Hartford HealthCare’s (HHC) decision to outsource its investment office means the award-winning track record for Chief Investment Officer David Holmgren closes on June 30, 2022. The results, which were shared with the investment board in September, have been widely acknowledged in the media for being positive despite the market turmoil. As this now ends the run of one of the industry’s most respected records, Markets Group took this opportunity to review its legacy from hospital investment office startup to record-breaking, top-tier Endowment and Foundation (E&F) performer.
Markets Group interviewed a number of investment board members and has confirmed the results shared last month placed the fund at a 1.3% return for the fiscal year, ending June 30, well ahead of the E&F peer universe, which dove to negative 11% and ranked HHC in the top 1% of all endowments and foundations. Holmgren was widely seen as fearing a fixed income market collapse and hedged out duration before the rate rise cycle began. His board members additionally commented that he started hedging inflation at least two years ago, which became a second contributor to the year’s success. His Sharpe ratio ranking showed the investment team took far fewer risks than the average E&F portfolio yet excelled in its gains.
What impressed
both the board and other CIOs the most was that the performance was not only in
the year ended June 2022. The HHC investment office continually raised the bar
year after year, often ranking in the top decile. One board member feels this
current year’s success at reaching the 1st percentile may have influenced HHC’s
decision to exit investing, saying, “can’t go any higher so glad we went out on
a high.”
Speaking to former investment board members, Markets Group has pieced together the story of a performance darling. According to LinkedIn profiles, Holmgren entered Hartford HealthCare 12 years ago, and brought on his strong deputy Kevin Edwards, who was the former CIO of the University of Connecticut Foundation, about eight years ago. Board members recall the fund being only $1 billion at its inception and the subsequent planning and strategy to make it globally diversified and actively managed. Most recently, the fund closed its 10-year run topping $4 billion and annualizing at 9.7%, which places the returns in the 2nd percentile of all E&F investors.
Hartford HealthCare Investment Committee Chair David Roth commented, “The investment staff did a lot of extra due diligence and had a thoughtful understanding of Private Markets. David was very active in building relationships that provided access to funds that were known to be difficult to access. His portfolio was nuanced and risk aware, and the portfolio’s earnings exceeded the market.”
In interviewing
close hospital peers, one CIO said, “Although David is the nicest guy around,
I’m kind of glad his run is now over as his performance always makes us look bad.”
(Congratulations,
David Holmgren, on an outstanding track record.)
Editor’s note: Although Mr. Holmgren
declined to be interviewed for this article, I have had the pleasure of
interviewing him over the years and I recall a quote that I feel summarizes his
philosophy: “To accomplish our mission, we need to thoroughly be doing our
homework.” Known for investing well by doing good, he has also been commended
by his peers for consistently punching above his weight and connecting many of
the thought leaders in the industry to the benefit of their portfolios and
careers.
Staff
Report
