Jennifer Wenzel is a real estate investment manager at the Teacher Retirement System of Texas. Wenzel has held various investment positions at the retirement system since February 2009. Prior to that, she was a senior analyst at Cherokee Investment Partners and a financial analyst at Crow Holdings. Wenzel holds a BBA in finance from the University of Texas at Austin.
Wenzel was recently named on Trusted Insight’s list of the Top 30 Women Rising Stars In Institutional Investing. She graciously spoke with Trusted Insight on August 9, 2016.
Trusted Insight: To what degree is institutional investing still a male dominated industry?
Jennifer Wenzel: Finance, in general, is still a male-dominated industry, but I think that more and more women are getting into this industry over time. I haven't personally felt at a disadvantage. I think that overall the industry rewards based on merit and everyone has opportunities to excel based on skill and hard work. There are just fewer women who have chosen this career field. And I have seen some examples of unconscious bias, but it’s never been overt.
Trusted Insight: Is there anything that could be done to raise awareness of institutional investing as a career?
Jennifer Wenzel: I think business schools do a fairly good job of trying to encourage more women to get into the industry, but they can always innovate and improve to find new ways to encourage women to consider finance as an option. Also, industry organizations help raise awareness. I'm part of an organization called the Urban Land Institute. It's a global real estate-based organization that has created a Women’s Initiative to raise awareness across the real estate industry, which includes real estate finance as well.
Trusted Insight: Tell me about the investment team dynamic and your role within it.
Jennifer Wenzel: Our team includes 10 to 12 people, and we are managing the real estate allocation, which is about 14% of the total trust. We have a mixture of analysts, associates and investment managers, and we all work pretty collaboratively. We divide work based on manager relationships and each person has specific managers and funds that they are responsible for.
We meet on a weekly basis to review investments. My specific role has to do with co-invest and principal investments. About 70% of our portfolio is co-mingled funds, 30% is what we call principal investments, which is anything where we have more influence or opt-out rights. That's where I spend the majority of my time.
Trusted Insight: Within your allocation, what are you optimistic about? Conversely, what are you pessimistic about?
Jennifer Wenzel: Well we have been trying to be cautious for some time now, just because we feel like core pricing is pretty rich right now. We've tried to choose strategies that give us better risk-adjusted returns, such as the lending space. Right now there are a lot of regulatory changes, so we've dipped our toe in a pretty big way into that space. We don't have a specific allocation to debt, but we have been doing mezzanine-type preferred equity where we feel like we get a better risk-adjusted return for being in 50% to 75% of the capital stack.
We have also chosen to participate in some recapitalizations that are created by some of the changes that are going on in the market. Our managers are always consolidating, and there are a lot of recapitalization opportunities.
Trusted Insight: You mentioned that valuations are frothy. What other trends have you noticed within the industry?
Jennifer Wenzel: I think that multi-family is becoming a much more stable and accepted asset class than it ever was before, and office is going the opposite direction. But our benchmark is so heavily weighted to office that people feel like they have to have exposure to office. But on a risk-adjusted basis, I think people are realizing that it's a very cyclical property type.
Other trends would be that we've done quite a bit in the senior housing space. We like that sector and some of the other niche sides of the property types are starting to become more accepted. For example, I recently saw that one of the ODCE core funds added self-storage as a major property type, so that it counts toward their overall major property type exposure and isn’t included as “20% other” anymore. I think that's a big change.
Trusted Insight: How much exposure do you have to markets outside the United States?
Jennifer Wenzel: We have about 20% to 25% outside of the United States. It's split up between developed and emerging economies and is a mixture of Europe, Asia and some Latin America as well. We use international investing as a diversifier, and we also feel like you should get paid for taking on some of the country risk. We don't do core international, we only do value-add and opportunistic. And we are constantly refining our approach to currency.
Trusted Insight: You've worked your way up through the retirement system. What's your key to success so far?
Jennifer Wenzel: I believe my background, being on the GP side before I came to the LP side, gave me an interesting perspective to be able to know who the players were and how investment funds work from the GP side. I was already very familiar with the asset class when I started at TRS. Since then, I’ve been fortunate to be part of a team and structure that allowed us to see opportunities and capitalize on them. We were early in the multi-family development strategy, and we went pretty big into that just based on some of the fundamentals early in the cycle. We also did similar transactions in industrial and retail. I feel like being able to leverage those types of strategies has been a key to success.
