Seventh Annual Industry Innovation Awards: Nominations Open

There may have been some big changes at Chief Investment Officer, but one thing hasn’t changed: It’s time once again to highlight and celebrate the industry’s innovators.

CIO’s seventh Industry Innovation Awards will take place on December 12 at the New York Public Library, celebrating the most innovative and talented players of institutional investing.

Please nominate asset owners and managers/servicers for this year’s awards. Nominations will close on Friday, August 26, and all finalists will be announced in mid-September.

This year, the CIO editorial team will consult an advisory board of former and current CIOs including Jagdeep Bachher (University of California), Robin Diamonte (UTC), Greg Williamson (American Red Cross), and Carrie Thome (WARF) to choose the finalists and winners. Data from CIO’s surveys will also be used to determine finalists and winners in some asset management and servicing categories such as investment outsourcing, transition management, and corporate investment strategies.

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The Lifetime Achievement Award—given last year to Rick Dahl, the recently retired CIO of the Missouri State Employees’ Retirement System (MOSERS)—will be presented at the dinner. An overall winner from the asset-owner categories will also be chosen and awarded CIO of the Year (presented last year to University of California CIO Jagdeep Bachher).

Tell us who deserve to be recognized.

This year’s asset owner categories include (2015 winners in parentheses):

Foundation (Wisconsin Alumni Research Foundation)

Endowment (University of California Board of Regents)

Corporate Defined Benefit Pension Plan Below $5 Billion (Textron)

Corporate Defined Benefit Pension Plan Above $5 Billion (Alcoa)

Public Defined Benefit Plan Below $15 Billion (Orange County Employees Retirement System)

Public Defined Benefit Plan Between $15 Billion and $100 Billion (Massachusetts Pension Reserves Investment Management Board)

Public Defined Benefit Plan Above $100 Billion (California Public Employees’ Retirement Systems)

Sovereign Wealth Fund (Alaska Permanent Fund)

Health Care Organization (Baylor Scott & White Health)

Defined Contribution Plan (Exelon)

Asset management categories include (2015 winners in parentheses; italics indicate altered category):

Fixed Income (Neuberger Berman)

Equities (including alternative equity beta) (TOBAM)

Multi-Asset (including risk-balanced strategies) (BlackRock)

Private Equity (Pantheon)

Hedge Funds (Two Sigma)

Real Assets (TIAA)

Defined Contribution Strategies (Prudential)

Investment Outsourcing (Goldman Sachs Asset Management)

Corporate Investment Strategies (UBS Global Asset Management)

Corporate Liability Strategies (Legal & General America)

Transition Management (Citi)

Data & Technology (Ortec Finance)

How your hedge fund portfolio performs after November won’t just be up to whether Hillary Clinton or Donald Trump wins the US presidential election—it could also be affected by whom your managers wanted to win, according to new research.

In the ten months following President Barack Obama’s win in 2008, Republican equity hedge managers underperformed Democratic peers by 72 basis points monthly, found the Haas School of Business’s Marian Moszoro and Michael Bykhovsky of the Center for Open Economics.

This underperformance was a direct result of an “overreaction” to Obama’s presidency, the researchers explained. Conservative commentators predicted that Democratic monetary policy would result in hyperinflation, while liberals defended the policies. In the end, equity markets “recovered at a fast pace,” and Democratic managers were rewarded for their optimism.

“Rational managers seeking to maximize their funds’ returns would ignore these prognostications in their allocation decisions,” Moszoro and Bykhovsky wrote. “Yet, we have observed differences in funds’ performance depending on the political preferences by managers.”

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Though the effects of ideological differences are usually subtle—overall, fund performance was “roughly similar,” with Democrats performing only “slightly” better than Republicans from 1999 to 2014—they can become “salient during abnormal situations.”

In the case of Obama’s first election, the significant difference in investment performance was the result of a perfect storm of a financial crisis, election, and politically polarized interpretation of US central bank policy, the researchers said.

“While all equity hedge fund managers were exposed to the same data, managers’ investment decisions were affected by the framing dominant in their politically affine circles,” they concluded. “Partisan affiliation is an important bias in the financial industry.”

Read the full paper, “Political Cognitive Biases Effect on Fund Managers’ Performance.”