Praise for Delivering Alpha Ochoa-Brillembourg’s 30-year record—140 basis points above a portfolio of benchmarks, with 75 percent of rolling three-year periods yielding above-market returns—creates all the credibility necessary to make her book a primer for every serious investor However, the real greatness of Delivering Alpha is how Ochoa-Brillembourg helps investors navigate the 25 percent of rolling three-year periods when they feel like failures “There is no worse professional pain than underperforming your benchmarks.” For Ochoa-Brillembourg this is where that battle for superior performance is won with philosophical vision and disciplined organization —PETER ACKERMAN, former head of special projects in the high yield and convertible bond department and head of international capital markets, Drexel Burnham Lambert What a marvelous book! Smart, informative, intelligently wrought, and beautifully written I’ve been in management for my entire career, running offices and divisions for two New York publishers as well as the Washington Post and the Library of Congress, and I have never read as engaging and illuminating a business book as Hilda Ochoa-Brillembourg’s Delivering Alpha Punctuated throughout with entertaining asides, from Albert Einstein to Oscar Wilde—as well as lessons from her personal experiences—this is a primer for anyone who wishes to understand leadership practices, investment markets, the building of prosperity, the economy as a whole, and the human component that underlies all these —MARIE ARANA, prizewinning author, most recently of Bolivar: American Liberator, and literary director, Library of Congress Those of us who know her from her Venezuelan Quinceañera years know her as Mañanita: an unusually thoughtful girl Now Hilda has become an unusually thoughtful and experienced portfolio manager, gifting us an unusually charming and expert account of what it takes to add value to life and portfolios alike She teaches us it’s more important over the long run to master the right piñata culture than to take home the most candies A great lesson for the UN Security Council members An admirable life and book —AMBASSADOR DIEGO ARRIA of Venezuela, former president of the UN Security Council In the sea of life, while many drift with the current, a brilliant few become the force of waves that crash the status quo and carry us forward Hilda Ochoa-Brillembourg is one such force Delivering Alpha captures the energy that imagined, developed, and nurtured an entity marked by integrity, innovation, and excellence in the pursuit of alpha No matter one’s investment acuity, readers will appreciate the illumination of ideas and the manifold skills needed to amplify that genius into practical and positive results —CAROL GREFENSTETTE BATES, cofounder and former managing director, Strategic Investment Group I never see this Ever As if penning the last letter to her heirs, one of the great minds in global investing sets out everything she has learned in 40 years Strategy, tactics, rules of thumb, avoidable mistakes, and the talent, psychology, and governance of great investment cultures Hilda Ochoa- Brillembourg writes for experts and professionals But there is enough here to make anyone, in the words of the English proverb, “healthy, wealthy, and wise.” —DAVID G BRADLEY, chairman, Atlantic Media Group Hilda Ochoa-Brillembourg has written a compelling insider’s tour through professional, sophisticated investing With wisdom, clarity, and the charming relief of personal stories—from childhood piñata theory to boardroom strategy—she unpacks how the best investors achieve strong, stable returns over time Delivering Alpha allows all of us to learn from the very best —KATHERINE BRADLEY, founding chairman, CityBridge Education It is widely acknowledged that good governance is critical to an organization’s long-term success Actually implementing such governance, however, is another matter entirely In Delivering Alpha, Hilda Ochoa-Brillembourg expertly demonstrates not only why good governance matters, but also what it looks like and how it can be achieved Any manager wishing to secure a strong and stable future for his or her organization will benefit from reading this book and absorbing OchoaBrillembourg’s wisdom —ARTHUR C BROOKS, president, American Enterprise Institute The concepts and practices Hilda describes here were developed by bringing to the task of portfolio management the best analytical resources and experience-born judgment and insight we could find It was