“Kif offers a good set of expertise acquired from varied roles on the buy side: He has in-depth experience investing in credit and across the capital structure, and has traded macro and quantitative strategies. He differentiates himself in his current role with an acute appreciation for risk/return trade-offs and a sharp sense of manager’s psychology to identifying good fund managers and investment opportunities. He is capable in quantitative asset allocation modeling and private investment cash flow modeling, displaying solid technical skills, as well as the maturity required to help run a modern global multi-asset endowment model. Kif is a multi-dimensional thinker, and his willingness to express contrarian opinion and challenge the status quo has supported meaningful discussions within the team.”
—Harvey Toor, CIO, Singapore Management University
Kif Ho gained experience across many asset classes before joining the endowment at Singapore Management University (SMU). After starting his career in UBS in credit trading & special situations, he moved on to take a similar role at Apollo Global Management in 2010, before switching over to the macro side of investments at Asia Genesis Asset Management.
It was a family member health crisis in 2016-17 that prompted Kif to take a step back and reassess what he wanted to do next with his career. Being a huge admirer of David Swensen’s philosophy in institutional investing and seeing how a well-run endowment have made meaningful impact at Yale, he took up the opportunity to join the Investment Office team at SMU.
His broad expertise and quant background were huge assets when he arrived at Singapore Management University. While he said manager selection is important, equally important to the asset allocator is sound portfolio construction and an investment process that helps the portfolio pounce on the right opportunities that come along. He has built the analytical tools to better measure risk and manage liquidity at the $1+ billion endowment, and continues to strive to incorporate the latest quantitative techniques to improve overall asset allocation decisions, risk premium extraction and risk-adjusted outcomes to create the leading endowment model in Asia.
CIO: How would you deal with rising inflation and interest rates?
Ho: The general asset allocation implications for an inflationary environment are bullish real assets, commodities, volatility, small cap, value, and emerging markets stocks, and bearish bonds. Certain commodities risk premia, which are largely uncorrelated with equities during positive equity bond correlation, and raising rate regimes are also interesting. However, it’s prudent to avoid making big tactical timing calls on inflation but rather to hold an appropriate level of inflation-sensitive assets as part of your strategic asset allocation through different regimes.
CIO: What are your favorite alts, and why?
Ho: My favorite alts are niche relative value managers who are able to thrive in various volatility regimes. These managers usually have specialist skill sets, robust risk management framework, and different monetization methods to capture different types of dislocations, dispersion, and market inefficiencies, and they are also able to structure their portfolios with a long convexity bias. Hence, they are able to provide effective diversification from traditional and alternative strategies. The challenges are that the good quality managers are hard to access.
CIO: What place does blockchain have in tomorrow’s financial scene?
Ho: Overall, the use cases of blockchain in finance are in payments, insurance, and trade. For payments, the impact is expected to be mainly in the international or institutional payments landscape. Blockchain technology can speed up transaction settlement times, thereby potentially helping to reduce systemic risks in the financial system and bring down capital requirements for financial services institutions. For insurance, it can help to speed up claims processing times and reduce fraud. For trade, adoption of distributed ledger can make securities or trade processing more efficient and reduce settlement times, collateral requirements, and fraud.
Blockchain has the potential to impact the incumbent business models in a number of sectors. However, widespread adoption of disruptive new technologies by different stakeholders takes time. While the benefits and disruption potential may not be realized in the near term, it is important for investors to have an understanding of how the technology may bring potential impact in the longer term.
CIO: How will the pandemic have changed the economic/financial world?
Ho: The economic shock triggered by the pandemic and the government, business, and individual responses to the pandemic together have triggered one of the sharpest economic downturns and recoveries in history. Some economies remains fragile, while others have adapted better. Overall, the pandemic has catalyzed disruption in many parts of the old economy, accelerating automation but also increasing concentration among businesses. In the financial world, market participants’ behaviors have changed with the increased accessibility and availability of leverage. The discounting mechanism of the markets looks to be even sharper and faster than in previous crises. Herding mentality and more volatility are also observed in some parts of the market.
CIO: How will ESG change investing going forward?
Ho: Asset owners have faced increased pressure from regulators, industry bodies, and stakeholders to assess and mitigate the financial risks of climate change, and to invest in a sustainable way. There are different high level schools of thought (e.g., the Doughnut economics framework for sustainable development regards the performance of an economy by the extent to which the needs of people are met without overshooting earth’s ecological ceiling). The main goal is to re-frame economic problems and set new goals so that social foundations are met without overshooting any of the ecological ceilings. In practice, more awareness of ESG [environmental, social, and governance issues] by different stakeholders will prompt further discussions and improve company practices and the ecosystem overall. ESG considerations will be more embedded in ways that are appropriate to the different asset classes for investing teams in various organizations.
CIO: Where do you see the most exciting areas to specialize further over the coming years?
Ho: The most exciting area over coming years would be China onshore hedge fund managers. Given the nascent level of institutionalization, there are still unprecedented RMB investment opportunities foreseen for both domestic and global investors given latest market and regulatory reforms. Onshore-based China hedge funds outperformed offshore-based China hedge funds by an extra 5% to 6% annualized return and alpha over the last five years. While, traditionally, China hedge funds offerings have a high beta component, there are increasingly more uncorrelated sources of alpha. With the new Qualified Foreign Institutional Investor (QFII) regime that came into effect in November, global investors and allocators are allowed easier direct access to China’s onshore private fund managers.
CIO: What asset class or investment troubles you most right now—and why?
Ho: One of the concerns of a long-term global multi-asset portfolio is the potential diminishing diversification power of bonds. The bond ‘tantrum’ risk is a long-term concern with favorable (negative) bond-equity correlation of the last two decades at risk of weakening. Will the minimal/negative correlation continue to hold in an inflationary environment? We have to bear in mind the characteristics of bonds that have been hard to replace: (1) Minimal/negative correlation in stress times (2) A liquid safe haven. There are two angles here: The reaction to the bonds’ diminishing diversification power has been to diversify your diversifiers, a shift from bonds toward liquid alternatives; while the reaction to lower yields has been to increase allocation to privates. These potential shifts to privates and alternatives have been kept in view for liquidity risk that might not be so obvious.
CIO: Who is the manager you don’t currently work with whose brain you’d most like to pick for an hour?
Ho: Zhang Lei of Hillhouse Capital Management. He has a tremendous track record and is an example of successfully combining Western and Eastern philosophies and investment principles.
