A chief investment officer (CIO) is the C-suite executive responsible for setting the investment style and strategy of a firm’s investments. The CIO thus oversees the management of an organization’s investments. Depending on the type and size of the organization, the CIO may directly oversee investments or manage a team of professionals who have such responsibilities. The CIO may also choose to outsource some or all investments to an outside sub-manager. The CIO may also head a company’s investment committee.
Broadly the CIO will be responsible for activities such as sourcing, managing, and monitoring investments, establishing an investment policy statement (IPS), and working with external portfolio managers, analysts, and investors.
The Chief’s Investment Officer Role
A wide range of organizations and businesses have investment portfolios that need professional management, or somebody who oversees the delegation of professional management to sub-advisors or funds. Universities or nonprofit organizations have endowments that need to be managed. Corporations have pension funds. Banks and insurance companies maintain investment portfolios. Basically, any business or organization with a portfolio of assets, such as stocks or bonds, will want an investment professional to oversee the management of those assets.
The role of a CIO sometimes is combined with other areas of finance within a company and taken on by the chief financial officer (CFO), a corporate title more common than CIO. The duties of a CIO may include deciding what amount of an organization’s operating funds may be put towards investment activity with limited overall risk to the organization. This typically includes tailoring and making changes to the portfolio of the company’s investments in order to create a desirable balance between risks and return on those investments.
The investment activity, if managed properly, should not introduce a threat to the liquidity of the organization or its ability to support its operations. While the CIO may follow guidelines set by a board of directors, this executive also may offer advice and recommendations to the board on potential ways the investment strategy and policy may change. CIOs may face high expectations for the performance of the investments they choose to make. Even in challenging market cycles, wherein yields remain low for extended periods, CIOs may be expected to navigate these challenges and uphold the fiscal security of their organizations.