exciting to be pioneering a new service model for large asset pools, and particularly satisfying to be doing so among respected, creative colleagues and friends The only thing better than reading about it in this wonderful book was living it Hilda offers the reader the opportunity to both —MARY CHOKSI, cofounder and former managing director, Strategic Investment Group Hilda Ochoa is one of the great investors of the last 30 years, and her book Delivering Alpha is a one-of-a-kind insightful journey into the facts, processes, and principles of delivering sustainable value-added in investing And it’s a pleasure to read —RAY DALIO, founder, co-CEO, and cochairman of Bridgewater Associates and author of the New York Times number one bestseller Principles Delivering Alpha, like its author, Hilda, is a fountain of knowledge and wisdom This book is a guide for institutional fiduciaries on how to create alpha over a generation time frame Hilda’s experience highlights how to combine the science of finance with pragmatic solutions to governance challenges that face institutional investors and how a culture of innovation renews the investment tools as well as renewing the governance relationships The best reward is the enhanced wealth creation to the ultimate beneficiaries of our joint efforts —MICHAEL DUFFY, cofounder and former managing director, Strategic Investment Group A one-of-a-kind book Light on theory and serious on practice, Delivering Alpha is for any finance professional who wants to know how to add sustainable value to globally diversified institutional portfolios beyond what’s learned in textbooks —RICARDO ERNST, Baratta Chair in Global Business, McDonough School of Business, Georgetown University Over three decades, the ex-World Bank investment team led by Hilda Ochoa-Brillembourg has outperformed the market benchmark without generating any additional volatility This wellconstructed book lays out the thinking that underpinned this achievement A mind-clearing and often mind-stretching read for investors —SEBASTIAN MALLABY, the Paul Volcker Senior Fellow in International Economics at the Council on Foreign Relations and author of More Money Than God: Hedge Funds and the Making of a New Elite and The Man Who Knew: The Life and Times of Alan Greenspan Alpha is the holy grail of investment management It is rare, difficult, elusive, and enormously valuable Hilda is one of the very few managers who have delivered alpha consistently over a long period of time Pay attention —JACK MEYER, former president and CEO of the Harvard Management Company and founder CEO of Convexity Capital Management Hilda’s book reflects both her investment acumen and creative instincts, which she translated into an enduring enterprise that continues to thrive years after her departure As the investment environment evolves, the principles of analytical rigor, disciplined governance, innovation, and collaboration espoused in Hilda’s book are her lasting legacy that guides us in the continuing pursuit of alpha for all of our clients —BRIAN A MURDOCK, president and CEO of Strategic Investment Group Hilda Ochoa-Brillembourg’s technical prowess as a finance professional is as impressive as her ability to combine the state-of-the-art techniques she masters with a deep understanding of human behavior These pages are full of useful, actionable insights A must-read —MOISÉS NAÍM, Distinguished Fellow, Carnegie Endowment, and author of The End of Power Every finance professional, portfolio manager, and individual investor should read this book But so should everyone else who wants to know what it takes to build and run a successful organization focused on challenging problems in a highly competitive space You will leave Delivering Alpha with new ways of thinking about investment risk and reward (pay special attention to “portfolio fit”!) But you’ll also leave it with a rare wisdom—about managing organizations, recognizing and rewarding talent, decision making, and governance—that will serve anyone who aspires to build or lead a complex organization in a volatile world —DAVID NIRENBERG, executive vice provost, Deborah R and Edgar D Jannotta Distinguished Service Professor, Committee on Social Thought, The University of Chicago The world is in the midst of a mutation Changing times always create uncertainties and opportunities; geopolitically, socially, and, yes, for investment The key is knowing how to sensibly approach an environment under transformation with both speed and depth Through her exceptionally