The SWIB Podcast: Wisconsin Retirement System Insights

Multi-strategy funds have become more popular over the years. But what exactly is a multi- strategy fund and how does SWIB’s implementation of a multi-strategy portfolio benefit the overall investment strategy for the Wisconsin Retirement System? In this episode of The SWIB Podcast, SWIB Senior Portfolio Manager Chase Nicholson explains what a multi-strategy portfolio is, why SWIB has the portfolio, and how that portfolio fits into the long-term investment strategy for the WRS. 

Despite interest rates that remain high and inflation that is still above the Federal Reserve’s 2% target, the U.S. stock market continues a bull run, unemployment remains relatively low, and wage growth has been steady. So, what does all that mean for investors and what will the second half of the year bring as geopolitical issues continue to grab headlines and we head into a November presidential election? In this episode of The SWIB Podcast, SWIB’s Head Economist and Asset and Risk Allocation Chief Investment Officer Todd Mattina talks about what all these headline grabbing issues mean for investors, the economy, and the Wisconsin Retirement System (WRS). Todd will share his thoughts on the first half of 2024 and his perspective on what the economic outlook is for the remainder of the year.

SWIB has implemented a diverse and sophisticated investment strategy for the Wisconsin Retirement System, or WRS. The Core Trust Fund, the larger of the two WRS trust funds, holds investments in public equities, fixed income, real estate, and private markets. That investment strategy also includes a mix of active and passive strategies.

In this episode of the SWIB Podcast, learn more about the role passive strategies like synthetic replication, passive exposure management, and leverage implementation have in helping keep the WRS fully funded. Find out how SWIB’s use of securities finance, collateral optimization, and liquidity management benefit the WRS trust funds. Finally, hear how SWIB’s innovative spirit played an important role in the founding of the Global Peer Financing Association and how the association has helped SWIB engage in a variety of securities finance activities and promote best practices and knowledge sharing with peers across the world.

Investments in the private markets is one aspect of SWIB’s diversified investment portfolio. But there are many ways to invest in the private markets. One approach that has been gathering momentum in the past decade is co-investment. In a private market context, coinvesting involves buying equity or debt in private companies alongside a private equity or private credit fund. What are the benefits of these investments and how do they help the Core Trust Fund? How has SWIB built and grown its co-investment portfolio? And what is the outlook for co-investments going forward?

In this episode of The SWIB Podcast, Chris Eckerman and Kirk Wolff of SWIB’s Private Equity and Co-Investment team answer those questions as we discuss private equity co-investments and learn more about how the Investment Board was an early adopter of building out an internal co-investment program. 

Yogi Berra once famously said, “It ain’t over till it’s over.” That was certainly true for financial markets in 2023. Just when it looked like many of the same issues that investors faced in 2022 would hold down returns, 2023 finished strong. Despite the challenges of the past year, the State of Wisconsin Investment Board remained committed to its long-term investment strategy that aims to keep annuity adjustments and contribution rates stable and deliver the benefits promised to over 675,000 Wisconsin Retirement System participants.

In this episode of The SWIB Podcast, SWIB Executive Director and Chief Investment Officer Edwin Denson talks about the positive performance the WRS trust funds turned in for 2023 and what that means for annuity adjustments for the system’s retirees and contribution rates for active employees and their employers. Edwin discusses how he and his team navigated the unpredictable financial markets, what we might expect in the year ahead, and how SWIB is working to keep itself positioned as a leading global investor. 

The U.S. economy has shown remarkable resiliency despite many industry experts saying a recession is inevitable. The same cannot be said about the housing market. Home prices continue to climb, interest rates are near record highs, and home inventory is not matching homebuyer demand. It seems like the dream of owning a home is inching further out of reach for many Americans. In this episode of The SWIB Podcast, Leo Kropywiansky, senior portfolio manager on the Research Team in SWIB’s Asset & Risk Allocation Group, shares his thoughts on just how long the volatility facing the U.S. housing market might continue, when home prices could level off or even drop, and what impact the Federal Reserve’s efforts to tame inflation have had. And Mike Shearer, SWIB’s head of fixed income strategies, will provide insight on what all this means for SWIB’s mortgage-backed securities portfolio.

While the investment management of the fully funded Wisconsin Retirement System may be more well known, SWIB also manages several other smaller trust funds including the State Investment Fund or the SIF. The SIF is a pool of cash balances of various state and local governmental units created by state statute. In managing the SIF, SWIB works on behalf of local governments to manage approximately $3.5 billion in the Local Government Investment Pool (LGIP). SWIB makes world class investment expertise available to even the smallest municipalities by providing them a safe and liquid investment vehicle.

In this episode of The SWIB Podcast, Andrea Ruiz, portfolio manager for the State Investment Fund talks about the role the SIF plays not only for local governments but also the WRS. Andrea will also talk about some of the challenges she and her team have had to navigate in 2023.

As we reach the midway point of 2023, investors continue to navigate a unique set of challenges that have caused, at times, volatile financial markets. Investors face concerns from geopolitical crises and supply chain issues, to inflation and rising interest rates and the ongoing possibility of a recession. The State of Wisconsin Investment Board has worked to meet the challenges head on. But what lies ahead for the second half of 2023? Will the Federal Reserve rethink its most recent decision to pause interest rate hikes? Will inflation start to ease? And will the U.S. face a a recession?

In this episode of The SWIB Podcast, SWIB’s Head Economist and Asset and Risk Allocation Chief Investment Officer Todd Mattina talks about what all these headline grabbing issues mean for investors and the WRS. Todd shares his thoughts on the first half of 2023 and his perspective on what the economic outlook is for the remainder of the year.

Investors have been navigating challenging financial markets for the past several years. From stocks to bonds, asset classes have been impacted by high inflation, rising interest rates and the lingering effects of the pandemic. But were venture capital and private debt investments the exception? Chris Prestigiacomo oversees the state of Wisconsin investment boards, venture capital and private debt portfolios. Like other portfolio managers, Chris and his team have sought to limit the impact the volatile financial markets have had on his investment strategy while positioning his portfolios for continued success in the future.

In this episode of The SWIB Podcast, we talk with Chris about how SWIB’s venture capital and private debt portfolios have weathered the market challenges, where the portfolios stand today, and what the future might bring given the current market conditions. 

It's no secret that 2022 was a challenging year for the financial markets. There was nowhere to hide for investors looking to escape the volatility that impacted almost every asset class, including stocks. Following strong performance in 2021, the markets faced rising inflation that soared to 40-year highs, a series of unprecedented interest rate hikes, and fears that the country would be thrown into a recession.

SWIB worked to navigate the volatility while seeking opportunities to keep the WRS well-positioned for the future. Because almost 50% of the Wisconsin Retirement System's Core Fund and all of the Variable Fund are invested in stocks, finding investment opportunities, even in a down market, is critical to SWIB’s investment strategy and the long-term success of the WRS.

In this episode of The SWIB Podcast, we talk with Susan Schmidt, SWIB's Head of Public Equities. Susan shares her expertise and insight into the challenges investors faced in 2022 and what we might expect in the 2023 year ahead. Plus, she'll discuss the impetus behind the "best ideas" portfolio that her team manages, and how it helps position SWIB to deliver on its promise to members of the WRS.