The CIO Editorial Team shared a dozen questions with all 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 Han Yik.
CIO: What is the best way to bring more diversity to the financial industry?
Yik: One way that I have found effective when speaking with other investment professionals is linking “diversity” with “diversification.” Investors appreciate the value of diversification during portfolio construction in avoiding concentration risk. Likewise, there is inherent value in having diversification of thoughts and ideas within investment staff or deal teams, to avoid blind spots or groupthink. By framing this issue in terms of the key investment considerations of risk and return, I believe we can drive greater acceptance and adoption of diversity within our industry.
CIO: How can allocators address the growing global tailwinds of aging populations, geopolitical tensions and changing global trade?
Yik: The commonality with all three of these tailwinds is in our asset allocation—specifically, the decision on how to allocate our portfolios between domestic assets and international assets, including allocations at a country/regional level. Any mathematical model is only as good as the underlying assumptions, so having a solid understanding of how geopolitical levers are altering our long-term growth expectations for a given country’s economic prospects is critical in developing a robust asset allocation strategy.
CIO: What roles do AI and large language models have in the future of institutional investing?
Yik: A lot of the current talk around AI is a debate on what jobs and roles will be most threatened by its implementation as refinements continue to be made and as it continues to learn. AI has the potential to be an extremely powerful tool and will be able to analyze rapidly changing economic conditions and scenarios more quickly than the smartest human analysts can, but ultimately, I see us still utilizing it as a tool, with human oversight, much as we have gotten used to employing other disruptive technologies, such as computers and the internet, in our businesses.
CIO: Which component of ESG-driven investing do you think will have the most influence on institutional investing going forward, and why?
Yik: Without a doubt, investment in the energy transition. We are seeing the effects climate change is having on cities, countries and vast regions all around the world, from consecutive days of record heat to “once in a millennium” storms causing unprecedented flooding. Companies and industries that are directly impacted are already having to adapt, and governments are as well, providing regulatory incentives to accelerate the transition needed from legacy energy sources to cleaner and renewable sources. This has a direct impact, both from a financial risk perspective and from an investment opportunity angle, and will shape the composition of institutional investment portfolios over the coming decade.
CIO: What asset class or investment troubles you most right now, and why?
Yik: Commercial real estate. As long-term asset owners, short-term trends and fluctuations are less of a concern, but a transformational change that fundamentally alters future projections is meaningful. The issue of remote work and what that means for the traditional office space is one we think about quite a bit, both from our own organization, as well as from a broader perspective. I fear that the relatively stable income that commercial real estate properties (such as office buildings and shopping malls) provided for many decades is something that institutional investors will need to find an alternative for going forward.
CIO: What new skills do you think allocators need to be leaders in the field in the coming decade?
Yik: The most important skill in the coming decade will be the ability to learn, understand and implement new technological tools. The current hot topic, of course, is artificial intelligence, but whether we are looking at robotics, quantum computing, distributed ledgers/blockchain or AI, the fact is that the rate of technological innovation has been increasing ever rapidly, and the most successful companies and organizations, including asset owners, will be those that are able to adapt to and effectively deploy these new technologies. It’s not a question of being supplanted by disruptive technology but, rather, the future will be about being able to utilize these new technologies, much as we adapted to the use of computers and the internet in our businesses.
