“Dan Parker is an extremely well networked and knowledgeable investment professional. I can only speak from my perspective, but TTU is lucky to have a high caliber professional like Dan. His ability to vet managers and strategies is a culmination of a solid background in the military, investment banking and buy side institutional management. Dan has a very strong knowledge base across asset classes, especially in hedge funds and private equity. He is a strong communicator at conferences, as well as in front of professional Investment Committees. It is not surprising to me or anyone who knows Dan that he is a CIO Magazine NextGen recipient.”
— Tim Barrett, CFA, Chief Investment Officer, TTUS – Office of Investments
Texas Tech University’s Deputy Chief Investment Officer and former Captain in the U.S. Marine Corps, Dan Parker earned his spot on this year’s NextGen list through his strong, continuous alpha generation in the portfolio. Parker’s has honed his ability to make impactful manager selections driven through unique research and due diligence techniques. Since he’s been with TTU, the portfolio has graduated through the ranks relative to their peer endowments, in part, attributable to Parker’s endeavors.
In addition to alpha generation, Parker’s contributions for the $2 billion portfolio as deputy CIO also include policy, strategy and asset allocation, whilst spearheading investments in public and private markets.
His robust career has included work as an investment banking associate at Citi, a private equity vice president at Blackrock and an investment officer for the Leona M. and Harry B. Helmsley Charitable Trust. Parker speaks with CIO about his experience thus far and how it benefits his work on TTU’s portfolio.
CIO: What makes 2019 an interesting investing climate? How are you handling it?
Parker: 2019 features the combination of a maturing market cycle, and a rapidly accelerating election cycle in the United States. There is the possibility of a degree of reflexivity between these two factors, as the capital markets (especially equities) have already demonstrated responsiveness to political noise, which is likely to continue rising as the campaign season progresses. Our portfolio is more alpha-centric than most institutions – we ran a factor exposure study last year with a third party that validated that our largest factor exposure in the entire portfolio is alpha. That was encouraging for two reasons: (1) it aligned with our strategic plan, and (2) reflects how we want to be positioned in a mature cycle where asset valuations are relatively high and volatility has been relatively low.
CIO: After this year, what are the largest opportunities and the largest threats you see on the horizon?
Parker: The two opportunities absorbing my attention are that the US election cycle could produce another significant change in policy direction, and that the extended relative outperformance of US markets seems unlikely to continue indefinitely. The risks I’ve spent time thinking about recently are that, despite the Fed’s current (or recent?) hiking cycle, US interest rates remain in a 40-year secular downtrend characterized by lower highs and lower lows, and geopolitical risk, which remains high but which global market seem determined to mostly ignore.
CIO: How did you arrive at your current position? And why did you choose this part of the financial services industry?
Parker: I have a relatively unconventional background that has prepared me well for investing globally in a volatile world. I started my career as an officer in the Marine Corps. In addition to broad international experience (I lived in Asia for three years and visited every continent except Antarctica), that responsibility provided unparalleled leadership training and experience. It also taught me to evaluate risk both rigorously and holistically, and that the relevant information threshold is sufficient vs insufficient, not perfect vs imperfect. After completing my MBA, I spent a decade working in New York, first on the sell side at a bulge-bracket investment bank, then on the buy side in PE at a premier asset management firm, and then as a senior allocator at a large private foundation. A few years ago, I had the opportunity to relocate to Austin, Texas for my current role, as Deputy CIO for Texas Tech University’s endowment. Having had high-quality experience on both the sell side and buy side makes me a more effective in a wide range of roles and organizations.
CIO: What was the most important strategic allocation of your career?
Parker: The three most important strategic decisions of my career were deciding to begin my financial services career in New York, deciding to focus on alternative asset classes and strategies, and, more recently, relocating to help drive a turnaround at Texas Tech. Starting in New York exposed me to a pace and scale that is hard to achieve in other locations. Focusing on alternative assets and strategies requires a breadth of perspective and skills, but I believe it has prepared me well for a world where expected returns to beta going forward are likely to be lower than the recent past, so that institutions will likely need alpha to provide a larger share of total portfolio returns than most organizations are used to. And finally, when I started at TTU three years ago, we were ranked at the 75th percentile against our NACUBO peers. We are now ranked at the 12th percentile for the trailing three year period.
CIO: Tips for money managers who want to work with you, especially what not to do. (Feel free to mention a funny goof story.)
Parker: Be efficient and be transparent. Concise emails with materials attached and a relevant summary in the text are great. Be rigorous and transparent about the strengths and weaknesses of your strategy and platform. If I ask you to follow up, please do; if I say I’ll reach out if I need more info, please respect that. Unfortunately, due to email volume, no response is probably a no.
CIO: Biggest goof a money manager has made with you?
Parker: I’ll never forget a hedge fund manager who, when asked about their most recent mistake or bad outcome, replied that there wasn’t one. Other than having committed fraud, that was the worst possible answer, and my negative impression was later validated when that manager was sanctioned by the SEC.
CIO: Who in the financial world would you like to have lunch with and why?
Parker: Marc Andreessen – he’s an exceptionally broad and unconventional thinker. I appreciated his podcast with Tim Ferriss and would enjoy the opportunity to have a conversation with Marc.
CIO: What are changes you’d like to see the institutional investing community make in 10 years?
Parker: On the allocator side, I’d like to see American institutions follow the example of the Canadian pensions, which have adopted independent governance structures and policies that have allowed those institutions to create world-class investment platforms built around top-tier resources/talent. On the manager side, I’d like to see more transparency, accompanied by fee structures that distinguish between alpha and beta. The current opacity and blunt fee structures make things less efficient for everyone. Beta is trending towards free, but rigorously validated alpha may be underpriced (it’s also much rarer than much of what’s currently marketed as alpha).
CIO: What are your hobbies not correlated to work?
Parker: Reading (eclectically, not just work-related), traveling with my family (including internationally), and keeping fit (I recently ran a Spartan Super race).
