Institutional Investor is proud to recognize leaders within the allocator community for their outstanding contributions to portfolio development at the second annual AlphaEdge Recognition Dinner. Prior to the event, we sat down with Bill Li, CFA, CAIA, recognized in the category of Next Generation Recognitions.
Bill’s education and work span the globe and various asset classes, enabling him to bring multifaceted perspectives to his work at Massachusetts Pension Reserves Investment Management Board (MassPRIM), a $100 billion public pension plan.
Bill joined MassPRIM in 2016 and now directs the investment activities for the $9 billion Portfolio Completion allocation. Known for his collaborative approach, he also developed the pension fund's innovative asset allocation framework. Previously, he held positions as a senior researcher at CoStar Group (formerly Property & Portfolio Research), providing credit advisory to investors and regulators. He initially joined the investment industry as an equity portfolio analyst at Allianz SE in Frankfurt, Germany. Bill pursued undergraduate studies in China and Germany, followed by advanced degrees at Brandeis International Business School and at Cornell Law School.
The following has been edited for length and clarity.
What is the biggest challenge facing your industry?
I think alpha is becoming rarer. In an inefficient market where prices converge slowly to their true value, smart and fast investors can consistently find steep bargains. But as data and technology increase efficiency, opportunities for quick gains become scarce. The alpha fishing pond appears to be shrinking. However, active investing, and our ability to pick alpha managers, relies on this very pond.
Fortunately, although quick alpha is harder to strike, patient alpha still holds true. Think of it as slow cooking: Though most food can now be mass-produced, true flavor comes from patience. In this context, smartness alone can be overrated, and patience is gold.
Patience is increasingly the key ingredient that sets apart durable wins from hasty speculations. Whatever other winning sauce – value, growth, or superior operations – it must be coupled with patience to create and serve gourmet performance. PRIM’s long investment horizon has enabled our staff to press this advantage, and we have achieved excellent performance. I believe this is the best recipe to unlock alpha, and more importantly, compound durable returns in a challenging market.
What part of your portfolio are you most excited about?
I oversee PRIM’s Completion Portfolio, which aims to bring differentiated return streams to the “PRIT Fund.” We achieve this by curating a selection of high-quality managers, each contributing their unique expertise and investment strategies, and these mandates collectively form a resilient portfolio.
At PRIM, we believe that nobody can reliably predict the future or the markets; therefore, we take a strategic approach forming long-term partnerships. Although each individual mandate holds promise, what excites me most is the portfolio's overall ability to compound gains and minimize losses.
I'm equally excited about our high-performing team, which is our invaluable asset. Our bottom-up investment approach thrives because everyone stays focused and aligned. The portfolio’s sturdy returns wouldn’t be possible without this strong foundation and culture.
Who were your mentors? What made you go into this job?
Throughout my career, I've been fortunate to have many mentors who have taught me about investing, leadership and life. Frankly, the initial attraction to this PRIM role was the opportunity to learn from the industry’s most brilliant minds. I dreamed of devising a transformative trading algorithm that would encompass all the learnings; soon I realized that there is no such silver bullet. Rather, I have grown more appreciative of temperament and critical thinking, which are as important as investment knowledge itself.
Over time, under the influence of PRIM’s long-term CIO and Executive Director Michael Trotsky, I discovered a deeper allure to this PRIM role: Beyond the intellectual challenge, there's the power of collaboration and a profound sense of mission. I continue to be captivated by this unique blend of intellect, people and purpose.
If you weren't in investment management, what would you be doing?
If I were not in investment management, I would probably try to become a consumer-tech product manager. The role calls for deep user empathy. To me, creating something useful and durable offers profound satisfaction. It lies at the intersection of intellect, people and purpose – the same qualities that fascinate me in my current role.
What is the one thing the industry should do to improve investment management?
This might sound cliché, but it’s more crucial than ever to stay centered on the objectives. A clear focus is essential in an environment of information overload.
Information overload is real these days, with constant fads and noise. On the one hand, technological advancements have drastically improved efficiency, which is fantastic; on the other hand, they also lead to a flood of new investment offerings. These developments can tempt people to chase fleeting trends. Many investment professionals, me included, sometimes struggle with the rapid shifts in popular topics.
The solution probably lies in returning to the core principles of investing. At PRIM, we believe that evaluating any investment must focus on three equally important pillars: return, risk and cost. It’s worth constantly reminding ourselves and those around us of the objectives and beliefs, crafting a timeless strategy and executing it with unwavering discipline.
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