Dear Investment Profession Leadership,
Larry Fink’s 2022 annual CEO letter was entitled The Power of Capitalism. It was a strong message, and we admire the voice and view which Larry continues to champion. Capitalism, however, is just the system, and it is powerless without the capitalist who is willing to be that change agent. We are calling on you and your firms to embrace a new professionalism and use your power to help bend the arc of our future more in the direction of the client.
We have enclosed your guide to the five essential marks of effective capital allocation under the title Portfolio for the Future. A glance at the contributing authors on the inside fold underscores where CAIA sits within the industry value chain. Our shared clients come to us with an intangible form of capital. They are certainly focused on outcomes, but ones that must be measured by transparency and simple fairness, knowing that certainty is an uncompensated risk.
This is their voice, and we are honored to be the vessel to bring it to you, the change-agents, who ultimately invest this capital on their behalf. There is little doubt about what they want and need. Nothing in life is ever a straight line but let us make this the beginning of an important and sustainable discussion.
Expectations for the role of the fiduciary and the impact of private capital continue to rise, at a time where we have seen a decade plus of explosive growth. That is true but let us not forget that we work in an industry of benchmarks and relative performance. Andrea Auerbach of Cambridge Associates so rightly sized it herein with the observation that the entire US Private Equity market could comfortably fit within the existing market cap of Apple Inc. We are still early, and we can and should do better for our clients for whom we have the pleasure to serve and the obligation to serve well.
Thank you for not only taking the time to read this report but committing to act upon it in a sustainable way, as that is truly the Power of the Capitalist. CAIA Association will continue to be a convening force and thought leader on behalf of the investor, and we welcome the opportunity to work more closely with you on this aspiration.
|William J. Kelly, CAIA||John L. Bowman, CFA|
|Chief Executive Officer||Executive Vice President|