WRS News Online

SWIB Remains Positioned for Future Success
by David Villa, SWIB Executive Director and Chief Investment Officer

David Villa

In 2006 the trustees of the State of Wisconsin Investment Board set out on a mission to transform the agency into a premier asset management firm. By building on past success with an eye toward continuous improvement, SWIB has become a recognized world-class investment manager.

In 2007 the Board hired me to help them meet their goals. It has been a tremendous honor to be a part of the journey to this point as SWIB’s chief investment officer. With the addition of the responsibilities of executive director, I am looking forward to leading a strong and talented team of dedicated professionals who will continue implementing the long-term vision of the Board.

But what does this mean for you? It means SWIB will work to implement a robust and sophisticated investment strategy designed to meet the challenges of the financial market head on, while helping grow and protect the Wisconsin Retirement System assets you count on for a more secure financial future.

Since the Great Recession, the financial markets have transitioned from an extremely accommodating to a more normal monetary policy. Going forward we see a tightening monetary policy, which means it will become more challenging to make money. Over the past several years, SWIB has put in place a relatively conservative investment strategy that is designed to provide the trust funds with moderate protection from another dramatic downturn while still earning reasonable returns.

To meet the market challenges we see coming in the next five to seven years, we will be relying on more robust and complex investment strategies. To continue to manage risk and optimize costs, SWIB will strengthen its already award-winning staff to deal with the complexity of managing assets in a more challenging environment. We will also continue to build out the infrastructure and technology needed to support the investments we are making on behalf of more than 632,000 WRS participants.

Actively managing the trust funds in a diversified portfolio is vital to the long-term success of SWIB and the WRS. Despite the challenges presented by the financial markets at times over the past ten years, the Core Trust Fund has generated a very reasonable return of 8.8%, which is ahead of the 7.0% target of the WRS.

Further, when looking over a 20-year period through December 31, 2018, SWIB’s active management has generated $43.7 billion for the Core Trust Fund above what we would have earned by simply investing in a low-cost passive portfolio consisting of 60% global equities and 40% global sovereign bonds, assuming no contributions or withdrawals.

To help SWIB continue its mission, the Board has put into place a robust leadership structure that will keep SWIB well-governed and positioned for continued success. The Board has created a management council that will advise me in connection with leading SWIB. The council consists of Rochelle Klaskin, deputy executive director/chief administrative officer; Mike Jacobs, agency business director; the newly created chief technology and operations officer; and one person representing investments, appointed by me for a rotating six-month term, initially Nick Stanton, head of multi asset strategy.

Together, Rochelle and Mike bring more than 50 years of investment and management experience to their positions. Nick, who brings 18 years of investment experience to the council, has served as the leader of the multi-asset division since it was created in 2015.

Later this year we will hire a chief technology and operations officer, who will be responsible for overseeing our operational processes and technology infrastructure. The advisory management council will allow leadership to collaborate and discuss ideas and, determine how to best implement those ideas to achieve SWIB’s goals.

The future of SWIB and the WRS is bright. SWIB has a great team and I am excited to lead it and continue our mission to keep the WRS among the best-funded public pensions in the country.

SWIB Management Council members are (back, left to right)
Nick Stanton and Mike Jacobs; and (front) Rochelle Klaskin and David Villa.