01:11  Perspectives from private pension fund CIO Charles Van Vleet of Textron Inc. (NYSE:TXT). Strategic allocation increases to private debt structured funds. Corporate plan sponsors like private equity alignment and structures, but want to control extension risk.

05:08  Using the HFRI as benchmark is a mistake in a rising S&P 500 environment. The search for hedge funds without structural beta characteristics. Stack LIBOR +200 hedge funds on top of the S+P 500.

08:17  Forecasting a great merger between traditional private equity managers and traditional hedge fund managers. Using smart leverage post-2008 to meet ROA. Hedge funds need to simplify and clarify their data for private plan sponsors.

13:11  Why most corporate plan sponsors are underspending their liquidity budget. Strategic alignment of liability transfer with Board of Directors is critical. Some illiquid, alternative parts of portfolio are “the most valuable, easy to harvest source of return”.

17:19  Post – 2008, there is a “complete reversal” of liquidity budgeting for many institutional investors. New recognition that volatility structure of private pensions are more stable than endowments and foundations. Private plan sponsors should increase their illiquidity budget & increase allocations to private equity structures that invest in private credit.

Private Pension Manager Forecasts “Great Merger”

The 2013-2014 Opalesque Institutional Investor Series profiles leading institutional investors to analyze their best strategic and tactical allocation ideas, portfolio construction trends, and investor expectations from alternative managers. Moderator Michael Oliver Weinberg is an Adjunct Associate Professor of Finance and Economics at Columbia University, and CIO of family office, MOW & AYW LLC. The goal of the series is to contrast asset allocation and best ideas of thought leading pensions, E&F’s, FOs and FOF CIO’s, and to inform both the buy-side and sell-side and facilitate improvement in the allocation process.

In this Institutional Investor Series interview, Michael profiles Charles Van Vleet, CIO and Assistant Treasurer of Textron, Inc. Textron is a Providence, Rhode Island, based industrial manufacturing company with plants primarily in Texas and Kansas. With 33,000+ employees, the company produces many well-known brands, including Bell, Cessna and E-Z-GO.

Mr. Van Vleet discusses his perspectives and priorities as a private pension fund CIO, including over/under-weights vs. historic allocations and benchmarks, and why benchmarking against the HFRI is a mistake in a rising S+P environment. He gives insight into strategic asset allocation over the next 12 months, best tactical allocation ideas, and investor expectations where managers must improve to facilitate investment by allocators. He likes strategic allocation increases to private debt structured funds, and explains why corporate plan sponsors often prefer private equity alignment and structures, but also want to control extension risk. Due to this investor demand, he forecasts great merger between traditional private equity managers and traditional hedge fund managers.

In addition, learn about the following:

    • Perspectives from private pension fund CIO Charles Van Vleet of Textron Inc.
    • Using the HFRI as benchmark is a mistake in a rising S+P 500 environment
    • The search for hedge funds without structural beta characteristics
    • Stack LIBOR +200 hedge funds on top of the S+P 500
    • Forecasting a great merger between traditional private equity managers and traditional hedge fund managers
    • Using smart leverage post-2008 to meet ROA
    • Hedge funds need to simplify and clarify their data for private plan sponsors
    • Why most corporate plan sponsors are underspending their liquidity budget
    • Strategic alignment of liability transfer with Board of Directors is critical
    • Some illiquid, alternative parts of portfolio are “the most valuable, easy to harvest source of return”
    • Post – 2008, there is a “complete reversal” of liquidity budgeting for many institutional investors
    • New recognition that volatility structure of private pensions are more stable than endowments and foundations
    • Private plan sponsors should increase their illiquidity budget & increase allocations to private equity structures that invest in private credit

Charles Van Vleet is Assistant Treasurer and Chief Investment Officer of Textron Inc. Providence RI, (TXT*) overseeing its $10 billion defined benefit and savings plan assets. Prior to Textron, Mr. Van Vleet was Director Pension Investments at United Technologies Corporation (UTC) in Hartford CT. Before UTC, Mr. Van Vleet spent several years in the investment management business in NY, London and Tokyo with Credit Suisse, Putnam and Alliance Capital. On behalf of Textron, Mr. Van Vleet has advisory board positions on several governance, risk management and asset/liability oversight committees. He holds bachelor’s degrees in Economics and Political Science from UC Berkeley and an MBA, Finance from The University of CT.

*Textron Inc. is a multi-industry company that leverages its global network of aircraft, defense, industrial and finance businesses to provide customers with innovative solutions and services. Textron in known around the world for its powerful brands such as Bell Helicopter, Cessna Aircraft Company, Jacobsen, Kautex, Lycoming, E-Z-GO, Greenlee, and Textron Systems. With approximately 32,000 people employed by our corporate office, subsidiaries and operating divisions, and facilities and presence in 25 countries, Textron is strategically positioned to provide integrated product solutions and services to customers worldwide. More information is available at http://www.textron.com.

Via Opalesque.tv