Mark Evans

Mark Evans is a 13-year veteran at Cambridge Associates, and serves as an outsourced chief investment officer (OCIO), particularly with endowments and foundations.

One of the largest problems facing these types of institutions, Evans says, is the “perennial issue.” “They are all designed to be perpetual institutions, and they’re all expending, and the real first order question that we’re always wrestling is how can we generate enough return at an appropriate level of risk that’s going to cover their spending,” he says. “So that 10, 20, or 30 years from now, the purchasing power is the same or better than it is today.

“In other words, we want to make sure we’re earning enough that we can protect against the erosion of purchasing power over time.”

Such a strategy could potentially include inflation-hedging assets, such as infrastructure and real estate, that are naturally befitting to the growth of the local economy the assets are situated in.

“When I think about inflation hedging, it’s a pretty broad net that we cast,” Evans says. “In a way, what we’re looking for are things that can generate a healthy return but do provide diversification benefits against our core equity exposure, which is our largest exposure in our portfolios.”

Another thing on Evans’ mind is the changing environment regarding demographics and climate change globally. “You think about the aging population in the US, the need for home health care, or evolving medical care, present opportunities in the health care space,” he says.

“When you think about climate change 20 years from now, you ask yourself do you really want to own real estate in coastal Florida? Or, with the drought in Africa, more and more people are moving into Europe, and we think about what the implications are for that.

“Those are longer-term things, and it’s difficult to express them in a portfolio per say, but by thinking about them, it can lead you to have a strategic direction for where you might want to be going,” he says. Such as, for example, real estate—you may say let’s increasingly shy away from areas where climate change might have a real impact.

“We may think about exiting these assets seven years from now and then that buyer thinks about the next seven years and all of a sudden you’re looking at a fairly long-time horizon.”

Evans notes that he’s keen to leverage Cambridge’s global network and offices, the use of which “allows me to see almost everything,” he tells CIO.

He also spoke of innovations in several industries, particularly in the biotechnology space. “The ability to decode the human genome much faster and much more cheaply than before, combined with a massive increase in computing power, means there’s a new ability to shorten the pathway to drug discovery, and be much more efficient in doing it.”

“I think there’s an interesting long-run opportunity to partner with someone who can sort through all of the ideas out there and find the most promising companies to back.”

Evans brought up China also, saying that the market is so opportunistic and large that “you can’t really ignore it.”

“There’s pretty much everything going on in China, the challenge is to sort through it to find the managers who are backing great companies, and are the type of managers who you can really partner with.”

By Steffan Navedo-Perez