AlphaEdge Recognition - Next Gen in Alpha Generation
This year, Allocator Intel is highlighting industry leaders for their achievements in portfolio construction through the Alpha Edge Recognition Awards. As an Investment Officer at the Illinois Firefighters' Pension Investment Fund (FPIF), Mitchell Green is being recognized as a Rising Star for having consolidated 296 pension funds into a new organization, developing the fund’s asset allocation, and recommending all of the investment strategies since the fund was created in 2019.
Following his college career at Northwestern University, Mitchell worked at the Illinois State Board of Investment for three and a half years, where he evaluated of investment strategies across asset classes for the $20.2 billion DB plan. He also oversaw the investment offerings and managed the implementation of auto-enrollment for the $4.7 billion State of Illinois Deferred Compensation Plan.
The following is edited for length and clarity.
Tell us a little bit about your portfolio
The Firefighters’ Pension Investment Fund is young. The Fund is currently managed to an interim asset allocation, which has a 65% equity allocation, a 30% fixed income allocation, and a 5% real estate allocation. FPIF plans to reduce its equity and fixed income allocations to fund target allocations of 10% to private equity, 10% to real estate, 7% to private debt, and 4% to infrastructure.
Through FPIF’s consolidation process, we maintained exposure to a core real estate manager and terminated all other strategies. Assets from those strategies were temporarily invested passively. When the consolidation began in October 2021, FPIF invested passively in fixed income, though was tactically underweight to agency mortgage-backed securities, high-yield bonds, and duration. We recently funded several active fixed income strategies and consciously reversed our underweights to modest overweights.
What are some of the factors that influence you when you’re evaluating opportunities in the investment space?
The efficiency of each asset class influences our prioritization. We continue to prioritize asset classes in which active managers have historically added the greatest value. In FPIF’s recent fixed income RFP, we were particularly aware of information ratios, upside and downside capture, and performance attributions. Analysis of performance attributions played the most significant role, as it allowed us to better understand the source of managers’ excess returns.
Tell us a little bit about what investment opportunities you’re focused on, in the next 12 months, that you’re invested in or researching?
We expect to be quite active in the next 12 months. Our top priority is private equity secondaries: FPIF is starting a private equity program and plans to prioritize LP-led secondaries as a means of increasing near-term returns while materially mitigating its J-curve. Spreads in secondaries are broadly quite wide. FPIF is fortunate that it can be a liquidity provider in an environment where liquidity is scarce for over-allocated PE investors.
In public markets, we plan to prioritize emerging markets debt due to various benchmark inefficiencies, attractive valuations, and yields well above historic averages. The next two priorities after this are core real estate and infrastructure searches.
What are some of the challenges that you anticipate in the next few years?
Over the next few years, we will remain cognizant of geopolitical challenges, particularly trends toward deglobalization and the continued isolation of China. A lack of progress on immigration reform combined with supply chains increasingly brought back the U.S. could certainly lead to stickier inflation.
What would you consider your greatest accomplishment?
I am quite proud of FPIF’s successful pension consolidation. A pension consolidation of this scale had not taken place in the U.S. in more than 30 years, and there was no rule book to follow. It feels wonderful to build something from scratch and to understand the logic for components that one would ordinarily never question.
I am also proud of our investment performance, our investment manager partnerships, and the strong collaboration within the lean five-person team at FPIF.
What do you do outside of work?
I play the classical guitar professionally. I can occasionally be found performing at local venues, or otherwise practicing at home. I enjoy going to many concerts across the Chicago area.
For more content of Investor Week, visit the group here.
To discuss the content of this article or gain access to like content, log in or request membership here.