long and successful career, Hilda Ochoa-Brillembourg has navigated the shallow waters of a changing world using a particular approach based on principles tested and developed over time Delivering Alpha is the product of that 30-year journey It is an invaluable resource for investors during this time of global and societal transformation.” —ANA PALACIO, former Spanish Minister of Foreign Affairs and former senior vicepresident and general counsel of the World Bank Group After a successful career in the highest stratospheres of global finance, Hilda Ochoa’s gift to the world is Delivering Alpha Her framework for managing funds and delivering results, including the innovative Fit Theory, will become a must-read for business students and the most sophisticated asset managers But it’s her humility, humor, and honesty that makes the work compelling The added bonus is a set of practical and battlefield-tested tools for investment committees and boards to raise their game to the highest standards, which has been a hallmark of Hilda’s entire career —DOUGLAS PETERSON, president and CEO, S&P Global In this insightful and psychologically astute book, a masterful investment strategist shows us, step by step, how to achieve a portfolio that is the right fit for the specific investor Leavening complex theory with personal anecdotes, Delivering Alpha is like a rare feast that is both delicious and good for you —NORMAN E ROSENTHAL, M.D., clinical professor of psychiatry at Georgetown University Medical School and author of Super Mind The Bible on risk management Full of rich, juicy anecdotes from an industry insider If you are a serious investor, run, don’t walk, and buy a copy —DAVID M SMICK, CEO of Johnson Smick International, Inc., and author of the New York Times bestseller The World Is Curved Hilda Ochoa-Brillembourg pioneered the use of alternatives in institutional portfolios, adding a rich set of opportunities for forward-thinking investment professionals Unlike Warren Buffett, who seems overly concerned with gross fees, Hilda recognizes that superior managers overcome the fee burden to produce excess returns for their partners She further knows that great teams identify winners In fact, her multidecade record of adding value for her clients proves the point While her discussion of the nuts and bolts provides valuable background for portfolio management practitioners, the central takeaway from her book is that effective governance underpins success Without a high-quality investment committee focused on the right issues and without a top-notch investment staff executing on the right plan, portfolio management will fail Delivering Alpha belongs on the bedside table of every serious practitioner of asset management Read it and learn! —DAVID F SWENSEN, chief investment officer, Yale University, and author of Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment Thirty-plus years—from my 90-plus years perspective not so long, but long enough to experience enormous changes in the world at large and in the financial world in particular: unbridled enthusiasm to corrosive doubts, the triumph of free markets to costly dependence on official rescues of shaky institutions; reasoned and successful investment strategies have never been more challenged This book is a reassuring collection of ideas, unlike the sagas of greed, misplaced loyalties, and fraud that have characterized too much of “Wall Street” in recent years Delivering Alpha highlights the value of being open to new approaches, adapting to perpetual, sometimes tumultuous changes This is a good, thoughtful book —PAUL VOLCKER, former chairman, Federal Reserve Copyright © 2019 by McGraw-Hill Education All rights reserved Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher ISBN: 978-1-26-044149-9 MHID: 1-26-044149-0 The material in this eBook also appears in the print version of this title: ISBN: 978-1-26-044148-2, MHID: 1-26-044148-2 eBook conversion by codeMantra Version 1.0 All trademarks are trademarks of their respective owners Rather than put a trademark 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the possibility of such damages This limitation of liability shall apply to any claim or cause whatsoever whether such claim or cause arises in contract, tort or otherwise To life and freedom, to Arturo, and to our children and grandchildren who make it all worthwhile mission objectives, with organizational structure, 203 mission-related investing (MRI), 86, 88 modern portfolio theory (MPT), xi, 5–7, 6f, 12, 54 