Moneta Taps Aoifinn Devitt as CIO | Chief Investment Officer

Aoifinn Devitt

Moneta Group Investment Advisors has tapped Aoifinn Devitt to become the first female CIO to oversee the registered investment adviser (RIA)’s $27.4 billion in assets under management (AUM). Although Moneta is based in Missouri, Devitt will work from Chicago, where she lives.

Devitt joins Moneta from investment banker Federated Hermes, where she was head of investment for Ireland, and was responsible for developing investment management oversight processes for Hermes Fund Managers Ireland Limited. Prior to Federated Hermes, Devitt was CIO of the $2.6 billion Policemen’s Annuity and Benefit Fund of Chicago. She also founded Clontarf Capital, a pan-alternatives research and consulting firm.

The Irish-born Devitt succeeds Bill Hornbarger, who had been Moneta’s CIO since 2009, but left the company to become CIO at Benjamin F. Edwards in September.

“I don’t believe in dictating strategies and I will not be excluding anything,” Devitt said in an interview with CIO, adding that she is “excited to bring my alternatives expertise” as well as her global experience to the firm, having worked in Europe and Asia.

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Devitt said that while she doesn’t believe there will be hyperinflation, she thinks “we will see a higher rate of inflation than we are used to” and said that one of her priorities going into the job will be to make sure that the portfolio is resilient against rising inflation. She noted that real estate, infrastructure, and equities are good hedges against inflation.

Regarding environmental, social, and governance (ESG) investing, Devitt said “I think we’re at a tipping point in time when ESG risks are really just like any other risks,” adding that ESG risk assessment “whether it’s climate change resilience, good governance, or ensuring a company does right by employees—those are basic hygiene factors in investing.”

In her spare time, Devitt hosts a podcast called “The Fiftyfaces Podcast,” where she shares inspiring stories that showcase role models from diverse backgrounds, particularly in business and finance. When asked which other CIOs Devitt admires, she cited Mark Steed, CIO of the Arizona Public Safety Personnel Retirement System (PSPRS), and Angela Miller-May, CIO of the Chicago Teachers’ Pension Fund, noting that Miller-May “pushes new boundaries” with diverse managers.

“Aoifinn’s impressive skill set and extensive experience across asset classes and management structures make her the perfect fit for the CIO role,” Moneta Chief Operating Officer Keith Bowles said in a statement. “We’re thrilled to welcome her to our senior leadership team and are eager to see her make her mark.”

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Tags: Aoifinn Devitt, chief investment officers, CIO, Moneta Group Investment Advisors, registered investment advisor, RIA

So, inflation is coming in hot, relatively speaking. The Consumer Price Index (CPI) for May showed a remarkable jump of 5% annually, the largest increase since August 2008, in the heady days right before the financial crisis. It was just 1.2% in 2020 and 1.8% in 2019. The first big question now is: Will this peppery inflation rate persist and run even hotter?

For investors, the second big question is: What will higher inflation mean for stocks? The answer, according to Goldman Sachs, is that if inflation stays muted, stocks will do well. If the CPI takes off, though, they won’t, or at least their returns will be mediocre.

“The stock market tends to perform better during periods of low inflation than when inflation is high,” Goldman’s chief US equity strategist, David Kostin, told clients. While that sounds like conventional wisdom, the Goldman study documents how this works.

Everything depends on the sustainability of the current inflationary surge, for sure. At the moment, standard expectations are that the recent jump was due to temporary factors, such as pent-up demand, supply constraints, and federal stimulus outlays. The Philadelphia Federal Reserve, in its latest survey of forecasters, shows an average annual 2.3% CPI rise over the next 10 years.

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The market seems to be siding with this benign conclusion. The five-year breakeven rate, the difference between Treasurys and Treasury inflation-protected securities (TIPS), has inflation at 2.4% yearly between now and 2026. Meanwhile, investors are piling into the benchmark 10-year Treasury, whose yield dipped to 1.46% on Friday, down from 1.56% the week before and from the 2021 peak of 1.72% in March. If investors’ inflation expectations were for a major up-trend, a yield decrease wouldn’t be happening.

Since the end of double-digit inflation in the early 1980s, the pattern has been for full-year CPI to stay in the low single digits, around 2%. Whenever it came in at a high point, which was never much more than 5%, it quickly fell back.

The Federal Reserve’s preferred inflation indicator, the core personal consumption expenditures index, or PCE, moved up 3.1% annually in April (the next reading, for May, is due in a couple of weeks). That was above the 2.9% consensus estimate.

Since 1962, Goldman’s study found, when inflation was high, stocks had a median market return of 9% annually, and when it was low, stocks gained 15%. The firm defined “high” and “low” by the CPI’s movement in comparison to forecasters’ projections.

More granularly, Goldman indicated, stocks rose a so-so 4% when inflation was low and rising—that’s the case now—and a gratifying 19% when the CPI was low and falling. Further, equities nudged up just 2% annually when inflation was high and rising, versus 15% when the CPI was high and falling.

Certainly, the performance varies by sector. Health care, energy, real estate, and consumer staples do best with mounting inflation. But tech and materials shares do the worst.

And there’s another way of culling out the best performers when inflation is high, the Goldman study stated. Stocks with large and stable gross margins fare the best. Gross margin is what’s left over after production costs are subtracted from sales revenue. Those with high margins, therefore, have pricing power. Goldman’s roster of these companies includes Adobe, Aspen Technology, Activision Blizzard, Etsy, and Williams Companies.