Elin Szymanowski is a private equity investment officer at the Los Angeles County Employees Retirement Association (LACERA), which manages the $55 billion retirement fund for the County of Los Angeles and outside Districts.
In this interview, she discusses how LACERA's dynamic work environment attracts and retains top investment talent; why she’s keeping a close eye on the infrastructure and healthcare sectors; and how she contributes to the industry’s efforts in improving diversity.
Elin Szymanowski was recently named as one of Trusted Insight's 2018 Top 30 Public Pension Institutional Investors. This interview has been edited and condensed for clarity.
Trusted Insight: Tell us more about the LACERA investment team and your role within it.
Elin Szymanowski: LACERA has a 30-person investment team responsible for overseeing and administering LA County’s $55 billion pension plan that includes over 165,000 members.
My area of expertise is private equity where I am a member of the Global Private Equity Investment Committee. I specialize in primary fund investing, with specific responsibility for European private equity investments across all strategies. My lateral responsibilities are contributing to modernization of the LACERA investment policy, which governs the total fund, and launching a new asset class that we introduced in 2018.
Trusted Insight: LACERA beat its 1-, 3- and 5-year policy benchmark returns. What’s the strategy for maintaining that momentum?
Elin Szymanowski: I would attribute our success to attracting and retaining top investment talent, who focus on implementing best practices in asset allocation and on making the best investment decisions possible. The team is organized in a matrix whereby team members develop deep traditional asset class expertise (i.e. specializing in real estate, private equity, fixed income, etc.) while at the same time working collaboratively across the total portfolio to become expert in the allocation of funds across asset classes while managing risk.
This matrix approach creates a dynamic and professional work environment with a lot of idea generation and exchange. We think that environment, coupled with a high degree of responsibility, is attractive to talented people. The leadership team here is very focused on developing that talent, which as a result has the skills and expertise to achieve LACERA’s performance objectives.
Trusted Insight: Within private equity, it seems like the winners of the future are firms that leverage or adopt new technology. Is this a trend you’re keeping a close eye on?
Elin Szymanowski: Yes, at LACERA, we're definitely looking at ways to use technology to help us not only capture but also synthesize the information we gather. That applies to all information, whether it is about a sector, a fund, a team or a particular market. This approach is really helpful in informing investment decisions, especially now, in what is an “overheated” market, where private equity firms are raising a lot of capital at a fast pace. With technology we are able to analyze bigger datasets more efficiently.
Trusted Insight: What other investment or industry verticals interest you the most in today’s market?
Elin Szymanowski: As a private equity investor, I tend to skew more toward long-term, sustainable trends versus something that's more tactical or shorter-term. I like to identify funds that invest in industries with positive long-term fundamentals where companies benefit from two of my favorite features of alternative investments: (1) longer time horizons, and (2) focused management.
Today, infrastructure and healthcare are interesting to me. Both sectors show long-term funding needs and clear demand. They can be addressed through a variety of private equity strategies, whether it's venture or something more established like an infrastructure or buyout fund. Within these strategies I look for managers with a proven track record of high impact management of their portfolios.
Trusted Insight: A well-known VC recently made a prediction of Amazon introducing something along the lines of “Amazon Health,” which seems to fall in line with what you’re discussing. What are LACERA’s next steps in venture capital?
Elin Szymanowski: LACERA plans to continue investing in venture capital in a very steadfast way. Venture has always been and will remain a core part of the LACERA private equity program. It's about 10 percent of the private equity portfolio, with the first commitment made to a VC fund in 1986, and the most recent one just this quarter.
If you invest in VC, you need to invest with the few top firms that have a consistent long-term positive track record. Otherwise, the returns are not very satisfactory. We are fortunate that we have been investing in and been loyal to some of these top funds for many years. We also have always made a real effort of building long-term relationships with emerging top VCs who care about the level of commitment that we bring to the asset class. We now capitalize on these long-term efforts.
Trusted Insight: After hundreds of meetings with managers, what‘s your investment philosophy for selecting great managers versus good managers?
