“Alex Far, as the deputy chief investment officer at the Indiana Public Retirement System, has demonstrated exceptional leadership across multiple dimensions. His contributions extend beyond traditional investment management, making him a standout candidate for the Next Generation award. Alex’s commitment to recruiting and developing a strong investment team has had a substantial impact on INPRS’s recent success. His mentorship has also empowered analysts of various experience levels, helping them grow into confident and high-performing investment professionals. Alex has helped successfully build and maintain a magnetic investment culture with professionals from various backgrounds. Through an emphasis on collaboration, intellectual curiosity and diligence, Alex has helped transform the investment environment at INPRS into an industry leader. Alex’s impact extends to building a high-performing investment operations team. His team’s operational excellence ensures seamless execution of investment decisions and has built substantial trust from INPRS’s various stakeholders.”
—Scott Davis, Chief Investment Officer, Indiana Public Retirement System
The CHIEF INVESTMENT OFFICER 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 Alex Far.
CIO: What is the best way to bring more diversity to the financial industry?
Far: When it comes to improving diversity, there are a few different things the financial industry should focus on. First, recruiting: intentionally expand recruiting efforts to diverse groups. Working with universities and professors directly can help create pipelines of diverse talent. Secondly, interviews: ask candidates the same questions to mitigate bias, have diverse interviewers so diverse candidates can envision themselves working at your organization, and consider not just the candidate’s qualifications, but how he or she would add diversity to the team. Internship programs and community outreach can also promote awareness and create opportunities for underrepresented individuals. Lastly, decisionmaking: leveraging diverse perspectives in the decisionmaking process can enhance innovation and allows all voices to be heard. This can enhance the performance of the team and/or portfolio. Improving diversity ultimately starts with the direction and tone from the top, but it takes the whole organization to be successful.
CIO: What asset classes offer the best options for avoiding or mitigating drawdown risk in an institutional portfolio?
Far: A diversified portfolio is the best option for avoiding drawdown risk, specifically equity risk, given that is typically the greatest risk an institutional portfolio has. Asset classes like fixed income, gold and alternative assets can provide protection in various economic environments. Government bonds are viewed as safe-haven assets, especially during equity market turmoil, due to their perceived lower risk and stable cash flows. Gold can act as a safe-haven asset during market stress. Including gold in a diversified portfolio can act as a hedge against equity volatility and economic uncertainty, reducing drawdown risks. Alternative investments like hedge funds, private credit, real assets and private equity seek to generate returns independent of market movements.
CIO: What traditional and/or alternative asset classes do you think are most important for institutional portfolios, and why?
Far: Institutional portfolios should include a mix of traditional and alternative asset classes to balance risk and return. Traditional assets like public equities and fixed income remain essential due to their liquidity and long track record of performance. Public equities offer growth potential, while fixed income provides stability and predictable income returns. Alternative asset classes can provide additional portfolio diversification. Private equity can offer growth opportunities with lower volatility, but with less liquidity than public equities. Real estate investments provide inflation protection and steady income through rents. Hedge funds can deliver uncorrelated returns, adding resilience in market downturns. Commodities, including gold and oil, offer diversification and hedge against inflation and geopolitical risks. By blending traditional and alternative assets, institutional portfolios can achieve a balanced investment approach, leveraging the growth and income of traditional investments while harnessing the diversification and risk mitigation benefits of alternatives.
CIO: What asset class or investment troubles you most right now, and why?
Far: Real estate, specifically the office real estate market, troubles me the most right now. When office buildings were acquired by investors pre-pandemic, interest rates were not only much lower, but occupancy rates were much higher. Those two variables helped increase the valuation of the building purchase prices. Post-pandemic, interest rates have increased significantly, and the demand for office space has dramatically receded. Refinancing office real estate is much more challenging in a higher-interest-rate environment, and investors are demanding higher cap rates due to the riskiness in the asset class. Fewer and fewer office real estate transactions are taking place, making it increasingly hard to value these assets.
CIO: What should be an investment trend, but isn’t (yet)?
Far: Equities, both public and private, have been the main investment narrative of the past decade. If history tells us anything, that is likely not going to be the case over the next decade. Portfolio diversifiers like fixed income, commodities and absolute-return strategies will play a more important role in an institutional portfolio going forward. With increased interest rates and an industry that continues to roll out new products and strategies, equities are not going to be the only place to look at for returns.
CIO: What new skills do you think allocators need to be leaders in the field in the coming decade?
Far: The ability to build, inspire and retain a world-class investment team will continue to be a skill required of any leader within the allocator field. Fostering a culture of trust, candidness and a passion for investments will allow the best ideas to rise to the top and increase the probability that long-term goals are met. Leaders must show intellectual generosity, put individuals in roles where they can achieve success and leverage training and development opportunities to close knowledge gaps. Successful leaders will be adaptable, not only with ever-changing technology, but also with a more diverse and well-rounded workforce.