momentum styles, xxxi MPT (modern portfolio theory), xi, 5–7, 6f, 12, 54 MRI (mission-related investing), 86, 88 mutual funds, xiii, 127 National Association of Real Estate Investment Trusts (NAREIT), 144 negative returns, 14 net long/net short, 241 newly securitized assets, xxv noblest profession, xxxviii–xl nominal return, 241 nominal tax efficiency, 241 nonmarket risks liquidity, 172–174 operational, 172 peer, 171 treasury and investment functions, 174 nonmarketables, 100–101, 128–129 non-profit world, compensation in, 200 objectives, 9–10, 21, 241 OCIO (outsourced chief investment officer), 43, 95, 102, 153, 196–197 offensive and defensive tool, volatility as, 93–94 oil crisis, of seventies, xix 1-, 2-, and 3-standard-deviation losses, 170, 233 open architecture asset management structure, xii open-end funds, 140, 141–142 operational risks due diligence process relating to, 172, 173f restriction relating to, 172–173 optimal ex ante policy, 32 optimal fit, optimal portfolios, 6–8, 47, 51, 54–55 prescient, 21–22, 21f, 22f organizational structure, with governance, 194f culture with, 203–204 disruptions with, 204 mission objectives with, 203 models of, 202 outcomes with, 203f transitions with, 204–205 values relating to, 204 outperformance, 172 outsourced chief investment officer (OCIO), 43, 95, 102, 153, 196–197 outsourcing, of frozen pension plan, 43–44 overlay, of futures, 112, 113, 114 passive management, 107, 114, 115, 115f, 118, 120 passive-active management structure, 111, 114 PBO (projected benefit obligation), 38 P/E ratios, xxxi–xxxii peer risks, 8, 49, 59, 171 pension funds, xx, xxi, 8f, 30 as U.S.-equity-centric, 80 of World Bank, xxvi, 34 pension plans, 127 See also frozen pension plan defined benefit pension plans, 37, 43, 79–80, 81f, 94, 101, 171 performance, xiii, xxxix of managers, xii, 154, 240–241 performance benchmarks, 65 performance measurement stick, 65–66 philosophy and biases, with investments, 27 Piñata Strategy, xvi–xviii, 212 Pioneering Portfolio Management (Swenson), 75 PIPES (private investments in public equity), 137 P(market), 6–7, 6f policies See also investment policy execution of, 172 optimal ex ante, 32 policies, changing of approval process for, 62–63 benefits of, 61 relative value, loss and recovery of, 63–64 tactical tilts relating to, 62 policies, divergence of with endowments and frozen DB plans, 79–80, 81f lure of new, 81–84 unstable volatilities and correlations, 84 policy benchmark risk, 241 policy portfolios, 14, 242 alternative, 27, 32, 33f factor-driven, 107–108 Yale, 49, 72f, 75, 94, 96 poor governance, xxxv–xxxvi portable alpha, 27, 106–107, 107f, 242 portfolio construction, 144–145, 169 portfolio structures, LDI, 39–40, 120 portfolio tilts, 121, 121f portfolios, xxix–xxx, 149–150 See also legacy portfolios; policy portfolios alpha-based, 105–106 balanced, xii beta-based globally balanced, 105–106 diversification of, 159 diversified, xi, 15 endowments and, 80 global diversification of, 89 leverage with, 6–7 management of, xi, xix, xxxiii, 56, 169 market, 5–10 market-weighted, 168 MPT, xi, 5–7, 6f, 12, 54 optimal, 6–8, 21–22, 21f, 47, 51, 54–55 policy, 14, 242 returns on, xi return-to-risk, 12–13, 16, 83 risk with, 242 stress-testing of, 84, 163 texturing of, 122 theory of, xxxvi, 81–82, 105 poverty, xxi–xxii prescient optimal portfolios, 21–22, 21f, 22f price, 53f, 119 corrections relating to, xxiv equilibrium, with investment decisions, xv markets relating to, xxx, 5, value relating to, xxix–xxx watching of, xxx–xxxii price, of assets, xxx–xxxi, 12 as risk, 5, 58–59 principal, 90 prioritization, with teams, 182 private equity, xxi, 129–130 private investment styles, 132 private investments in public equity (PIPES), 137 professional knowledge, of investment committee, 208–209 projected benefit obligation (PBO), 38 property sectors, 143 pure alpha, 106 P(with borrowing), 6–7, 6f P(with lending), 6f, qualified professional asset manager (QPAM), 44 quantitative portfolio analysis, 82 quod principi placuit, legis habet vigorem, 177 ranges, for asset classes, 28–30 rate of growth, xxii hurdle, 239 of return, 242 rationality, xxxiv real estate, 178 closed-end funds relating to, 140, 142 high stress times in, 140 investment vehicles for, 141–142 open-end funds relating to, 140, 141–142 separate accounts, 142 structural tilts, 139–141 real estate, investment strategies for, 143, 143f core, 142 opportunistic, 142 value-add, 142 real estate investment trusts (REITs), 141, 142, 144 real geometric return, 91, 91f, 243 real