“As a lean team of generalists, Julia played a critical role in building out the portfolio. Julia has been tasked with underwriting and monitoring managers across asset classes. She has demonstrated an exceptional ability to underwrite complex strategies, from European credit managers to biotech venture funds. Julia also received her CFA designation in 2022, demonstrating her passion and commitment to investing. Additionally, Julia has set herself apart as a leader on the team because of her communication skills and ability to build strong relationships, internally and externally. She has led our internship program for the past three years and has shown an impressive ability to empower junior team members, significantly contributing to their professional growth. Julia has also been a mentor with the Girls Who Invest program for the past three years. Julia’s integrity, dedication and ability to motivate others make her a natural leader on the team.”
—Peng Wang, CIO, Inatai Foundation
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 Julia Reilly.
CIO: How are you dealing with interest-rate risk and economic uncertainty?
Reilly: In dealing with interest-rate risk and economic uncertainty, in my opinion, it is essential to adopt a patient approach focused on long-term resilience. A key element of our approach is to partner with high-quality investment managers who have proven track records of navigating various market conditions. These managers possess deep expertise, robust research capabilities and disciplined investment approaches. In uncertain times, the emphasis on quality and fundamentals becomes even more critical. A significant portion of our assets are invested with public equities managers that prioritize investments in businesses with strong balance sheets, consistent cash flows and prudent management teams. Such businesses are better positioned to navigate economic challenges and capitalize on opportunities that arise during market recoveries. In times of interest-rate risk and economic uncertainty, patience, as well as partnerships with high-quality managers focusing on strong fundamentals, are essential. I believe partnering with high-quality managers and investing in resilient businesses will best position our portfolio to achieve long-term stability and growth, effectively navigating through market cycles.
CIO: What is the best way to bring more diversity to the financial industry?
Reilly: As someone who is really passionate about increasing the representation of women in the investment industry, I believe it is crucial to support mentorship programs. For the past three years, I have been a mentor with Girls Who Invest, and I have seen firsthand how effective mentorship can empower women to pursue and excel in the financial industry. Expanding and supporting such programs can provide the necessary guidance, support and networking opportunities for women and people of color.
I also believe that providing internship opportunities is another way we can help bring more diversity to the industry. At Inatai Foundation, I lead our internship program, which is focused on women and people of color. These internships not only help participants gain valuable skills, but also boost their confidence and readiness to enter the financial industry. By providing these opportunities, we can build a pipeline of diverse talent.
Not only is it important to focus on building and supporting mentorship programs, but it’s also critical to ensure hiring practices are inclusive and that the work environment is supportive for diverse talent. I believe focusing on these key areas will help the financial industry to become more diverse over time.
CIO: How can allocators address the growing global headwinds of demographics, geopolitical tensions and changing supply chains?
Reilly: At Inatai, we are building a resilient portfolio that is focused on inefficiency, innovation and impact. Inefficient markets allow us to purchase assets at below intrinsic value; for example, we invest in early-stage venture and China. We believe a global approach is critical, especially considering demographic headwinds. We have also spent considerable time understanding the opportunities in India and Southeast Asia, as we believe these areas, especially India, will be large economic growth drivers over the next decade. Investing behind innovation allows us to participate at the right point along the growth curve; we invest in industries that have significant growth potential, such as technology (including AI) and life sciences. Specifically, investing in venture can provide strong diversification benefits, as performance is less impacted by market volatility, which we expect to increase because of increased geopolitical tensions. Further, even more broadly within our public portfolio, we see many companies deriving significant value from implementing AI to cut costs or bolster product offerings, especially those that have large proprietary data sets, which can help companies drive growth despite supply chain challenges. We believe focusing on inefficiency, innovation and impact will best position our portfolio to generate long term returns despite significant global headwinds.
CIO: What traditional and/or alternative asset classes do you think are most important for institutional portfolios, and why?
Reilly: In my opinion, venture capital provides very compelling benefits for long-term investors, especially those that have access to the high-quality managers. I believe early-stage venture investing offers significant growth potential, diversification benefits, access to innovation and the opportunity to make a positive impact. While it requires patience and a higher risk tolerance, the potential benefits make it an attractive addition to institutional portfolios for long-term value creation. Investing in early-stage VC provides exposure to cutting-edge technologies and innovative business models. Long-term investors can participate in groundbreaking developments in sectors such as technology, health care and clean energy. This not only offers potential financial returns, but also aligns with goals to support and promote innovation and technological advancement, which are also powerful from an impact perspective in many cases. Further, since early-stage companies are more focused on growth and innovation, their performance is less tied to broader market cycles compared to mature, publicly traded companies. This can provide diversification benefits, contributing to portfolio resilience as well. However, in my opinion, access to high-quality managers is critical in venture because of the high dispersion of fund returns among managers.
CIO: What investing decision have you made for your organization that you’re most proud of?
Reilly: I’m most proud of the work I have done to help build out our biotech exposure at Inatai Foundation. I’ve led the diligence efforts on four biotech managers and lead Inatai’s sourcing and coverage efforts broadly in biotech and at the intersection of technology and biotech. As our team utilizes a generalist model, I have been responsible for underwriting and covering biotech managers across assets classes from venture to public equities. Life sciences is one of our core long-term investment themes, and we believe that it is a sector with strong tail winds. The declining cost of gene sequencing has allowed biotech companies to target patients for clinical trials based on genotypes, which accelerates the productivity and predictability of drug development. It has also led to new and better molecular targets for tailored drugs, new tools in the therapeutic tool kit and more successful clinical trials with better expected returns for investors along the way. Despite the volatility in the biotech sector, especially over the past few years, we trusted our conviction in the space and built our relationships and added capital over time. Our portfolio to date has performed very strongly, and I believe it’s an incredibly high-quality portfolio.
CIO: What new skills do you think allocators need to be leaders in the field in the coming decade?
Reilly: I believe that the ability to build, manage and retain a team with diverse perspectives is more important than ever; allocators who have the leadership skills necessary to do so will be the most successful, in my opinion. Diversity in thought, experience and background can lead to more innovative solutions and better decisionmaking, which I think will become increasingly critical over the next decade.
Further, I believe the pace of innovation will only increase over the next decade. As a result, allocators who develop the skills necessary to both implement and leverage technology while also keeping up with advancements, especially in AI, will be in the best position to succeed over the next decade. This is critical not only for more efficient internal processes but also in terms of understanding the investment opportunity set, especially in tech and biotech.
