“Chris has been a member of the Foundation’s team for almost 18 months, after spending more than 15 years in a variety of institutional settings including the last decade for The Church Pension Fund implementing extensive quantitative and qualitative investment analyses in fulfillment of an integral role in the overall success of that portfolio. Community foundations generally view their investment horizon as perpetual, or at the very least, long-term. Chris’ contributions to the overall quality, character and composition of the portfolio have already begun, and are expected to further solidify the endowment’s position as a key contributor to the region’s charitable landscape. Chris’ ability to understand the critical components and connectivity of the long-term success metrics while continuously translating that information on a present value basis to the investment opportunities of today are both noteworthy and invaluable. His reserved and keenly perceptive demeanor leads to insightful engagement with all of the underlying investment managers, which not only furthers genuine clarity of investment strategy but also creates solid relationships and instills confidence in the Foundation and its many constituents. The skills, capacity, passion and generosity possessed by Chris clearly mark him as a rising star as an investment professional, as a candidate worthy of that recognition and, most importantly, as a trusted and respected colleague.”
—A.F. Drew Alden, CIO, The Community Foundation for Greater New Haven
The CIO Editorial Team shared a dozen questions with all of our NextGen nominees and asked them each to pick six to answer. Their answers informed our decision to include them as a NextGen. Below are the answers from Christopher Koler.
CIO: What is the best way to bring more diversity to the financial industry?
Koler: The best way to bring more diversity to the financial industry is to actively look for and recruit it. I think working as an allocator is one of the most exciting jobs in the world, but people from a wide variety of backgrounds may not consider the profession because they face barriers or hurdles early on. Over my career, I have found people passionate about investments from all backgrounds. It may take interviewing candidates outside of economics and finance majors, or creating a pipeline of candidates through an internship program, but growing diversity should be an imperative of all investment offices. And you can’t stop there—you should strive to provide an environment of mentorship, guidance and room for growth.
CIO: Is cryptocurrency an institutional asset of lasting value?
Koler: Cryptocurrencies are here to stay. Approximately 20% of U.S. citizens and nearly 10% of the global population participate in cryptos, mostly through the ownership of Bitcoin. The adoption curve, in many ways, resembles the early stages of the internet. While Bitcoin’s resilience and anti-fragile characteristics are fascinating, there are a slew of next-generation blockchains that offer faster speeds and more computational power, and it is the ability to program decentralized applications or “dAPPs” on top on them that really opens up a huge design space for creative ideas and permissionless innovation. Some dAPPs, like Uniswap and Aave, already allow users to trade, borrow and lend assets, and it’s all being done in a transparent, decentralized and peer-to-peer manner. Given the amount of capital and engineering talent that has entered the space, I anticipate a lot of continued innovation in the years to come. But these new systems are not without major risks. As an asset class, the volatility is eyewatering—I think that as the U.S. continues to adopt a more crypto-positive stance the regulatory overhang will continue to lift, which should help.
CIO: What role do blockchain or tokenization have in the future of institutional investing?
Koler: Some of the most talented and knowledgeable people I know are working to bridge the gap between traditional financial systems and the new systems enabled by cryptography and blockchain. Blockchains are a really great way to record transactions and the custody of assets, and the tokenization of assets is well underway. There are many questions yet to be answered, but for me, it’s easy to envision a world where cutting-edge blockchain-enabled exchanges rapidly move stocks and bonds over these new rails instead of the traditional ones.
CIO: What should be an investment trend, but isn’t (yet)?
Koler: I think more time should go into thinking about the ramifications of deglobalization. We’ve had the fortunate winds of globalization at our backs, but it seems that modern economic nationalism, especially as it relates to critical resources, should be a larger part of the discussion. Globalization could take a pause, and I think it’s worth thinking about the second- and third-order effects and how they may play out in the portfolio.
CIO: Which asset manager (exclusive of their firm) has most influenced your growth as an institutional asset manager?
Koler: He’s not an asset manager, per se, but Benoit Mandelbrot’s ideas regarding complex systems and the idea that normal distributions aren’t the rule but the exception really broadened my horizon. Why do we have models where once-in-500-year occurrences happen multiple times over a five-year period? In reality, extreme events happen with regularity, and market risk is generally underestimated. Normal and lognormal distributions don’t fully capture the wildness of the financial markets.
CIO: What new skills do you think allocators need to be leaders in the field in the coming decade?
Koler: Future leaders need to increase their cognitive flexibility and be able to continually learn and adapt. Having high emotional and cultural intelligence should bode well over the next decade, especially as the investment industry continues to work itself out of its self-made diversity deficit.
