A Conversation With Mike Wissell, HOOPP's New CIO

The Healthcare of Ontario Pension Plan (HOOPP) just appointed Michael Wissell as the new CIO, effective immediately:

The Healthcare of Ontario Pension Plan (HOOPP) is pleased to announce the appointment of Michael Wissell as its new Chief Investment Officer (CIO), effective today. He takes over CIO responsibilities from HOOPP President and CEO Jeff Wendling, who has been serving both roles since becoming CEO in March 2020.

Michael has a long track record of market leadership and innovation in public and private markets, asset allocation and portfolio construction. Since joining HOOPP more than three years ago he has been an important part of HOOPP’s Executive Leadership team and Investment Management division, serving as Senior Vice President, Capital Markets & Total Portfolio. He has helped foster a culture of innovation and brought forward new investment strategies that have helped HOOPP continue to succeed on behalf of its members, even in the most challenging of market conditions.

“I am very pleased to have someone of Michael’s calibre moving into this critical position at HOOPP,” said Wendling. “His deep knowledge and understanding of the HOOPP Fund, our investment strategies and the investment teams, combined with his more than 30 years of investment experience, make him the right choice for the role.”

Prior to HOOPP, Wissell was at the Ontario Teachers’ Pension Plan from 2002 to 2018, with increasingly senior responsibilities including leading the Public Equities team and building and leading the Portfolio Construction Group. He has served on numerous Boards of Directors, including the Canadian Coalition for Good Corporate Governance, and was a member of the Ontario Securities Commission Investor Advisory Panel.

Wissell said: “I’m honoured to be HOOPP’s next CIO and look forward to building upon the success of my predecessors. HOOPP has an excellent track record of adapting to evolving market conditions and maintaining a strong funded position for our members. It’s a privilege to help Ontario’s healthcare workers achieve retirement security, especially now as our members are going through extremely challenging times. As part of the great team at HOOPP, I am excited to continue to deliver on the pension promise.”

Today’s announcement concludes an exhaustive search that identified many strong candidates. In his new role, Wissell will assume leadership of the investment team and play a lead role in HOOPP’s investment strategies while remaining a key member of the Executive Team.

About the Healthcare of Ontario Pension Plan

HOOPP serves Ontario’s hospital and community-based healthcare sector, with more than 610 participating employers. Its membership includes nurses, medical technicians, food services staff, housekeeping staff, and many others who provide valued healthcare services. In total, HOOPP has more than 400,000 active, deferred and retired members.

HOOPP operates as a private independent trust, and is governed by a Board of Trustees with a sole fiduciary duty to deliver the pension promise. The Board is jointly governed by the Ontario Hospital Association (OHA) and four unions: the Ontario Nurses’ Association (ONA), the Canadian Union of Public Employees (CUPE), the Ontario Public Service Employees' Union (OPSEU), and the Service Employees International Union (SEIU). This governance model provides representation from both management and workers in support of the long-term interests of the Plan.

Earlier today, I had a chance to catch up and speak with Mike Wissell, HOOPP's new CIO. 

Let me first publicly congratulate him as I did so privately earlier.

I also want to thank James Geuzebroek, Senior Manager, Media and Public Affairs for contacting me this morning with the press release and arranging  a conference call.

I can't say I am surprised as Michael Wissell was the favorite internal candidate but rest assured, there were excellent external candidates too (I know, the headhunter called me months ago to go over internal and external candidates).

The only thing that somewhat surprised me was why it took so long to name a new CIO but I can tell you from the little I know of Jeff Wendling, HOOPP's CEO, he doesn't strike me as someone who makes hasty organizational decisions, he respects the process and took his time before naming Mike to this position.

Also, to be fair, the last time I spoke to Jeff about this position was at the end of Q1 2020 and he told me he wanted to stay on as CIO during that turbulent time, which is totally understandable.

But carrying both hats (CEO/CIO) is incredibly taxing and Jeff already has enough on his plate running the organization. He will continue to be an integral part of the process but it's Michael Wissell who will now be responsible for investments at HOOPP across public and private markets (with Jeff's input as well as others, of course).

Mike began by telling me he's "incredibly grateful for this opportunity" to steward investments at HOOPP during the next growth phase and follow in the footsteps of Jim Keohane and Jeff Wendling, two people he learned a lot from.

He then talked about his background prior to HOOPP.

He told me he was a Managing Director at TD Securities back in 2002, trading across products, and he decided to join the Ontario Teachers' Pension Plan (OTPP).

"At the time, the pension industry was a somewhat new industry but growing fast. I was very fortunate to join OTPP during its growth phase and work with incredibly talented people."

At OTPP, he had several roles:

  • Senior Vice President, Tactical Asset Allocation (TAA) which was basically an internal hedge fund.
  • Senior Vice President/ Senior Managing Director Public Equities
  • And Senior Vice President of the portfolio construction group which is now called the Total Fund Management group.

"The portfolio construction group was wonderful, I worked with James Davis, CIO of OPTrust and Kevin Zhu, Managing Director and Head of Portfolio Construction Group at OPTrust who you recently profiled on your blog. We had the full support of senior management and in 2016, they allocated considerable resources to bolster that group and are still doing so."

That group ended up being run by Barb Zvan, the former Chief Risk Officer at OTPP now heading up the University Pension Plan Ontario. [Note: Today, UPP appointed their inaugural Chief Investment Officer (CIO), Aaron Bennett, and Senior Managing Director of Private Markets, Peter Martin Larsen.]

