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Nickol R. Hackett, Chief Investment Officer, Joyce Foundation

Institutional Investor • 14 November 2023

Alpha Edge Recognition: Private Equity — Impact Investing

This year, Allocator Intel is recognizing leaders in the allocator community, acknowledged by their peers, for exceptional leadership in the key areas of portfolio construction in the Alpha Edge Recognition Awards.
Nominated for the Private Equity — Impact Investing award, Nickol R. Hackett is the Chief Investment Officer and Treasurer at the Joyce Foundation in Chicago. Since joining the foundation in 2019, she has focused the portfolio on private investments, risk management, and mission alignment amid disruptions such as the pandemic, the banking crisis, changing rate environment, and the evolving geopolitical environment.
An industry veteran, Nickol was Executive Director and Chief Investment Officer of the $14 billion Cook County Pension Fund, covering public employees in the second-most-populous county in the country. She’s spent over 20 years in investment management and capital markets.
The following is edited for length and clarity.

Let’s start with you sharing an overview of your portfolio

Assets at the foundations are approximately $1.2 billion. We’ve had considerable growth in the last couple of years. It’s a diversified portfolio: domestic and global long only strategies, 50%; liquid fixed income and credit, 20%; and private investments, 30% of the portfolio. We’re currently looking at dislocation strategies, as well as specialized opportunistic strategies.

What have been the significant changes in the portfolio?

As with any portfolio, we must always be focused on our long-term objectives and be flexible to manage according to the near-term risk and opportunity landscape. Our portfolio is a constrained pool of capital and discipline is key.
First, we conducted a structural and rebalancing to review to address our risk and liquidity profile. This led to a rotation away from the hedge-fund exposure, into more diversified private strategies. We’ve been a long-term allocator to privates and have been evaluating what’s in our mix to assure an appropriate-duration blend of private investments; they can’t all be 10- to 15-year vehicles.
Secondly, a significant change has been our focus on mission-alignment. We acknowledge that capital allocation is both a critical source of portfolio return, to support our program objectives, and likewise a driver of economic participation for emerging founders. Since widening our investment lens by including diverse founders and differentiated strategies to our investment process, both our portfolio and foundation have benefitted. We consider it imperative that our capital is inclusive, and it has proven to be a demonstrated source of value. 
Additionally, we have been deeply engaged in sustainability integration across our portfolio. This has been an intensive process starting with decarbonization as a critical first of many more steps.

When looking at strategic partnerships with an asset manager, what are some of the key areas that you focus on?

As we have turned our attention to sustainability, this area will offer a great opportunity for strategic partnerships. We’ve been engaging with our managers who are able to truly customize, according to client sustainability objectives. They will also complement further engagement efforts as we continue evaluate carbon intensity of underlying holdings and effective paths to transition toward carbon neutral strategies and innovative solutions.

What challenges do you anticipate for your team over the next few years?

We’ve had a lot of shocks: Covid, the banking crisis, the debt crisis. We’ve weathered them all to positive effect, but complacency is not our friend. There remains a lot of risk in the economy, including potentially structural shifts in the labor market as a result of AI, as well as a very charged geo-political climate.

Is AI something you would see incorporating from a decision-making standpoint?

What I enjoy about being in the foundation space is looking at problems multidimensionally. Are we contributors or are we being detractors through our investment program? If there is a disruption, in terms of economic mobility, what are other things that can drive skill and opportunity? I think there’s opportunity to drive greater low-cost solutions to achieve scale within sustainability.
We are also keenly aware of the downside risks of AI and the potential for economic displacement and how vulnerable communities may be made more vulnerable. That must be evaluated on the front end of any potential solution so as mitigate any societal harm. Operationally, it will help us map data and help us gain greater visibility and better identify themes across sectors. AI is not a perfect solution. We still have use for it as a complement, but not a sole source.

What would you say is your office’s greatest accomplishment since you joined?

I think the foundation sector at large is undergoing a shift, particularly as it relates to mission alignment.  How we acknowledge our role as stewards of our capital and our mission has immensely shifted how we evaluate opportunities and allowed to make progress on critical issues of inclusion and sustainability.
I like that we’ve developed a model to embed mission into our portfolio which expands the opportunity set, not just to achieve returns, but to consider underlying outcomes as a result from intentional capital deployment. That’s a key consideration for us in supporting the work of the foundation. Also bringing this focus while still growing the portfolio and maintaining a competitive return profile. We can do many things at once.  

What do you like to do in your spare time?

Aside from my family, I have two great external passions – tennis and art. During Grand Slam season, I remain glued to the screen and watch as many matches as I can that I can’t attend in person. I was fortunate to see Coco win the U.S. Open this year, which was a real treat. One day, I hope to catch the full Grand Slam season in person.

When I’m not watching tennis, I’m a very avid champion of the arts, and I really enjoy discovering both emerging and established artists. The discipline of identifying great investment strategies also applies in the art space: very research intensive, but with art, it can be more penetrating. Art and artists are always challenging us to set our hubris aside and bring some humility to what we think we already know opening us up to new discoveries. Few things do that better than art.

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