returns, 89 arithmetic, 91f, 243 disequilibrium, 28–29, 237 real volatility, 243 reallocation, of assets, 44 reassessment, of volatility and illiquidity, 95–96 rebalancing, xxxivf risky, with nonmarketables, 100–101 tactical tilts vs., 75–78, 119 regimes, authoritarian, xxiii regression coefficient, regulatory and legal considerations, of LDI, 40–41 REITs (real estate investment trusts), 141, 142, 144 relative value, xv, 63–64, 82, 150 responsible investing (RI), 85 ESG, 87 impact investing, 87 investment performance relating to, 87–88 MRI, 86, 88 SRI, 86 retention risk, 157–158 return and risk buckets, 68 return and risk goals of investment, 28 three-dimensional, 28 two-dimensional, 28 return/beta, 243 returns, xxiii, xxviif, 31–35, 105–106 See also real returns actual, 61 annual, 52, 61, 89, 90, 92–93, 111, 233 annualized excess, 197 on bonds, 167 compound, 90–92, 91f, 92f cumulative, 90f, 93f diminished, xxiv equity, 53, 167 excess, xi, xxviif, 12, 54, 197, 238 expected, xi, xxx, 12, 51, 58, 82 expected long-term returns and volatility, 48–49, 48f, 52f HFRI index returns, volatility, and correlations, 68–69, 68f, 71 high-return assets, 163 low, xxiv negative, 14 nominal, 241 on portfolios, xi rate of, 242 real geometric, 91, 91f, 243 risk-adjusted excess, xi, 12, 54 total, 245 uncertainty of, 22 unrealistic return expectations, 49–52 valuation-adjusted, 50 with various volatility, 90f volatility of, xxiv, 12, 81–83, 246 return/standard deviation, 243 return-to-risk portfolios, 12–13, 16, 83 RI See responsible investing risk and merger arbitrage, 133–134 risk and return, statistical measures of, 149 risk diversifiers, 96, 114 risk exposures, 169 risk premium, 243 risk-adjusted excess returns, xi, 12, 54 risk-equalization process, 77 risk-free asset, risk-parity model, 77–78 risks See also currency risks; nonmarket risks; return and risk goals analysis of, 243 distribution of, 80 diversification relating to, 63, 168 expected, xxx factors of, xxxix of illiquidity, 164 low-risk hedge funds, 112–113 management of, xii, xxxiv, 105 with markets, 40, 106 measurable, xxiv operational, 172–173, 173f peer, 8, 49, 59, 171 policy benchmark, 241 with portfolios, 242 price of, 5, 58–59 retention, 157–158 scaling of, xxv sources of, 169 translation, 55 risks, boundaries of, 163 assessment of, 168–169 counterparty, 168 damage, loss vs., 165–167 reluctance, of decision makers, 164–165 stress tests, 167 stress-testing illiquidity, 167–168 survival relating to, 169–170 robust investment, xvi, xxxiii R-squared, 244 safety tips, xxxvi–xxxvii scalability, 181 securitization, xxi, 126 segmentation, xxxiv–xxxv, 127 selection, of managers, 151, 153 sequence, with teams, 182 serial correlation (one month lagged), 244 service providers, governance with, 202 Sharpe, William, Sharpe ratio, 244 short sales, 244 short sellers, 138 skeptics, 19–23 skewness, 244 small sample bias, 151 small-capitalization stocks, xxv smart betas, 118, 119, 150, 169 social radicalization, xxiii socially responsible investing (SRI), 86 Sortino ratio, 245 SRI (socially responsible investing), 86 staff internal, governance with, 196–197 of Strategic Investment Group, xxviii–xxix staff compensation attributes relating to, 198 buy-side asset management, 198–200 expectations of, 199 full package relating to, 201 honesty about, 200, 201 increased revenues for, 201 limits to, 199–201 in non-profit world, 200 praise relating to, 200–201 structure of, 197 talent relating to, 197 Wall Street model for, 197–198 standard academic theory, xi standard deviation, 21, 58, 82, 165, 243, 245 stocks, xxv, 54 larger-cap, xxv, 120 small, large vs., 128 small-cap, xxv Strategic Investment Group, xii, 204–205 collaborative approach of, 177–178 excess returns without added volatility with, xxviif experience with, xxxviii expertise of, xxxviii quarterly returns versus benchmarks of, xxviif staff of, xxviii–xxix strategies, 130 See also real estate, investment strategies for active, 233 for arbitrage, 234, 235, 238–239 for investments, 142–143 long-duration LDI, 79 Piñata Strategy, xvi–xviii, 212 structural tilts, 142–143 of teams, 181–182 stress, with real estate, 140 stress-testing of illiquidity, 167–168 of portfolios, 84, 163 structural tilts, 120 activist, 136–137 within asset classes, 123 blending and hedging manager styles, 145–146 CTAs, 138 distressed, 134–135 diversified, 136 emerging markets, 128 equity long-short and directional, 133 fixed income arbitrage, 135, 238–239 hedge funds, 132, 138–139 high-yield investor segmentation, 