David Villa, the executive director and chief investment officer of the $120 billion State of Wisconsin Investment Board (SWIB), who passed away last weekend, described running a public employees retirement system as “missionary work.” He will be remembered as a crusading and visionary leader not only for his management of SWIB’s investment but also for his role in reshaping the design of the system.
Villa joined SWIB as CIO in 2006 and became executive director in 2018. He had been CIO of the Florida State board of Administration for more than two years, and before that he spent a dozen years at Brinson Partners which became part of UBS. When he arrived in Wisconsin, he began to move a substantial portion of the investment management work in house – eventually reaching 50% of assets -- while diversifying into hedge funds and other alternative investments. He was an advocate of risk parity and he carved out an original path, far bolder than those who stuck with 60/40, but far steadier than those who constantly chased the investment flavor of the month. He was a thoughtful leader who repeatedly outperformed SWIB’s benchmarks, delivering strong results at lower costs than most of his peers. SWIB is one of the nation’s few fully funded major public funds.
While reshaping SWIB’s investments, Villa also grappled with the fundamental issues confronting the nation’s pension system. The steady monthly checks from a defined benefit plan served retirees well, but Increasing longevity has made these plans expensive to maintain. Defined contribution plans cost less, but they shift risk to plan participants who are not necessarily equipped to shoulder those risks, and they yield uncertain retirement incomes.
Villa pioneered in designing a carefully constructed system that combined elements of both approaches, offering a guaranteed benefit topped by a variable benefit based on SWIB’s investment results. This approach was lauded for aligning the interests of the plan and its participants.
He was also active in transforming SWIB’s internal systems, enhancing the role of technology in monitoring and managing the portfolio, which serves more than 650,000 active and retired employees of Wisconsin’s state and local governments, local school districts, and the University of Wisconsin system. In 2018, Villa was recipient of the Lifetime Achievement Award at Institutional Investor’s Hedge Fund Industry Awards event.
A native of New Mexico, Villa earned degrees at Princeton, Stanford, and Northwestern Universities. He was a music buff, and he collected guitars. He was often lauded by SWIB staff members as a mentor, and he was active in Madison, Wisconsin’s Latino community.
Wisconsin Governor Tony Evers said in a statement that Villa provided “visionary leadership and the strategic direction to forge a stronger and more certain future for thousands of Wisconsin retirees.” He will be missed.