Anastasia Titarchuk: One Step Ahead
Art by Joe Ciardiello
Imagine it was your first year on the job, and just as you were about to present your results next month, the coronavirus pandemic crashed the markets. That’s the predicament Anastasia Titarchuk, chief investment officer at the New York State Common Retirement Fund, has found herself in.
She has served behind the scenes at the state pension fund for years, most recently as the interim CIO after Vicki Fuller stepped down in 2018. Prior to that, she was the deputy CIO starting in 2015, and served as the director of absolute-return strategies beginning in 2011.
But now, Titarchuk has taken up the mantle at the $210.5 billion retirement fund just as state pension officers are waving goodbye to the longest bull market in US history. The party had to stop at some point, and some money managers, like Titarchuk, were already heeding the warning signs.
The pension fund has incrementally increased exposure to fixed income, such as cash, bonds, and mortgages, to roughly 24%, up from 18% of its total portfolio since last April, or the start of the fund’s fiscal year. The fund also keeps about 1% of cash on hand at all times.
“At this point in the cycle, we’re much more concerned about liquidity,” she said at a conference for investors in November. “If we have a downturn, I don’t want to sell equities on the low.”
That was pre-pandemic. Money managers typically maintain that they’re not impacted by the day-to-day market activity, preferring a long-term investment horizon for their pensioners. But that’s changed now. The New York pension chief’s risk-averse strategy has been a boon to the portfolio since the world’s changed overnight
Whether or not the US succeeds in flattening the curve of the disease, COVID-19’s impact on the economy is already being felt. Workers in travel, food service, and retail are getting laid off. According to the Economic Policy Institute, up to 14 million Americans will be laid off by summer. Businesses are closing their doors—a mandate that could kill cash-poor companies without the balance sheets to hold them up during troubled times.
The pension world is not impervious to the ripple effects. Last week, Ben Meng, chief investment officer at the California Public Employees’ Retirement System (CalPERS), warned his board that fluctuations in the market are causing portfolio rates to deviate away from strategic allocation targets.
When asked how the coronavirus is impacting her fund, Titarchuk said last week in an emailed statement that the market slide has been hurting everyone’s value. A spokesperson added that the fund does not expect to meet its 6.8% fiscal year target.
“We don’t see a market recovery of the size needed in the next few days that would reverse the losses of the last weeks,” Titarchuk wrote.
The timing is especially challenging for the New York fund. Just about every other state pension completes its fiscal year in June or December, but the Common Retirement Fund ends its fiscal year in March.
“The fund is built and managed to withstand volatility,” Titarchuk wrote. “With a diversified portfolio and virtually fully funded, it will continue to meet its obligations and stay strong until markets ultimately recover.”
The New York Common Retirement Fund, the third-largest state pension in the US, is also one of the nation’s strongest with a 96.1% funded ratio, as of March 2019.
Looking Ahead
For Titarchuk, who was born in Moscow and moved to the US as a teenager, it’s the non-investment issues that keep her up at night. The Yale grad with a mathematics background likes to focus on her portfolio, having spent the majority of her professional career on Wall Street. She’s worked at JPMorgan Chase, Barclays Capital/Lehman Brothers, and Bank of America.
Weeks before the corona-crash, the chief investment officer was focused on building out her own team. The New York Common Retirement Fund recently increased its team by a quarter, though mostly on the operational side. It has also streamlined its approach to credit investments, which were previously tackled through different teams.
The pension fund also has recently expanded into sustainable investments, a contentious point for some investors. Titarchuk publicly has said that she doesn’t believe in divestment as an advocacy or investment tool. But she said the comptroller and the fund are interested in finding good opportunities in climate-related investments that could potentially drive returns.
“There, you could focus on returns as well as perhaps diversifying the rest of your portfolio,” she said. The fund recently hired a director for sustainable investments, who is responsible for doubling the fund’s allocation to $20 billion, up from $10 billion, in green funding.
She’s also hoping to wrap up her search this year for a deputy CIO. In New York City, public retirement funds typically have a more challenging time attracting finance talent, compared with big investment firms, which can pay more. But Titarchuk said the firm tries to attract people who may want access to deal flow and the best managers, which she says are top notch.
“You just have to find that person who can take the intellectual stimulation and maybe a little less money, but it’s a challenge,” Titarchuk said. “We’re more competitive now than we have been, and we try to attract because we’re a good place to work.”
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