41: VMLH's Vijoy Chattergy - Crisis Risk Offset, Complexity and Governance

Vijoy Chattergy is the founder and president of VMLH, a consulting firm for global institutional investors. Previously, Vijoy was Chief Investment Officer of the US$17.5 billion State of Hawai'i Employees Retirement System. He is well known for implementing an investment philosophy that focuses on functional risk classes instead of asset classes, which led him to create a Crisis Risk Offset sleeve to the portfolio. This podcast was recorded at the [i3] Asset Allocation Forum 2019 in Bowral, Australia. We spoke about the function of complexity in portfolios and how to set effective governance frameworks around this. Overview of Vijoy Chattergy podcast: 2:30 How did you get started in the investment industry? 5:00 What are some of the differences and similarities between Australian and US pension funds, you find? 10:45 As CIO you want to make key decisions, not all the decisions. 14:00 Does the size of the organisation come into play when designing a governance policy? 16:45 Governance is different from culture building 18:10 Does governance add to returns? 21:00 Where does the member come into the governance process? 22:00 Can we address the issue of peer risk through governance? 24:44 Should complexity be embraced and how would you communicate it? 27:45 Complexity should have a function in the portfolio. 29:30 Using functional risk classes 32:00 Should board directors be experts in asset management? 35:00 Implementing a crisis risk offset class