Elin Szymanowski: What I find helpful in manager selection is interacting with firm leadership and the investment team over an extended period of time. These longer relationships help me understand how a team underwrites, how they think about investing and how they work together. Over time and through multiple touchpoints, I think certain firms emerge as consistent, thoughtful, and disciplined in executing their strategies and managing their firms. Seeing multiple instances of consistent behavior from a manager in different market environments and deal scenarios, over a period of years, helps me build conviction in their ability to deliver returns.
Another point is that I spend a lot of time meeting with all relevant managers in the market. I always aim to fully understand the market differences, for example between the Spanish and Swedish private equity markets. As part of that effort, I need to understand the capital demand and supply balance, what investment strategies are most likely to return high absolute returns and which firms are best equipped to capitalize on that particular opportunity. For that I need to creatively use my networks to identify the key market participants and ultimately spend a lot of time on the road to meet all these managers.
Trusted Insight: Do you believe there’s been significant progress in gender diversity in the institutional workplace?
Elin Szymanowski: I have been fortunate to work with both women and men who, like me, are committed to promoting diversity of talent in the industry. This commitment is based on the belief that environments promoting diversity of thought and experience lead not only to superior investment performance, but also to creating a great working environment. I certainly believe that is true.
Today, I see more and more organizations who are making diversity a priority. Many of our best performing managers are focused on it, but it is also fair to say that a number of firms have not realized the potential that diversity brings.
I personally participate in global organizations like PEWIN, Level 20, and the ILPA that promote diversity. I hope to make a small contribution to more progress that way.
Trusted Insight: Do you feel we missed anything in our discussion?
Elin Szymanowski: I’d just like to thank you for the recognition and for taking the time to learn more about LACERA and our approach to investing in the private equity asset class. Private Equity has not only delivered great returns for the members of our pension plan, but it has also had a significant positive impact on companies and economies at large, for example, in job creation. I am proud to be part of the industry and to be in a position to shape the ongoing evolution of the private equity industry.
View our full catalog of interviews here.
The full list of 2018 Top 30 Public Pension Institutional Investors can be found here.
In this interview, she discusses how LACERA's dynamic work environment attracts and retains top investment talent; why she’s keeping a close eye on the infrastructure and healthcare sectors; and how she contributes to the industry’s efforts in improving diversity.
Elin Szymanowski was recently named as one of Trusted Insight's 2018 Top 30 Public Pension Institutional Investors. This interview has been edited and condensed for clarity.
Trusted Insight: Tell us more about the LACERA investment team and your role within it.
Elin Szymanowski: LACERA has a 30-person investment team responsible for overseeing and administering LA County’s $55 billion pension plan that includes over 165,000 members.
"The leadership team here is very focused on developing that talent, which as a result has the skills and expertise to achieve LACERA’s performance objectives."
My area of expertise is private equity where I am a member of the Global Private Equity Investment Committee. I specialize in primary fund investing, with specific responsibility for European private equity investments across all strategies. My lateral responsibilities are contributing to modernization of the LACERA investment policy, which governs the total fund, and launching a new asset class that we introduced in 2018.
Trusted Insight: LACERA beat its 1-, 3- and 5-year policy benchmark returns. What’s the strategy for maintaining that momentum?
Elin Szymanowski: I would attribute our success to attracting and retaining top investment talent, who focus on implementing best practices in asset allocation and on making the best investment decisions possible. The team is organized in a matrix whereby team members develop deep traditional asset class expertise (i.e. specializing in real estate, private equity, fixed income, etc.) while at the same time working collaboratively across the total portfolio to become expert in the allocation of funds across asset classes while managing risk.
"Today, infrastructure and healthcare are interesting to me. Both sectors show long-term funding needs and clear demand."
This matrix approach creates a dynamic and professional work environment with a lot of idea generation and exchange. We think that environment, coupled with a high degree of responsibility, is attractive to talented people. The leadership team here is very focused on developing that talent, which as a result has the skills and expertise to achieve LACERA’s performance objectives.
Trusted Insight: Within private equity, it seems like the winners of the future are firms that leverage or adopt new technology. Is this a trend you’re keeping a close eye on?
