At the beginning of this year, the Iowa Public Employees Retirement System named Sriram Lakshminarayanan as its new chief investment officer, after having served as IPERS’ chief risk officer for seven years. Prior to serving in Iowa, he was previously a director of portfolio management at a New Jersey-based asset management firm. Within his first few months on the job, Alternatives Watch asked Lakshminarayanan to share a few first impressions of his new role.
It is worth noting that the $44 billion pension system recently issued multiple RFPs for alternative investment work.
AW: What has been the biggest change or difference to which you have had to adjust so far in your role as CIO at IPERS versus your chief risk officer role?
Lakshminarayanan: My prior role as IPERS’ Risk and Asset Allocation Officer primarily dealt with investment risk, portfolio structuring and other ad-hoc research initiatives. These focused mainly on how to efficiently get paid for deploying risk. While most of those functions translate to my current role, I am now responsible for stakeholder engagement, strategic planning, and other legal terms/operational duties. These are necessary functions of the office of the CIO, and I hope to increase staffing to support some of these duties.
AW: In what main way do you see your experience as chief risk officer playing into your function as CIO?
Lakshminarayanan: As the Risk and Asset Allocation Officer, I focused on the minutiae of structuring portfolios and the diversification of active risk across the portfolio. This experience gives me the advantage of having an intimate knowledge of the investment risks that might adversely affect the portfolio so we can mitigate them.
AW: Currently, how would you rank your priority objectives this year in your role as IPERS’s CIO?
Lakshminarayanan: We currently have three strategic objectives: 1. To secure and fund managers for a meaningful increase in our private markets’ portfolio. 2. To identify and implement external strategies to bolster our alpha initiative. 3. To launch a couple of internal initiatives in risk premia and tactical asset allocation.
AW: How would you describe your investment outlook/philosophy concerning alternative assets?
Lakshminarayanan: Alternative assets are mainstream in institutional portfolios. Given the broad definition of this asset class, IPERS is attempting to implement some of these strategies in our strategic asset allocation and some in our alpha overlay. Given the rapid growth of offerings in this asset class, it is challenging for all asset owners to sift through the space and construct portfolios that may suit their individual needs, often leading to implementation delays. IPERS is working hard to make sure we strike an appropriate balance between quick implementation and an optimal portfolio structure.
AW: Last year we reported that IPERS had a bold plan to commit up to $3 billion to private markets investments in 2022. Will your appointment impact those plans in any material way?
Lakshminarayanan: No, it will not. IPERS is a long-term investor. After thoughtful discussions with our Investment Board, IPERS implements strategic commitments based on long-term decisions.
AW: What new alternative assets do you think may have attractive prospects, i.e., Cryptocurrencies, infrastructure, or alternative energy perhaps?
Lakshminarayanan: I cannot comment on the specifics of strategies for obvious reasons. But, generally, an attractive idea only gets the strategy half of the way. The nuances of implementation, economics and other structural considerations largely define when a niche strategy in alternatives becomes more mainstream.
AW: What was the last book that you read?
Lakshminarayanan:The Inimitable Jeeves by P.G. Wodehouse
Mark Fortune has more than 30 years of experience as a financial writer and editor, with a focus on institutional investment management. He has worked in various editorial roles at organizations that include Institutional Investor, Pageant Media, Markets Group and, most recently, at New York investment management firm Cohen & Steers.