Steven Meier, the Chief Investment Officer (CIO) of New York City Retirement Systems, joined Giovanni Amodeo for an insightful fireside chat as part of the ION Influencers series. The discussion delved into various aspects of private market investments, strategic asset allocation, and the evolving landscape of capital markets. Here are the key topics covered during the conversation:

Background and Role

• Experience: Steven Meier shared his extensive experience in global capital markets, spanning over 42 years.
• Current Role: As the CIO of New York City Retirement Systems, he oversees five distinct pension plans with assets exceeding $285 billion, serving over 800,000 participants and beneficiaries.

Convergence of Public and Private Markets

• Economic Drivers: Meier discussed the convergence between public and private markets, emphasizing that the same economic drivers—such as growth, productivity, inflation, and government spending—affect both.
• Opportunities: He highlighted the importance of identifying opportunities in private markets, particularly in private credit and alternative credit, to capitalize on widening credit spreads and achieve better risk-reward dynamics.

Strategic vs. Tactical Investment

• Strategic Focus: New York City Retirement Systems tends to be more strategic rather than tactical in its asset allocation.
• Tactical Bets: Meier noted the importance of hiring managers who can take tactical bets within separately managed accounts.
• Creativity and Adaptability: He stressed the need for creativity and adaptability in response to changing market conditions and policy shifts.

Policy Changes and Economic Drivers

• Impact of Policies: Meier highlighted the significant impact of policy changes from the current U.S. administration on key economic drivers.
• Strategic Approach: These policies could influence growth, inflation, and private capital flows, necessitating a strategic approach to investment decisions.

Manager Selection and Allocation

• Top-Tier Managers: The discussion touched on the importance of selecting top-tier managers, particularly in private equity.
• Legislative Changes: Recent legislative changes in New York have allowed for an increased allocation to private assets, enabling the pension plans to negotiate better terms and secure co-investment opportunities.

Asset Class Preferences

• Private Equity: Meier expressed a bullish outlook on private equity.
• Private Credit: He emphasized the value of private credit, given higher base rates and the potential for attractive returns.
• Infrastructure and Real Estate: Additionally, he highlighted the opportunities in asset-backed funding and the potential for office space investments.

Artificial Intelligence and Data Centers

• Transformative Potential: The conversation also covered the role of artificial intelligence (AI) and data centers in the investment strategy.
• Growing Demand: Meier acknowledged the transformative potential of AI and the growing demand for data centers, which align with the broader theme of technological advancement.

ESG and Responsible Investing

• ESG Considerations: Meier underscored the importance of incorporating environmental, social, and governance (ESG) considerations into investment decisions.
• Long-Term Performance: He argued that firms focusing on ESG factors are likely to outperform over the long term and that ESG analysis helps mitigate risks such as regulatory and litigation risks.

Long-Term Investment Horizon

• Disciplined Approach: Finally, Meier emphasized the importance of maintaining a long-term investment horizon and a disciplined, quantitative approach to decision-making.
• Institutional Investors: He highlighted the need for institutional investors to remain steady and thoughtful, avoiding reactionary moves based on short-term market fluctuations.

This fireside chat provided valuable insights into the strategic thinking and investment philosophy of one of the leading figures in the pension fund industry. Steven Meier’s expertise and forward-looking approach offer a compelling perspective on navigating the complexities of the private market space.

Key timestamps:

00:07 Introduction to the Fireside Chats
00:37 Steven Meier’s Background and Role
01:54 Market Observations: Unprecedented Times
02:51 Convergence of Public and Private Markets
04:06 Investment Strategies in Credit Markets
05:30 Impact of Policy Changes on Markets
06:37 Characteristics of Effective Managers
07:07 Changes in Legislation Affecting Investments
08:25 Concentration of Management in Investments
10:39 Strategic Asset Allocation Decisions
12:42 Outlook on Private Equity Investments
13:33 Exploring Private Credit Opportunities
14:33 Infrastructure as a Steady Investment
15:41 The Role of Data Centers in Investment
16:48 Artificial Intelligence: A Game Changer
18:14 The Role of Responsible Investing
20:55 Political Neutrality in Investment Decisions
21:28 Qualities of a Successful CIO
22:34 Engagement with Trustees
23:34 Conclusion