Spencer Hunter

Located in RVK’s Portland headquarters, Spencer serves as a board member, co-president and senior consultant. He joined the firm in 2008 and works with complex public pension and sovereign wealth fund clients regarding strategic asset allocation, portfolio construction and implementation, and policy development. In addition, Spencer serves as an active member of RVK’s investment program review team, focusing on governance considerations and management of world-class investment organizations. As co-president, Spencer is tasked with the management of day-to-day operations at RVK, along with leadership of the associate, analyst and business development professionals.

CIO: What changes are you making to your asset allocation advice, given the current state of monetary policy, geopolitics and the impact of inflation and rising interest rates?

Hunter: We strive to maintain a long-term perspective, extending beyond the current market conditions. This approach allows us to build robust investment strategies that are resilient over time. However, we are realistic about the risks and opportunities that arise, continuously assessing and adjusting our recommendations for portfolio positioning.

Over the last year, many of our clients have shown a preference for increasing their exposure to public fixed income and, in some instances, even holding cash. This shift is primarily driven by the higher yields currently available and the necessity to manage other risks within their portfolios. These relatively safe and predictable asset classes have regained prominence as valuable tools for asset allocation.

The period following the global financial crisis of 2008 through 2009 was characterized by persistently low yields, which pushed allocators to seek alternative methods to balance equity risk and achieve reasonable returns. Now, with the rise in yields, public fixed income and cash have re-emerged as effective components of a well-rounded investment strategy.

CIO: What do you think will be the biggest innovation in the institutional asset allocation industry in the next 10 years?

Hunter: AI and its contributions to the institutional investment industry are interesting to discuss, but it is somewhat unlikely it will revolutionize how we view asset allocation and portfolio structuring. Its primary contribution will be to complement and enhance data-gathering, processing and analysis. It may lead to more efficient processes, but the existing foundations of asset allocation—diversification, risk mitigation, liquidity, etc.—will persist well into the future.

Looking ahead, I believe that asset owners, particularly public pensions, will place a greater emphasis on liquidity and sequence risk. As demographic shifts lead to an aging population and increased payout demands, there will be a critical need to balance the pursuit of higher returns with the necessity of maintaining a liquid yet resilient portfolio structure. This requires a careful evaluation of investment strategies to ensure they can meet short-term liquidity needs without compromising long-term growth potential.

CIO: What asset classes (specific securities or sectors) are you concerned about now? Why?

Hunter: While we continue to find attractive opportunities across the spectrum in private credit, we anticipate an increase in volatility and potential losses in the future. Over the past decade, the private credit market has benefitted from a confluence of favorable conditions, including a robust economy and rising demand from LPs seeking exposure to this asset class. This positive backdrop has encouraged a significant influx of capital and new GPs entering the market.

As expected, the surge of new participants has also led to many inexperienced GPs managing largely untested portfolios. They may not have the experience to properly navigate difficult market conditions that will undoubtedly occur. Despite these challenges, we remain constructive on private credit overall, but selecting high-quality GPs will be more important than ever. We continue to raise our standards in the diligence process and have been far more selective in sourcing new deals.