Kim Lew Takes Stock of Her First Few Months as Columbia’s CEO and CIO

What she’s eying as she reshapes the portfolio.

Kim Lew, former CIO of the Carnegie Corporation, became the buzz of the industry this past year when she left her CIO post to soar further through the glass ceiling to become the new chief executive officer of the Columbia Investment Management Company in New York. (Although she’s green in her new perch, when we asked our CIOs what 2021 success stories most inspired them, Lew’s name was sung in chorus.)

Lew is currently building a new action plan for the investment team at Columbia’s $11.3 billion endowment, playing to her specific skill set of finding niche investments, establishing strong relationships as a partner, and exploring new territories.

“Venture is going to be a growing part of the endowment,” she told CIO. Columbia has a modest amount allocated to venture. She hopes to grow it significantly, doubling or tripling it if she can, and to search for opportunities both domestically and internationally. Opportunities in China and India, where Lew has a strong history of investment, are among the options being considered.

“We are spending a lot of time trying to come up with a comprehensive approach to China, which includes thinking about how we’re going to do privates, publics, and hedge funds, and what the overall looks like,” Lew said.

A venture action plan could further buttress the portfolio’s growth. The Ivy’s last two years of returns were 5.6% for 2020, which was in the top decile, but 3.8% for 2019. The university’s trailing 10-year return was 9.1%, placing it in the top quartile of its peer group.

Her plans are to put more rigor in portfolio construction. She wants to position the portfolio for the long term, and the industry is watching how the CIO, known for her strategy, will achieve it.

“I’m trying not to do too much at one time and have any of it be mediocre,” Lew said. “I want all eyes on it. Those are big bites, right? Even venture alone takes so much to manage and develop relationships.”

Lew’s Harvard MBA mind calls her to constantly dig into situations. She has a sign that reads: “If it doesn’t challenge you, it doesn’t change you.” And she’s won many awards for her daring and successful investment strategies, (including a CIO Innovation Award from this publication.) Her 10-year return at Carnegie was 9.5%.

Part of her strategy is asking her team questions such as: What active bets are we taking? What strategies have we invested in or not invested in, and for what reasons: lack of capacity or lack of understanding?

She’s determining her action plan, and future due diligence, depending on the answers. “It will be a bottoms-up decision about where the best managers are,” said Lew, who has been known to grow managers, especially those with different perspectives from the market or in areas such as Africa, who have strengths in cherry picking business opportunities.

A Sea Change

Lew overcame extreme personal tragedy to take the helm at Columbia, but says she did so to establish a new future for her daughters after the death of her husband last summer.

She took the CEO position after former CEO Peter Holland retired on Sept. 30. (His reported salary, with deferred benefits, was $6.5 million.) She became Columbia Investment Management’s first female CEO of Black and Chinese heritage, and an instant icon for diverse women worldwide. A flood of media outlets reported the news.

Then she dug in, stepping up to be fully accountable for the portfolio for the foreseeable future as both CEO and chief investment officer. It’s easier that way, she believes, because she can keep the entire portfolio in her mind, and ask her directors to take more ownership and responsibility over it.

The inherited Columbia portfolio had a generalist model. Holland’s strategy was to build something of an internal hedge fund with allocations based on risk. In managing a total risk number, a portfolio can skew toward marketables and hedge funds and still find balance. It had worked well. Yet, in the changing world, the approach can lead to unintended bets based on the portfolio’s reactivity.

“I have a ton of respect for him and I think he’s an incredible investor and he’s a good person, but I’m so different so it’s re-shifting,” Lew said. “He was skilled at trading. I’m not a trader. There are a million ways to outperform. You’ve got to choose the one strategy that you can execute on.”

She’s thinking about duration and composition, and then, she says, “You have to go out and market to have the type of things that you want.”

The key is in the value she can bring to the relationship. At Lew’s former fund, Carnegie Corporation, the investment team was thought of as a good partner and thought leader. The same intellectual currency will correspond to Columbia. “We’re going to be the people who are going to tell you the truth, but not interfere in your business. We want to be thought partners with our managers,” she said.

With Ivy League research and law professionals at her fingertips, she may indeed transform industry relations to the Ivy.

“We have an Earth institute, we have a climate school, we have a business school and a law school that are top tier. We have a lot of experts that we can share with managers,” she said.

Following in her wake at Carnegie, two of her mentees from her investment team became CIOs themselves: Brooke Jones (NextGen winner and now CIO of Bryn College) and Ken Lee (now CIO of Children’s Health in Dallas). A third, Alisa Mall (CIO NextGen winner), took on an entirely new challenge (Foresite Capital). Lew calls it “a promise kept.”

“Brooke and Ken are going to be phenomenal CIOs,” she said. “They’re smart, they’re thoughtful, they’re very different.  They will show how you can be successful managing capital in different ways”

Lew said she believes the COVID-19 pandemic stunted communication, or one of them might have stayed at Carnegie to take the CIO seat she left open. Throughout her 13 years at Carnegie, Lew promised she’d give her team members the opportunities to develop the skills they’d need to thrive and become future CIOs. Then, she judiciously released the reigns and let them speak directly to the board, sharing both authority and responsibility. “If you’re trying to develop CIOs, you’ve got to give authority at different times to different people and balance that out,” She said.

Since then, in search of a CIO, Carnegie’s board waded through a sea of 200 applicants to unanimously approve Mark Baumgartner, the former CIO of the Institute for Advanced Study, due to “his stellar performance investing in both up and down cycles as well as his leadership on the boards of several high-level mission-driven nonprofits,” according to a press release. (An innovation award winner of this publication in 2019, Baumgartner also made a name for himself by building a portfolio entirely of alternatives.)

Although, due to COVID-19 work-from-home arrangements, Lew has yet to meet her entire investment team face-to-face, her sharp junior analysts already impressed her by warning her about the possibility of the volatility created by the Reddit group WallStreetBets, two days before the volatility started to unfold.

One of her goals is to develop more CIOs at Columbia, “I believe that your portfolio performance gets better as you develop talent … and, yes, they’re going to eventually want to go off and be CIOs but stay within the network and be a member of the Columbia family.”

—Christine Giordano

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