All this to say, Mike Wissell had tremendous experience at OTPP prior to joining HOOPP.

It's also no secret he was in the running to be OTPP's next CIO but that appointment went to Ziad Hindo (they worked closely together and know each other well).

As the press release above notes:

Since joining HOOPP more than three years ago he has been an important part of HOOPP’s Executive Leadership team and Investment Management division, serving as Senior Vice President, Capital Markets & Total Portfolio. He has helped foster a culture of innovation and brought forward new investment strategies that have helped HOOPP continue to succeed on behalf of its members, even in the most challenging of market conditions. 

Mike told me: "It has been exactly three years and 5 days since I joined HOOPP." 

He added: "Just like at OTPP, there's a complete focus on members. It's not a single employer representing members, it's multi-employer, but not many constituents. Also similar to OTPP, there's a tenacious focus on risk management."

But HOOPP is a smaller plan. When he arrived there, assets were at $76 billion, they are now at $104 billion (as at end of December 2020) but growing fast.

The performance has been stellar. HOOPP gained 11.42% in 2020 and 11.15% annualized over the last ten years.

"We are smaller than our larger peers but quick and nimble and always focused on finding the best risk-adjusted returns across public and private markets."

Of course, that was HOOPP LDI 1.0. I told Mike that HOOPP is now in LDI 2.0 and it's his job to manage the next growth phase.

We talked a bit about Fixed Income as an asset class.

He told me "you go back to 2018 and the yield on the US 10-year Treasury note was above 3%." 

That has all changed in a post-pandemic world where global bond yields are at record lows.

He said HOOPP's massive bond portfolio has served members well over the years but at these historical low rates, bonds become problematic because they are "less effective at hedging" liabilities.

I told him in a recent conversation with Jim Keohane on market manias, he told me he thinks there's a huge risk of capital loss on a 30-year zero coupon bond but added  "there's a role for bonds" in pension portfolios, and agreed with me that they serve their purpose for liquidity risk management:

"Bonds are priced for deflation and right now, it's inflation that worries me. You're better off getting a 5% dividend on bank stocks even if they are more volatile in terms of share price."

I agree with one caveat: Canadian bank shares almost doubled since their March 2020 lows and many banks took huge provisions in the first quarter of last year. Since then, they put that money back in their balance sheets, grew their bottom line this year but the top line remains anemic. 

Of course, big banks and insurance companies want rates to rise materially so their net interest income rises.

Who else wants rates to rise a lot? Pensions and fixed income retirees looking to lock in higher rates.

Interestingly, I asked Jim what happens if rates keep dropping? Won't that have a huge negative effect on Canada's large pensions?

He said "not as much as you'd think because they're fully funded so even if rates go to zero, I'm pretty confident they will remain fully funded." (worth noting that even though they are fully funded, all the large Canadian pension plans have lowered their discount rate in recent years to increase their reserve cushion in case something goes wrong).

Mike Wissell also told me there are plenty of examples all over the world where rates went negative and pensions were able to weather that storm.

He added: "We live in interesting times."

I replied: "Indeed, yesterday I had lunch with a fixed income manager who told me he's worried the war on Covid is not won and that he worries about where the world is headed and thinks we are at a major inflection point where stagflation and creative destruction will co-exist."

I told this fixed income portfolio manager "there's only one war the power elite really care about, the war on deflation, and they will do everything in their power to fight deflation because it's not congruent with capitalism, even if paradoxically this means massive amount of fiscal and monetary intervention to the scale we've never seen before."

Mike Wissell told me in a post-pandemic world, there will be "challenges and opportunities" but HOOPP will remain focused on "balancing those opportunities with the soundness of the plan."

He gave me the example of March 2020:"We were awash in liquidity. Even though there were a lot of distressed assets, the focus remained on finding the best opportunities which properly compensated us for the risk we took. Risk management was integral during this time as it always is in our investment process."

He said he was blessed to work alongside Jim Keohane, then Jeff Wendling as well as Jim Walker, the Senior Vice President of Private who will be leaving HOOPP in October to start an impact fund.

"Jim Walker makes everyone around him better."

I have no doubt but Mike has to find a suitable replacement and I mentioned a couple of names like Andrew Claerhout and Nicole Musicco, both of whom he knows well.

"The truth is we have incredible depth and the growth of large pensions in Canada has enabled immense talent, so I'm very optimistic about the next growth phase."

We didn't go into details on private markets but he told me HOOPP's brand is helping them deploy capital in infrastructure where they have a great team working extraordinarily well and are deploying a lot of capital through funds and co-investments.

He added: "We have lots of dry powder."

In private equity, he surprised me because I thought their focus was purely mid-market.

"It's not, PE tends to be mid-market but we have done some very significant deals with big funds."

Anyway, I really enjoyed talking to Mike Wissell earlier, the guy is exceptionally bright, he really knows his stuff and I have no doubt whatsoever that he will be a great CIO at HOOPP in every sense, including managing a very talented team.

I wish him and the organization all the best and look forward to catching up with him and Jeff Wendling in the future.

Below, Ray Dalio, founder of Bridgewater Associates, joins "Squawk Box" to give his take on the markets, the US economy and more.

Dalio also stated that if bitcoin proves successful, "they will kill it". I totally agree.

  Like Mike Wissell says, we live in interesting times! Good luck Mike, enjoy the journey!