Trusted Insight: It’s tough for GPs to switch to the LP side. Can you tell me about how you made the transition?
Jennifer Wenzel: TRS did not have much real estate exposure until the mid 2000s when they increased the allocation to alternatives. I was in the right place at the right time. TRS was expanding their real estate program, and I stumbled upon it. Now we are more well-known in the market as a real estate investor and we have students who want to work here after college. TRS was not on my radar when I was graduating.
Overall, I think there is more of an interest on the LP side to find people who have some GP experience and to build off of that because they know how to structure investments and they are better able to have a broader perspective on asset classes and deals.
Trusted Insight: What's a challenge that you face in your role currently?
Jennifer Wenzel: Our size is always hard. We have to invest in scale, and so we make large commitments. Our minimum fund investment is $150 to $200 million. We also limit ourselves to the number of managers that we have. That's another hurdle that we have put on ourselves.
Also, time horizons and benchmarks. It's not an easy asset class to benchmark. That's another huge hurdle that we are continually trying to refine.
Trusted Insight: Who would you consider to be TRS' peers, and what sets your investment office apart from them?
Jennifer Wenzel: All the other large state pensions are probably the closest peers. We run into the sovereign wealth funds quite a bit. They have a little bit different model. I think what sets us apart is that we have chosen to really focus on relationships as opposed to being more transactional and just doing fund by fund investing. I think that really sets us apart. I also think that we have a really strong and consistent team and process. There tends to be a lot of turnover at other places. Having that stability of team and direction really gives our partners a lot of trust and gives us credibility in the market.
Trusted Insight: What advice if any would you give to a young woman who's looking to enter the institutional investing industry?
Jennifer Wenzel: Well, I should point out, because I haven't yet, that our three analysts are all women, and two of our three associates are women. I don't think we planned it that way necessarily, but it has just evolved like that. We have a really strong team of women, and I think I'm always trying to encourage them to grow in their career.
To someone who is in school, I would say that working at a large pension gives you a great macro view instead of being extremely siloed or specialized. You get to work with some of the best investment partners in the world. I think that lends well to being able to see things from a broader perspective.
To learn more about women in institutional investing, view the full list of Top 30 Women Rising Stars In Institutional Investing.
Wenzel was recently named on Trusted Insight’s list of the Top 30 Women Rising Stars In Institutional Investing. She graciously spoke with Trusted Insight on August 9, 2016.
Trusted Insight: To what degree is institutional investing still a male dominated industry?
Jennifer Wenzel: Finance, in general, is still a male-dominated industry, but I think that more and more women are getting into this industry over time. I haven't personally felt at a disadvantage. I think that overall the industry rewards based on merit and everyone has opportunities to excel based on skill and hard work. There are just fewer women who have chosen this career field. And I have seen some examples of unconscious bias, but it’s never been overt.
Trusted Insight: Is there anything that could be done to raise awareness of institutional investing as a career?
Jennifer Wenzel: I think business schools do a fairly good job of trying to encourage more women to get into the industry, but they can always innovate and improve to find new ways to encourage women to consider finance as an option. Also, industry organizations help raise awareness. I'm part of an organization called the Urban Land Institute. It's a global real estate-based organization that has created a Women’s Initiative to raise awareness across the real estate industry, which includes real estate finance as well.
Trusted Insight: Tell me about the investment team dynamic and your role within it.
Jennifer Wenzel: Our team includes 10 to 12 people, and we are managing the real estate allocation, which is about 14% of the total trust. We have a mixture of analysts, associates and investment managers, and we all work pretty collaboratively. We divide work based on manager relationships and each person has specific managers and funds that they are responsible for.
We meet on a weekly basis to review investments. My specific role has to do with co-invest and principal investments. About 70% of our portfolio is co-mingled funds, 30% is what we call principal investments, which is anything where we have more influence or opt-out rights. That's where I spend the majority of my time.
Trusted Insight: Within your allocation, what are you optimistic about? Conversely, what are you pessimistic about?
