“Anna came us with great experience, including as the chief risk officer at Fortress, Axa Rosenberg, and a large sovereign wealth fund. She is also a three-time graduate of MIT. Anna has made truly exceptional contributions to SFERS. She has highly advanced capabilities in planning, forecasting, scenario and stress testing, and probabilities, across asset allocation, the range of projected returns and volatility, cash flow and pacing schedules, and risk and factor exposures. She also works wonderfully with our staff, board, and other stakeholders, and she is very thoughtful about where to take risk and pursue return. In sum, Anna has a very bright mind, she has a thorough approach to risk and return, she is a wonderful team player, and she has a very kind heart. I am very grateful for her service to the public employees of the City-County of San Francisco.”
—Bill Coaker, CIO, SFERS
Anna Langs is an accomplished asset allocator with a history of work at significant institutional investors around the world, including the San Francisco Employees’ Retirement System (SFERS), the Abu Dhabi Investment Authority (ADIA), and AXA Investment Managers.
Prior to her current role as managing director, Asset Allocation, Risk Management, and Innovative Solutions at SFERS, Langs spearheaded investment risk efforts at ADIA designing, architecting and implementing investment risk management framework for one of the largest sovereign wealth funds in the world.
Langs served as chief risk officer at three multi-billion-dollar investment funds, including AXA Rosenberg, Fortress Investment Group, and First Quadrant L.P. Her interest in asset allocation, risk management, and proprietary investment and risk models developed over the course of a 20+ year career in financial services, working as quantitative strategist and risk and analytics manager at Western Asset Management, Merrill Lynch Intelligent Technologies Group, and D.E. Shaw.
CIO: What did you think you understood before the COVID-19 crisis … and if, during the crisis you were proven wrong, what did you learn from it?
Langs: The COVID-19 crisis created an unprecedented liquidity glut. Going into the crisis, I believed that SFERS had a comprehensive liquidity management framework, which required considerable redesign to account for more stressful dislocations over longer time periods and a holistic view of our investments in drawdown vehicles.
SFERS allocates 45% to private investments, which are structured as drawdown vehicles. We run comprehensive cash flow forecasting models to estimate aggregate amount of capital calls and distributions for the Trust. In March 2020, in addition to unprecedented dislocations in publicly traded securities, managers of private capital called on large amounts to the tune of three times of our normal expectations. As private equity and private debt managers were closing their credit facilities or preparing for or funding their next investment opportunities, we had to fund these capital calls by selling in a dislocated market.
CIO: What took you by surprise? What worked?
Langs: I was surprised by how quickly and efficiently investment staff transitioned to work-from-home. We did not anticipate the speed of the market downturn. We monitor liquidity and market stress test scenarios continuously, which proved to be a great reference point.
I was also pleasantly surprised by the robustness of our home-work setup. The structure and internal processes of our investment team proved to be efficient and adaptable and worked well under stress. We did not skip a beat, we were able to continue managing our portfolio, and engage in regular dialog with our managers, custodians, and vendors. Virtual Board meetings, while awkward at first, now run smoothly and efficiently.
CIO: How would you build the portfolio differently now that you have gone through this massive accelerated shift in the market? (What changes do you plan to implement? What were the biggest challenges?)
Langs: I would make the portfolio a bit more liquid and a bit more defensive. It can be achieved in many ways, from negotiating credit lines with our custodian and shifting part of our index exposures to synthetic replication to increasing direct allocations to cash and treasuries. We are also looking into partnering with thoughtful experienced managers to implement tactical asset allocation decisions.
CIO: ESG has been a tidal wave force behind recent innovative investment framework in our industry. How do you see the ESG framework and effort be influenced by the recent event?
Langs: SFERS’ ESG effort is one of the best in the industry, it is tightly integrated into our internal investment and operational processes. I believe the sustainability angle will play a large role going forward.
CIO: What’s your view on the “perfect storm” that is currently impacting the oil markets, and how that will change how you invest in upstream energy?
Langs: The current demand shock threatens to render many high-price producers insolvent. Long-term investors need to be cautious about current upstream energy investment. It is a unique opportunity for alternative energy sources.
CIO: What’s your view on the fate of the Euro and the EU?
Langs: It could be the case that the Euro survives even if the EU’s power diminishes. The EU is laden with the stocks of seemingly doomed industries, such as car making and banking. But the Euro itself is not obviously doomed.
The commitments of a shared currency are not easily shaken off. The complexity of the financial super-structure built upon the Euro makes break-up a terrifying prospect. The ECB has muscle and can swiftly bring to bear powerful tools in a crisis.
The COVID-19 crisis led to the suspension of many of the EU’s strictures: on the free movement of labor; on state aid to industry, and spending limits. But people have not stopped using the Euro. Its reach as a unified currency is a lot harder to reverse.
CIO: What do you think will be the impact of COVID-19 on developing economies?
Langs: Developing economies do not have the resources to sustain a long shutdown. So, they might be forced to resume economic activities sooner and as a result, experience more COVID-19 cases.
Commodities economies will be hit the most by the double blow of sharp oil price decline and rising public expenses.
CIO: What are the new creative/innovative strategies that you are researching right now?
Langs: We have a strategic tilt toward technology and health care that has just been accelerated. The trend is now touching more and more industries and it is exciting to follow the innovation and creativity of portfolio companies.
CIO: And professionally, where do you see the most exciting areas to specialize further over the coming years?
Technology, health care, innovation and the industrial revolution, led by AI and automation.
CIO: What exercises have you found useful?
Langs: Unfortunately, my favorite yoga studio went out of business. I am not sure when and if it will ever return. So, I bought an extra yoga mat and an online subscription.
