“Joe is truly a superstar. He has the unique gift of being a strategic leader and results-focused. Today, he oversees $18 billion in the DB plan having expertise in liability driven investments, private investments and real estate. In additional, he runs our $8 billion dollar stable value portfolio in the DC plan that has one of the highest principal-protected crediting rates in the country. He is a great mentor and team player and always willing to take on a new challenge. In his spare time, he acts as a trustee for two UK pension funds, and sits on the board of both the Stable Value Investment Association and the Connecticut State Retirement Authority. “
—Robin Diamonte, CIO, UTC
Joseph Fazzino, senior director of pension investments at United Technologies, made his way onto the NextGen list this year through his leadership and persistence in improving the institution’s fixed income rotation and updating its legacy real estate portfolio. In his position, he oversees more than $18 billion in defined benefit assets and $8 billion of the defined contribution plan. He was the project manager for the UTC small balance retiree pension risk transfer and coordinated the 2014 and 2016 term vested buyout programs, settling $1.5 billion of pension liabilities.
In his role, he’s entered into 34 private equity partnerships and three real estate joint venture partnerships across an abundance of strategies. Prior to this position, in which he’s now worked for over 11 years, he was an assistant vice president of capital markets at Bank of America and an asset management analyst at JP Morgan. Fazzino has earned an MBA in finance at the Fordham Gabelli School of Business and a bachelor’s degree in finance and economics from Bryant University.
Fazzino speaks with CIO about his accomplishments to date, including his affinity for the high level of responsibility he’s been given and the importance of remaining humble.
CIO: What makes 2019 an interesting investing climate? How are you handling it?
Fazzino: I find inflection points in the cycle to be some of the more interesting times for investing because they require a balance of creativity and intuition. Technical distortions aside, yield curve inversions are a classic cue for investors to start thinking about positioning for the end of the cycle. At UTC, this means ensuring the effectiveness of our duration hedges, adding investment-grade spread diversification where appropriate, and looking closely at investments that offer a smoothing of returns (like private equity and private credit). Also important is ensuring that we’ve communicated the risks that this plan poses to our parent company, while offering up strategies to further reduce funded status volatility.
CIO: After this year, what are the largest opportunities and the largest threats you see on the horizon?
Fazzino: Because I identify myself as more of a bond investor, I’ll naturally start with threats: Government debt. Loose credit conditions. Inflation surprises. Those are the three things that keep me up at night—particularly how all three intersect with and drive volatility in the markets. On the flip side, a fear of missing out on a market rally is every investor’s biggest fear. But uncertainty can fuel opportunity if you take it as an opportunity to re-evaluate your investment goals.
CIO: How did you arrive at your current position? And why did you choose this part of the financial services industry?
Fazzino: I learned through a recruiter that UTC was hiring so I moved quickly. When I applied for the job (now 11 years ago), Robin Diamonte explained to me that for a person with an economic curiosity, and an eagerness to learn, this role is akin to being a kid in a candy store. And she was right. Every day is stimulating in different ways, but there’s also a seriousness to being entrusted with investing a large pool of capital for the benefit of a large group of retirees, a responsibility which I like.
CIO: What was the most important strategic allocation of your career?
Fazzino: It came early at UTC, but it was a team decision to add a significant allocation to high-quality long-duration corporate bonds in 2009, when spreads had just come off of their widest marks. They’re now 10 years shorter than they were, but I’m sure we still hold some of those bonds today.
CIO: Tips for money managers who want to work with you, especially what not to do.
Fazzino: Be humble and relatable. I don’t own a horse farm, and it is somewhat awkward to hear about yours.
CIO: Biggest goof a money manager has made with you?
Fazzino: In advance of a manager meeting, their marketing person sent me an email asking for “the Fazzino file”…. I still wonder what’s in that file.
CIO: Who in the financial world would you like to have lunch with and why?
Fazzino: Gillian Tett from the Financial Times—she’s got a way of boiling down complex topics into digestible fragments that help me sound smart when I repeat them. So I’d buy her lunch as a thank you.
CIO: What are changes you’d like to see the institutional investing community make in 10 years?
Fazzino: More diversity of backgrounds and areas of expertise on the plan sponsor side—perhaps some history and science majors to mix in with the finance and economic majors. I’ve really bought into the idea that having an eclectic and diverse team makes for a significantly richer output and experience.
CIO: What are your hobbies not correlated to work?
Fazzino: Princess gowns and tiaras—I’ve got two daughters under 5, their hobbies are my hobbies.
