“Ryan’s strong analytical background and extensive experience in institutional investments has led to his success at Children’s Health. The health care industry is constantly evolving, and Ryan’s commitment to consistently managing our investment strategy amidst these industry changes is what makes him an outstanding leader. We appreciate his hard work to help us continue our mission to make life better for children.”
– Rich Goode, President, Corporate Services, and Chief Financial Officer, Children’s Health
Putting the well-being of the Children’s Health Hospital’s $1.8 billion portfolio at the top of his priorities, Head of Investments Ryan Bailey is an experienced financial analyst whose career spans a multitude of different portfolios from foundations to asset management firms. His most notable achievements that garnered him a spot on this year’s NextGen series generally gravitate around his adept approach towards alternative investments and pushing against the grain.
As the institution’s first investment officer, Bailey drove the development of a number of different foundational procedures such as creating the due diligence process, building a manager evaluation framework, formatting the inaugural strategic asset allocation, and working on competitive strategies that would drive strong return figures.
Previously he worked at Cross River Advisors, the Meadows Foundation, Sabre Holdings, and Merrill Lynch. He also founded a trading company in the World Trade Center in 2000 and is a survivor of the attacks. Deeply intellectually curious, his educational designations include CAIA, CFA, FRM, and CMT. Bailey discussed with CIO how a robust alternative investment program can generate strong alpha.
CIO: What makes 2019 an interesting investing climate? How are you handling it?
Bailey: The current investment climate is interesting since you have a trade war, a yield curve that is shaped like a J curve, and very few assets that are attractively priced. We are handling it by running our allocation close to target, shortening the duration of our credit portfolio since cash has an attractive return, and we are focusing on long volatility strategies in our diversifying strategies portfolio since higher vol. is just a Tweet away.
CIO: After this year, what are the largest opportunities and the largest threats you see on the horizon?
Bailey: The largest opportunities on the horizon are China A shares, which is a market that is 85% retail and is receiving a good deal of stimulus. In addition, value relative to growth is attractive, since the dispersion between the two is at one of its highest levels.
The largest threats are a long trade war and/or a policy mistake by the Fed. I believe that we have grown to trust the Fed and its guidance, but if there was mistake or loss of confidence, the ramifications could be extreme. In addition, a long, drawn-out trade war with higher tariffs has the potential to slow down growth, and contribute to possible geopolitical events.
CIO: How did you arrive at your current position? And why did you choose this part of the financial services industry?
Bailey: I arrived at this position through hard work, some luck, and people willing to give me a chance. I chose this part of the financial services industry, since it gave me the opportunity to analyze markets, invest assets, and help a worthy cause.
CIO: What was the most important strategic allocation of your career?
Bailey: I would have to say adding private assets to the portfolio when I first arrived, but most would say that just made sense. My other answer would be a strategic allocation to China A and China VC. It is the second-largest economy in the world, but it is underrepresented in world market cap.
CIO: Tips for money managers who want to work with you, especially what not to do.
Bailey:
- Don’t call and send an email, since most of the time voicemails show up in your email, or they are transcribed.
- Don’t ever let your investors be put in a dangerous situation. I was once stuck in an elevator with a GP and a sedated baboon that was waking up.
- Keep the relationship. Just because something is not a fit today, doesn’t mean it is not a fit tomorrow.
CIO: Biggest goof a money manager has made with you?
Bailey: After reading a manager needed a succession plan; the manager’s teeth fell out in the middle of the due diligence meeting.
CIO: Who in the financial world would you like to have lunch with and why?
Bailey: I would most like to have lunch with Robert Smith of Vista Partners. He does unbelievable and meaningful things like paying off all the student loans of the 2019 graduating class of Morehouse College. He also has made over 300 investments and has never lost money.
CIO: What are changes you’d like to see the institutional investing community make in 10 years?
Bailey: I would love to see more diversity on the GP and LP level. I would also love to see more innovation in the tools available to allocators. I believe artificial intelligence and machine learning could make us much more efficient if they were applied to what we do every day.
CIO: What are your hobbies not correlated to work?
Bailey: Reading non-fiction, muscle cars, fitness, BBQ enthusiast.