127 life cycle of, 125, 126f macro managers, 135–136 market neutral, 132–133 nonmarketables, 128–129 portfolio construction, 144–145, 169 private equity, xxi, 129–130 private investment styles, 132 property sectors, 143 real estate, 139–141 real estate investment vehicles, 141–142 risk and merger arbitrage, 133–134 short sellers, 138 small, large stocks vs., 128 strategies, 142–143 VC, 131 structure of governance, xi, xii, xiii, xxxvi managers relating to, 241 structuring decisions, 114 style buckets, 120 survival, with risks, 169–170 sustainable investing, 86 sustainable value, xi Swenson, David F., xii, 75 SWOT analysis, xvii–xviii tactical tilts, 51, 62, 115, 120–123 rebalancing vs., 75–78, 119 talent, 197 development of, 184–186 recruitment of, 184–186 retention of, 184–186 target fund size, 245 teams, wisdom of achievements of, 177–178 ambiguity, 186–188 asset-class reviews by, 178–179 capital market reviews by, 178–179 CEO relating to, 180 collaborative effort by, 177–180, 183 cross-fertilizing ideas of, 178 culture, 183–184 embracing change, 188–189 execution excellence, 182–183 information processed by, 178–179, 179f leadership attributes, 180–181 opportunities identified by, 178–179 prioritization with, 182 sequence with, 182 strategies, 181–182 talent recruitment, development, retention, 184–186 term, 245 termination, of managers, 151, 153 theory, to practice, 47 currency risks, 54–57 diversification, 53–54 equity returns, 53, 167 expected long-term returns and volatility, 48–49, 48f, 52f hedging, of currency risks, 57–58 peers relating to, 49, 59 price of asset, as risk, 5, 58–59 unrealistic return expectations, 49–52 TIPS (Treasury Inflation Protected Securities), 82 tools, xiii, xxv, 12, 14, 93–94, 105 total return, 245 total volatility (standard deviation), 245 tracking error, 245 translation risks, 55 transparency, with teams, 183 transport, of alphas and betas, 105–108 Treasuries, 168 treasury and investment functions, coordination of, 174 Treasury Inflation Protected Securities (TIPS), 82 Treasury yields, 52f trustees See board of directors or trustees, governance with Tversky, Amos, 179–180 uncertainty, xxxii, underperformance, xxvi, xxxviii, xl, xlf of managers, 151, 155–159 undisbursed commitments, 100–101 unintended consequences, of governance, 193 United Nations Principles for Responsible Investment (UNPRI), 85 unrealistic return expectations, correcting for, 49–52 unstable volatilities and correlations, 84 up beta, 245 U.S stocks and bonds, correlations of, 54 U.S.-equity-centric pension funds, 80 valuation, xi, xxxi, 58 valuation-adjusted returns, 50 value, maps of, 111–113 alternative styles, 117 art of tilt, 120–123 asset class, managing of, 114–116 diversification criteria, 118–120 equities styles, 116–117 fixed income styles, 117 structural tilts within asset classes, 123 value added, xiii, xv, xl–xli, 120, 122, 142, 196 annual, 233 managers relating to, 153–154, 155, 157f sources of, xxvi–xxix value investing, xxxi value trap, xxxi values fair, xiv, xxx NAV, 241 with organizational structure, 204 personal, 12–13 price is not, xxix–xxx relative, xv, 63–64, 82, 150 sustainable, xi venture capital (VC) financing for, 131–132 partnerships with, 127, 131 structural tilts, 131 Vietnam War, xx volatility, xi, xxii, xxiii, 10 added, xxviif of alphas, 112 of asset class, 68–69, 68f, 71 of bonds, 82 crash relating to, 93–94 currency-induced, 15 damage vs loss relating to, 165–166 expected long-term returns and, 48–49, 48f, 52f guardrails against, xxxiii high, xiv, xv ignoring of, 90 impact of, 90–93, 91f investment expectations relating to, 32–35 managing government bonds, ETFs, and futures-in-house, 102–103 as offensive and defensive tool, 93–94 real, 243 as recoverable, 165 of returns, xxiv, 12, 81–83, 246 returns with various, 90f risky rebalancing with nonmarketables, 100–101 tolerance for, 21 total, 245 uncontrolled visible, 38 uses of, 89–92 volatility, illiquidity and during crisis, 95–96, 100 OCIOs relating to, 43, 95, 102 reassessment of, 95–96 trade-off between, 95–100 volatility above-average return, xxiv, 246 volatility below-average return, 246 Wall Street model, for staff compensation, 197–198 wealth diminishing of, 166 expansion of, xxi–xxii increase in, 166 well-diversified group, of hedge funds, 106, 111, 112–113 Western free market systems, xxii White knights, 137 win percent, 246 Winning the Loser’s Game (Ellis), xxxviii work environment, work-life balance and, 206–207 World Bank, xii, xv, 4, 69, 102, 144 major concepts