Elin Szymanowski: Yes, at LACERA, we're definitely looking at ways to use technology to help us not only capture but also synthesize the information we gather. That applies to all information, whether it is about a sector, a fund, a team or a particular market. This approach is really helpful in informing investment decisions, especially now, in what is an “overheated” market, where private equity firms are raising a lot of capital at a fast pace. With technology we are able to analyze bigger datasets more efficiently.
Trusted Insight: What other investment or industry verticals interest you the most in today’s market?
Elin Szymanowski: As a private equity investor, I tend to skew more toward long-term, sustainable trends versus something that's more tactical or shorter-term. I like to identify funds that invest in industries with positive long-term fundamentals where companies benefit from two of my favorite features of alternative investments: (1) longer time horizons, and (2) focused management.
"I see more and more organizations who are making diversity a priority... but it is also fair to say that a number of firms have not realized the potential that diversity brings."
Today, infrastructure and healthcare are interesting to me. Both sectors show long-term funding needs and clear demand. They can be addressed through a variety of private equity strategies, whether it's venture or something more established like an infrastructure or buyout fund. Within these strategies I look for managers with a proven track record of high impact management of their portfolios.
Trusted Insight: A well-known VC recently made a prediction of Amazon introducing something along the lines of “Amazon Health,” which seems to fall in line with what you’re discussing. What are LACERA’s next steps in venture capital?
Elin Szymanowski: LACERA plans to continue investing in venture capital in a very steadfast way. Venture has always been and will remain a core part of the LACERA private equity program. It's about 10 percent of the private equity portfolio, with the first commitment made to a VC fund in 1986, and the most recent one just this quarter.
If you invest in VC, you need to invest with the few top firms that have a consistent long-term positive track record. Otherwise, the returns are not very satisfactory. We are fortunate that we have been investing in and been loyal to some of these top funds for many years. We also have always made a real effort of building long-term relationships with emerging top VCs who care about the level of commitment that we bring to the asset class. We now capitalize on these long-term efforts.
Trusted Insight: After hundreds of meetings with managers, what‘s your investment philosophy for selecting great managers versus good managers?
Elin Szymanowski: What I find helpful in manager selection is interacting with firm leadership and the investment team over an extended period of time. These longer relationships help me understand how a team underwrites, how they think about investing and how they work together. Over time and through multiple touchpoints, I think certain firms emerge as consistent, thoughtful, and disciplined in executing their strategies and managing their firms. Seeing multiple instances of consistent behavior from a manager in different market environments and deal scenarios, over a period of years, helps me build conviction in their ability to deliver returns.
Another point is that I spend a lot of time meeting with all relevant managers in the market. I always aim to fully understand the market differences, for example between the Spanish and Swedish private equity markets. As part of that effort, I need to understand the capital demand and supply balance, what investment strategies are most likely to return high absolute returns and which firms are best equipped to capitalize on that particular opportunity. For that I need to creatively use my networks to identify the key market participants and ultimately spend a lot of time on the road to meet all these managers.
Trusted Insight: Do you believe there’s been significant progress in gender diversity in the institutional workplace?
Elin Szymanowski: I have been fortunate to work with both women and men who, like me, are committed to promoting diversity of talent in the industry. This commitment is based on the belief that environments promoting diversity of thought and experience lead not only to superior investment performance, but also to creating a great working environment. I certainly believe that is true.
Today, I see more and more organizations who are making diversity a priority. Many of our best performing managers are focused on it, but it is also fair to say that a number of firms have not realized the potential that diversity brings.
I personally participate in global organizations like PEWIN, Level 20, and the ILPA that promote diversity. I hope to make a small contribution to more progress that way.
Trusted Insight: Do you feel we missed anything in our discussion?
Elin Szymanowski: I’d just like to thank you for the recognition and for taking the time to learn more about LACERA and our approach to investing in the private equity asset class. Private Equity has not only delivered great returns for the members of our pension plan, but it has also had a significant positive impact on companies and economies at large, for example, in job creation. I am proud to be part of the industry and to be in a position to shape the ongoing evolution of the private equity industry.
View our full catalog of interviews here.
The full list of 2018 Top 30 Public Pension Institutional Investors can be found here.