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 Jarad Vary, CFA, recognized in the category of Next Generation Recognitions.
Jarad was a journalist and an investment consultant before he assumed the role of Investment Portfolio Manager at Carilion Clinic. He is a graduate of Cornell University, where he received his bachelor’s degree in Government. After working as a journalist at The New Republic and Institutional Investor, he co-founded II’s investment consultancy, ManagerMatch, as Executive Director and Head of Manager Research. Over the course of eight years, he evaluated hedge funds, private equity, and credit GPs, on behalf of pension and endowment clients, helping them invest more than $12 billion across liquid and illiquid asset classes.
At Carilion, he oversees the public market portion of the hospital system's $3 billion in investments.
The following has been edited for length and clarity.
What is the biggest challenge facing the industry today?
Like peers nationwide, we’ve seen major challenges on the healthcare operating side over the last three years, which have created downstream challenges for investment portfolios. During Covid, a lot of people left healthcare, which helped raise wages. This is a good thing for a lot of people (including my sister, who is a nurse!), but it did mean we saw a significant hit to our operating cash flows. We’re very proud to support the organization, and margins are curing now; we’re continually working to get through to the other side.
Historically, we had a sharp separation of cash management and investment functions. One thing we’ve learned is that this was fine during a period with relatively muted portfolio flows, but when you need to withdraw double-digit percentages of the portfolio to help fund operations, you have a good impetus to establish a more holistic approach.
What are you most excited about?
We like to invest in biotech. The stocks have been beat up, and we think there may be an opportunity to earn attractive returns while supporting transformative innovation in things like cancer, immunology, and metabolics. Looking at it another way, as care technology improves resulting in better patient outcomes and (ideally) increasing ambulatory usage, how might our investments best meet these evolving industry needs? Over a long time horizon, biotech might be a hedge for hospital operations.
Another thing: We’ve been investing in carbon markets. In California, carbon emitters must buy credits at auction, and the current price is about $36 per ton of carbon. You compare the cost of carbon with the cost of carbon-abating technologies, like Direct Air Capture with estimates mostly above $200 a ton. You have $36 to emit carbon and $200 to abate emissions through DAC, so if I’m an emitter, I’m just going to pay the carbon price. It seems likely that the cost of carbon will have to rise to incentivize adoption of these abating technologies.
Who were your mentors, and what made you get into this industry?
People have been enormously generous to me. My boss, Fred Greear, is an incredible person and mentor. He took a big chance on me. I had been a consultant, and he said, “I think this guy can make a jump from consulting to investing, from just doing manager research and evaluation to having responsibility for a portfolio.”
Before that, I made another leap, from journalism to investment consulting at Institutional Investor. I think the chasm there is not as wide as people think, but you have to have someone who believes in you, and I’m so grateful to Diane Alfano, Simon McLoughlin, Randy Klein, and Alistair Morrison at Institutional Investor who put their trust in me.
If you weren’t an allocator, what would you be doing?
I might still be a journalist. It’s an important profession, and one that has a lot in common with investing. Journalists go out into the world armed with intellectual curiosity and cheerful ignorance, and they attempt to get to the bottom of things, and that is more or less my job, too.
What’s the one tangible change you think the entire industry can do?
I think we’re making a lot of progress on diversity and inclusion, but there’s still a long way to go.
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