of, xxv–xxxvi manager relating to, 149–150 pension fund of, xxvi, 34 tools developed by, xxv World Bank Pension Finance Committee, 20 World Bank Staff Retirement Plan, xxvi world GDP, xxi worst four quarters, 246 worst negative quarter, 246 Yale policy portfolio, 49, 72f, 75, 94, 96 Yale University, xii, 201 yield-based equity portfolios, 150 yield-based strategies, 149–150 zero-sum nature, of alphas, 181 About the Author Hilda Ochoa-Brillembourg is the lead founder and chairman of Strategic Investment Group and cofounder of Emerging Markets Management and three affiliated asset management firms A Fulbright Fellow and Fulbright Lifetime Achievement awardee, she completed doctoral studies (except dissertation) in Business Administration in Finance at Harvard Business School and received a Master of Public Administration from the Kennedy School of Government at Harvard and a Bachelor of Science in Economics from Universidad Andrés Bello, Caracas She is a Chartered Financial Analyst Hilda was chief investment officer of the Pension Investment Division of the World Bank from 1976 to 1987 and continued as an external manager of the World Bank’s pension assets until 1995 A native of Venezuela, she also served as asset and liability adviser to the World Bank, the Venezuelan government, Grupo Electricidad de Caracas, and others She has been a lecturer at the Universidad Católica Andrés Bello and IESA in Venezuela, treasurer of the C.A Luz Eléctrica de Venezuela in Caracas, and an independent consultant in economics and finance She serves on the boards of directors of Strategic Investment Group; Cementos Pacasmayo, S.A.A.; the Asset Management Company (AMC), a World Bank affiliate; and the Atlantic Council of the United States She is a former director of General Mills Inc., 2003–2016; S&P Global Inc (formerly McGraw-Hill Financial, Inc.), 2004–2017; US Airways Group Inc., 2000–2004; Custodial Trust Company, 1988– 1999; World Bank Group/IMF Credit Union, 1986–2008; Harvard Management Company, 1991– 2010; Vassar College, 1988–1998; Fulbright Association, 2007–2011; and Research Foundation of CFA Institute, 2009–2011, as well as an investment committee member of the Rockefeller Family Fund, 1982–2008 Hilda is the founding chairman of the Youth Orchestra of the Americas and serves on the advisory committee of Harvard’s David Rockefeller Center for Latin American Studies and the investment committee of the New England Conservatory She is a lifetime member of the Council on Foreign Relations, a member of the American Enterprise Institute National Council, the Committee for Economic Development Board, Harvard’s Kennedy School Dean’s Executive Council and Dean’s Alumni Leadership Council, and was a longtime member of the World Economic Forum She was a trustee and in later years president of the executive committee of the Washington National Opera, 1998–2010, and of the executive committee of the National Symphony Orchestra, 1999–2007; vice chairman of the Group of Fifty (G-50) at the Carnegie Endowment for International Peace, 2000– 2010, and an ad hoc member of the United Nations Secretary General’s Joint Staff Pension Fund Investment Committee (2011–2012) She has been featured in Pensions & Investments, Fortune, Bloomberg Latin America, Investment News, Smart Money, and Money magazine, as well as Efecto Naím, Fox News Latino, the AIMR Exchange, Hispanic Business magazine, and PODER magazine, where she was described as one of the “50 most successful women in the U.S.” She has been quoted in the New York Times, Wall Street Journal, Financial Times, Bloomberg, and elsewhere She received aiCIO magazine’s Lifetime Achievement Award She has published articles in the Financial Analysts Journal, Pensions & Investments, The Atlantic, and International Economy, and has been a guest lecturer at Columbia University, Georgetown, George Washington University, Johns Hopkins, The New School, and Yale ... Hilda offers the reader the opportunity to both —MARY CHOKSI, cofounder and former managing director, Strategic Investment Group Hilda Ochoa is one of the great investors of the last 30 years, ... collection of ideas, unlike the sagas of greed, misplaced loyalties, and fraud that have characterized too much of “Wall Street” in recent years Delivering Alpha highlights the value of being open... the threshold of expertise in any field, many of the senior investment principals have booked multiples of those threshold hours of focused attention to the topic of adding value to investment portfolios