you had one piece of advice for your peers, what would it be?

Koutrakos: Always look for ways to improve and continue to grow your skills, especially the soft skills. People underestimate the importance of interpersonal skills in leadership. At some point, your technical abilities are no longer going to be what you need to succeed. You have to be able to motivate your colleagues, find ways to adapt to their sensitivities, and work with people through conflict and disagreement. And it requires humility. I’ve learned there is always room for improvement, even when I think I have it figured out. It is a continuous process.

CIO:  What are the biggest current trends you are seeing that have surprised you?​

Koutrakos:  The combination of the current technological rate of change and the rising tide around wealth inequality and populism. These had been latent for a long time, but over the past two years, they seem to have reached a new inflection point. I don’t think this is about a typical cycle. Instead, I’m of the mind that we are seeing a structural change happening in both technology and politics as meaningful and potentially impactful as we saw in the early 20^th century. And it seems to be accelerating. We live in very interesting times and they look to be getting more interesting by the day.