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Making Progress In A Troubled Post-Recession State | Exclusive Q&A With Dina Richard, CIO Of Trinity Health

by trusted insight posted 2years ago 2242 views

Dina Richard is the senior vice president of treasury and chief investment officer of Trinity Health, a national Catholic health care system headquartered in Livonia, Michigan. She assumed the role in December 2014. Prior to Trinity Health, Richard served as the vice president of investments for Taubman Ventures Management, a Michigan-based single-family office. She also serves as chairman for the investment committee of the Detroit Institute of Art.

Richard holds an MBA in finance and international business from Wayne State University in Detroit and a B.A. in business administration from the University of Michigan. She is also a Certified Public Accountant.

Ms. Richard was recently named on Trusted Insight’s Top 30 Women Chief Investment Officers. She graciously spoke with us on March 16, 2017. In this interview, Richard discusses a number of topics, including Trinity Health’s investment strategy, her involvement in promoting female representation in institutional investing and her observations from an investor’s perspective on Michigan’s economy post the 2008 Financial Crisis.


Trusted Insight: Prior to Trinity Health, you worked at a single-family office (Taubman Ventures Management) in Michigan. How did you transition to the health care sector?

Dina Richard: Prior to the single family office, I worked for DTE Energy the largest utility in Michigan. I went from a large institution to a single-family office, and back to an even larger institution (Trinity Health). At Taubman Ventures Management our investment portfolio was primarily focused on hedge funds and private equity investments, including direct investments. I think my experience in an entrepreneurial environment and in alternative investments was appealing. At Trinity Health we've used this experience to grow our alternatives program and also make direct investments in health care technology companies as a result.

I was a member of Trinity Health’s Investment Subcommittee from 2002 to 2012, which gave me significant insight and helped make the transition smooth. One lesson for young readers, volunteering your time can be rewarding as well as lead to new opportunities.

Trusted Insight: How have you reconstructed Trinity’s portfolio since 2014?

Dina Richard: When I joined, we performed an asset liability study, and re-evaluated the level of risk we could take within our investment portfolios. This analysis resulted in three significant changes: 1) an increase in growth assets, primarily public equities; 2) a decrease in multi-strategy hedge funds and 3) an increase in our private markets allocation.

We have two types of portfolios at Trinity Health: an operating portfolio of about $7.7 billion and pension assets (defined benefit plan) totaling approximately $6 billion. The operating portfolio is globally diversified -- we are about 40 percent in long equity, 10 percent in long-short equity, 27 percent in fixed income, 11 percent in hedge funds and the remainder in private equity and a small amount of cash.

Trusted Insight: Is this makeup typical for health care institutions?

 

"We took a hard look at our investment portfolio and asset allocation, and made a decision not to make significant changes in reaction to the crisis."
Dina Richard: We do look at peer organizations when we construct our portfolio asset allocation. I believe we may have more invested in alternative assets than some of our peers.

Trusted Insight: How is the pension fund invested?

Dina Richard: For pension assets, we embrace the LDI (liability-driven investments) concept. We hedge our liabilities with long-duration bonds based on our funding status over time. That is the primary difference between our pension and our operating portfolio investments. Once you figure out how much you want in long-duration bonds, the rest of the growth portfolio is modeled after the operating portfolio.

Trusted Insight: How is your investment team structured?

Dina Richard: In my role, I am the senior vice president of treasury and chief investment officer. I lead the investment program, but also am responsible for debt issuance, cash management and investor relations. The investment team consists of seven members, split between traditional and alternative assets as well as risk management.

Trusted Insight: Do you see it a trend that hospital investment offices are getting more sophisticated as a result of increased asset size?

Dina Richard: Yes I do, especially for large systems. Trinity Health is one of the largest Catholic health care systems in the country. With the amount of assets that we manage, our focus is to provide returns that further our mission. As health care systems grow, investment portfolios will grow, and the more important it will be to provide returns to sustain the mission.

