Chicago Teachers’ Names Interim Chief Investment Officer

Andrew K. Kelsen

The $13.1 billion Chicago Teachers’ Pension Fund (CTPF) has named its alternative investments portfolio manager, Andrew K. Kelsen, as its interim CIO.

Kelsen steps into the role as former CTPF CIO Angela Miller-May begins her new post at the $54 billion Illinois Municipal Retirement Fund (IMRF). Like Kelsen, when she took the top post at Chicago Teachers’, Miller-May was promoted to CIO from within the organization from her role as director of investments. She served for four years in the CIO role and, among other achievements, is credited with diversifying the fund’s roster of investment partners to include more firms owned by minorities, women, and people with disabilities, which is also an area of focus for IMRF.

Before taking the post at IMRF, Miller-May led the Chicago Teachers’ fund to a historic high—a 28.68% net return on investments for the 2020-21 fiscal year, beating the benchmark of 27.03%. Over the past three years, her returns averaged 12.17%. She will take the post at IMRF following the exit of former CIO Dhvani Shah, who moved into the CIO role at the automotive-themed $16 billion JM Family Enterprises.

Kelsen has been at CTPF since 2014 and has more than 30 years of experience in research, capital market management, portfolio management, asset allocation, consulting, and pension fund investments. He studied economics at Keene State College and is credited with helping to move CTPF’s private equity portfolio from a pure fund-of fund-model to a hybrid construct.

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His primary CTPF responsibilities have been focused on private equity, private credit, natural resources, asset allocation, portfolio strategy, securities lending, transition management, cash management, and portfolio efficiency. The fund says he has been instrumental in providing knowledge transfer and mentorship to the investment department, according to a press release from CTPF.

Despite beating its benchmarks for the past 29 years (i.e., since the fund’s inception), the funded ratio for pension benefits was 45.4% based on the market value of assets as of June 30, 2020, according to a CTPF spokeswoman.

According to CTPF, as interim CIO, Kelsen will be mainly responsible for managing and directing CTPF’s investment operations in accordance with the Illinois Pension Code; the investment policy statement (IPS); the board rules, orders, and resolutions; and all applicable laws, and he will report to executive director Carlton W. Lenoir Sr.

Lenoir said, “We appreciate Andrew’s willingness to step into the role of CIO. With his career experience and background, Andrew will make an immediate impact, providing leadership for the team without interruption to our policies, pacing, objectives, and goals. I look forward to working with him in his new role.”

The spokeswoman for the fund said CTPF has not hired a search firm to permanently fill the CIO position at this time.

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Tags: Andrew K. Kelsen, Angela Miller-May, Chicago Teachers’ Pension Fund, CIO vacancy, Dhvani Shah, Illinois Municipal Retirement Fund, interim, JM Family Enterprises

How much do supply chain bottlenecks worry the C-suite set? A lot, as seen by a Bank of America (BofA) study of second-quarter earnings calls.

These vexing crimps in the flow of goods from factories (sometimes overseas) to homes have been the bane of the US consumer economy. They surely helped boost prices and frustrate customers unable to get a purchase delivered. A big, big problem in the spring, the supply chain issue eased during the summer, but these woes have come back lately due to the onset of the Delta variant. In China, the world’s third-busiest port was recently closed for two weeks out of pandemic fears, for instance.

A worse-than-expected drop in retail spending of 1.1% in July appears to be linked to the latest COVID-19 reprise, which is a demand problem, not a supply one. But T.J. Thornton, BofA’s head of product marketing and predictive analytics, said this situation should help alleviate some of the newer bottlenecks resulting from suppressed demand. “This should improve the inventory problem,” he told Yahoo Finance in a video interview.

If the issue persists, the supply constraints could hold down the climbing stock market, but thus far logistical predicaments haven’t filtered through to equities.

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Although the bottlenecks started to ease in the second quarter, they were very much on executives’ minds during the calls. After all, the supply-induced shortages did arise again. To measure that level of concern, BofA researchers performed key-word searches in earnings transcripts to gauge what company managements said about these themes: supply chain, labor, freight, and price-cost. The pandemic has created snags in all these areas.

After running the searches, in their report, the researchers pronounced the second quarter to be “a game of managing supply chains.” Companies struggled to meet strong demand due to component shortages, cost inflation, and labor constraints. Mentions of “supply chain” on second quarter earnings calls accelerated from the previous period, and more than doubled from the prior year.

Shortages are widespread across a variety of components and have proved to be an annoying constraint for many companies. Said Dover CEO Rich Tobin, “What we underestimated was the total cost impacts of a strained logistics system and tight labor market that show no signs of abating.” Some executives spoke of a need for more automation as labor scarcity is becoming a structural issue. Companies are also suffering from higher freight and expedited shipping costs to deliver products on time.

Higher product prices and operating costs also proved to be a main focus in the second quarter and will continue to be in this year’s second half, BofA said. Most companies highlighted price-cost as an obstacle in the quarter. And managements expect cost inflation to accelerate in the second half of the year. Almost all companies and industries are implementing price increases to counterbalance rising costs. At the same time, the inflationary impact of this is unclear. Reason: Distributors and retailers are willing to absorb price increases to meet high demand, the report stated.