Jennifer Wenzel: Well we have been trying to be cautious for some time now, just because we feel like core pricing is pretty rich right now. We've tried to choose strategies that give us better risk-adjusted returns, such as the lending space. Right now there are a lot of regulatory changes, so we've dipped our toe in a pretty big way into that space. We don't have a specific allocation to debt, but we have been doing mezzanine-type preferred equity where we feel like we get a better risk-adjusted return for being in 50% to 75% of the capital stack.
We have also chosen to participate in some recapitalizations that are created by some of the changes that are going on in the market. Our managers are always consolidating, and there are a lot of recapitalization opportunities.
Trusted Insight: You mentioned that valuations are frothy. What other trends have you noticed within the industry?
Jennifer Wenzel: I think that multi-family is becoming a much more stable and accepted asset class than it ever was before, and office is going the opposite direction. But our benchmark is so heavily weighted to office that people feel like they have to have exposure to office. But on a risk-adjusted basis, I think people are realizing that it's a very cyclical property type.
Other trends would be that we've done quite a bit in the senior housing space. We like that sector and some of the other niche sides of the property types are starting to become more accepted. For example, I recently saw that one of the ODCE core funds added self-storage as a major property type, so that it counts toward their overall major property type exposure and isn’t included as “20% other” anymore. I think that's a big change.
Trusted Insight: How much exposure do you have to markets outside the United States?
Jennifer Wenzel: We have about 20% to 25% outside of the United States. It's split up between developed and emerging economies and is a mixture of Europe, Asia and some Latin America as well. We use international investing as a diversifier, and we also feel like you should get paid for taking on some of the country risk. We don't do core international, we only do value-add and opportunistic. And we are constantly refining our approach to currency.
Trusted Insight: You've worked your way up through the retirement system. What's your key to success so far?
Jennifer Wenzel: I believe my background, being on the GP side before I came to the LP side, gave me an interesting perspective to be able to know who the players were and how investment funds work from the GP side. I was already very familiar with the asset class when I started at TRS. Since then, I’ve been fortunate to be part of a team and structure that allowed us to see opportunities and capitalize on them. We were early in the multi-family development strategy, and we went pretty big into that just based on some of the fundamentals early in the cycle. We also did similar transactions in industrial and retail. I feel like being able to leverage those types of strategies has been a key to success.
Trusted Insight: It’s tough for GPs to switch to the LP side. Can you tell me about how you made the transition?
Jennifer Wenzel: TRS did not have much real estate exposure until the mid 2000s when they increased the allocation to alternatives. I was in the right place at the right time. TRS was expanding their real estate program, and I stumbled upon it. Now we are more well-known in the market as a real estate investor and we have students who want to work here after college. TRS was not on my radar when I was graduating.
Overall, I think there is more of an interest on the LP side to find people who have some GP experience and to build off of that because they know how to structure investments and they are better able to have a broader perspective on asset classes and deals.
Trusted Insight: What's a challenge that you face in your role currently?
Jennifer Wenzel: Our size is always hard. We have to invest in scale, and so we make large commitments. Our minimum fund investment is $150 to $200 million. We also limit ourselves to the number of managers that we have. That's another hurdle that we have put on ourselves.
Also, time horizons and benchmarks. It's not an easy asset class to benchmark. That's another huge hurdle that we are continually trying to refine.
Trusted Insight: Who would you consider to be TRS' peers, and what sets your investment office apart from them?
Jennifer Wenzel: All the other large state pensions are probably the closest peers. We run into the sovereign wealth funds quite a bit. They have a little bit different model. I think what sets us apart is that we have chosen to really focus on relationships as opposed to being more transactional and just doing fund by fund investing. I think that really sets us apart. I also think that we have a really strong and consistent team and process. There tends to be a lot of turnover at other places. Having that stability of team and direction really gives our partners a lot of trust and gives us credibility in the market.
Trusted Insight: What advice if any would you give to a young woman who's looking to enter the institutional investing industry?
Jennifer Wenzel: Well, I should point out, because I haven't yet, that our three analysts are all women, and two of our three associates are women. I don't think we planned it that way necessarily, but it has just evolved like that. We have a really strong team of women, and I think I'm always trying to encourage them to grow in their career.
To someone who is in school, I would say that working at a large pension gives you a great macro view instead of being extremely siloed or specialized. You get to work with some of the best investment partners in the world. I think that lends well to being able to see things from a broader perspective.
To learn more about women in institutional investing, view the full list of Top 30 Women Rising Stars In Institutional Investing.