 


Trusted Insight: How much of Trinity Health’s annual operation was supported by the investment return?
 

"After all, serving the poor and vulnerable as well as being a trusted health partner for life is a mission worth doing well."
Dina Richard: None. In fact, operations are self-sustaining. We are similar to many endowments in that our goal is to earn at least 5 percent return over the long term.

Trusted Insight: What's your observation on the status of gender balance in institutional investment?

Dina Richard: I think the investment industry as a whole still has a long way to go with embracing women in leadership positions.

Trusted Insight: What do you think is stopping women from advancing their careers, especially in this industry?

Dina Richard: I think that the demands of the industry, especially in the early years, has not always been met by employers in a way that is helpful to women who are trying to balance their careers and family lives.

As women leaders, we need to continue to help, coach and mentor younger women who are entering into this career path. For example, I am involved in a mentoring program here at Trinity Health. The program is more broad-based than mentoring just in the investment function. My mentoring relationship formally lasts for 12 months and I'm currently mentoring someone who works in a non-treasury department within the organization.

 

In the future, all industries (including health care) will need to do a much better job of ensuring that young people can have enriching careers and fulfilled personal lives.

Trusted Insight: Outside health care, you chair the investment committee of the Detroit Institute of Art. Can you discuss your role there?

Dina Richard: The Detroit Institute of Arts is one of the best in the United States, with a world-renowned collection. The DIA was recently part of the grand bargain of the bankruptcy of the City of Detroit and now is an independent art museum. Our investment goal over the next seven years is to grow the endowment. We've changed asset allocation to be more return seeking so that the museum will be able to become self-sustaining over time.

Trusted Insight: You spent most of your career in Michigan, an area where the 2008 Financial Crisis made quite a dent. What impact have you felt from an institutional investor’s perspective on the region’s economy?

Dina Richard: Yes, during the financial crisis, the region was hit pretty hard. Not only the State of Michigan, but certainly the City of Detroit has had its challenges. I would say over the last couple of years, under the leadership of Detroit’s new mayor, Mike Duggan, as well as business and community leaders like Dan Gilbert and Mike Ilitch, there has been such a significant rebound in investment in Detroit. Many companies are moving downtown and more people are living downtown for the first time in decades. It's very exciting to see the change and positive excitement in Detroit.

From an investor standpoint, I’ve seen an increase in venture capital and technology talent in the area, which is leading to new investment opportunities.


Trusted Insight: Speaking of 2008, you were with Taubman Ventures Management at the time. Were there any significant changes in your investment strategies for the firm before and after 2008?

Dina Richard: We took a hard look at our investment portfolio and asset allocation, and made a decision not to make significant changes in reaction to the crisis. We redeemed from a few funds, but that's really no different than any other year. We did take the opportunity from 2009 through 2011 to really upgrade our portfolio, especially in the hedge fund area, because a lot of hedge funds that were closed prior to 2008 reopened during that period. Basically we “bit our lip”, held through the financial crisis and were able to upgrade our portfolio. We made back our losses within about 16 months.

Trusted Insight: What's your outlook for the near-term and longer-term prospect for hospital investors?

Dina Richard: One trend in our industry that will likely continue will be more consolidation over time. Trinity Health expects to continue to grow over the next five to 10 years, which means that our investment portfolios will continue to grow. It will continue to be important to deliver strong risk-adjusted returns for the system.

In the short term, we have been recipients of the market rally and have strong investment results this year. Given our asset liability work, we believe our asset allocation and risk is appropriate for our organization. However, we have recently rebalanced back to our policy targets given the run-up in equities.

My view overall for our industry is positive. The investment opportunities are great and we also utilize our ownership positions with companies to advance causes that support our mission. After all, serving the poor and vulnerable as well as being a trusted health partner for life is a mission worth doing well.

 

To learn more about women in institutional investing, click here to view the complete list of 2017 Top Women Chief Investment Officers. You can view our full catalogue of interviews with institutional investors here.