Podcast Summary: "E192: Lessons from a Top Pension Turnaround w/Anurag Chandra"

Release Date: July 28, 2025

Host: David Isburg

Guest: Anurag Chandra

Introduction

In episode E192 of "How I Invest with David Weisburd," host David Isburg engages in a deep and insightful conversation with Anurag Chandra, a seasoned asset allocator renowned for orchestrating a remarkable turnaround of the San Jose Federated City Employment Retirement System (EFSERS). The discussion delves into the dynamics of intelligence versus emotional intelligence (IQ vs. EQ), the pivotal role of teamwork in achieving success, strategic governance in pension management, and the nuances of transitioning to a family office role. Anurag also shares his expertise on advanced investment strategies like tax loss harvesting and model delivery, culminating in reflections on the value of being a polymath in the financial sector.

IQ vs. EQ in Finance and Investing

Challenging Conventional Wisdom

Anurag begins by presenting a contrarian view: "a person with 120 IQ with a great network will beat a person with 160 IQ with no network" (00:00). He emphasizes that while high intelligence is valuable, qualities such as resourcefulness, emotional intelligence, and the ability to work within a team often trump raw IQ in business settings.

The Role of Emotional Intelligence

He recounts an anecdote about an attorney who, despite losing cases, maintained strong client relationships through effective emotional intelligence. This, Anurag notes, underscores the importance of EQ in building trust and sustaining long-term professional relationships (04:48).

David's Reflection

David echoes this sentiment, highlighting a prevalent bias towards IQ in the finance community and the undervaluation of EQ: "There is a huge bias towards IQ and almost irreverence towards EQ" (07:59).

The Importance of Teamwork in Success

Collaborative Achievements

Anurag passionately discusses how his career successes are intrinsically tied to team efforts. From closing deals to managing complex investment portfolios, he attributes his accomplishments to collaborative endeavors and the synergy of strong team cultures (02:37).

Contrasting Individualism

He criticizes the ego-driven narrative of individual success, asserting that true joy and fulfillment come from collective achievements and the relationships built along the way (02:37).

Career as an Asset Allocator and Pension Plan Turnaround

Initial Challenges

Anurag recounts his tenure at San Jose EFSERS, where he was appointed to chair the investment committee when the pension plan was among the worst-performing in the nation (11:55).

Strategic Turnaround

Through enhanced governance, strategic asset allocation, and rigorous risk analysis, Anurag led the pension plan to become one of the top 10% performers within three years, maintaining this status consistently thereafter (12:52).

Key Strategies Employed

1. Governance Model Overhaul: Delegated manager selection to the CIO and staff, streamlining decision-making processes.
2. Exhaustive Risk Analysis: Conducted comprehensive stress tests and stochastic modeling to determine acceptable levels of portfolio volatility (12:52).
3. Timely Re-Risking: Capitalized on market downturns, notably during the COVID-19 crash, to adjust asset allocations proactively (18:00).

Governance Changes in Pension Fund Management

Delegating Manager Selection

Anurag explains the shift in governance where the CIO and investment staff take over manager selection, allowing the investment committee to focus on strategic asset allocation (19:44).

Advantages of Delegation

This approach enhances agility, reduces bureaucratic delays, and leverages the expertise of investment professionals, ultimately leading to better investment decisions (22:16).

Maintaining High Standards

He reassures that delegating does not compromise quality, as the investment staff conducts thorough due diligence and maintains strong relationships with high-caliber managers (22:16).

Transition to Family Office and Lessons Learned

Moving to a Family Office Role

After nearly a decade with San Jose EFSERS, Anurag transitioned to a family office position, bringing over the principles and practices that drove his success in pension management (23:45).

Key Lessons Applied

1. Asset Allocation Fundamentals: Emphasizing time horizon and risk profile as foundational elements in investment strategy.
2. Customization for Scale: Tailoring investment approaches based on the size and needs of the portfolio, whether it's $500,000 or $100 billion (24:02).
3. Combining Institutional Rigor with Family Office Flexibility: Striking a balance between structured governance and creative investment solutions (24:02).

Unique Challenges in Family Offices

Anurag highlights the often disorganized nature of family offices compared to institutional settings and advocates for adopting structured governance practices to enhance long-term success (26:52).

Tax Loss Harvesting and Model Delivery Strategies

Understanding Tax Loss Harvesting

Anurag defines tax loss harvesting as the strategic selling of securities to realize losses, which can offset taxable gains. This involves replacing sold assets with market proxies to maintain asset allocation integrity while avoiding wash sale rules (26:52).

Implementing Tax Optimization

He explains how his firm integrates tax loss harvesting within broader tax optimization strategies, leveraging both internal processes and external expertise to maximize after-tax returns (27:12).

Model Delivery Approach

Anurag discusses the innovative model delivery system his firm employs, where they replicate investment manager models directly by purchasing underlying securities. This approach eliminates management fees and allows for greater tax efficiency through direct ownership of assets (27:12).

The Power of Being a Polymath and Synthesis of Skills

Diverse Skill Integration

Anurag emphasizes the value of being a polymath—combining skills as an operator, investor, and asset allocator. This synthesis enables him to approach problems with a multifaceted perspective, enhancing decision-making and strategic planning (30:58).

First Principles Thinking

He advocates for first principles thinking, where integrating knowledge from various domains (e.g., physics, poetry) fosters innovative solutions and deeper understanding (34:41).

Application Across Disciplines

Anurag believes that cross-functional experiences enrich one's ability to synthesize information, making professionals more adept at navigating complex financial landscapes and identifying unique investment opportunities (33:31).

Final Thoughts and Advice

Effective Board Participation

Anurag advises that individuals serving on boards should strive to be "warm porridge"—approachable, supportive, and knowledgeable without dominating. He underscores the importance of self-awareness in recognizing one's expertise and contributing constructively to leadership roles (35:05).

Believability Weighted Index

Drawing parallels to Bridgewater's principles, he highlights the significance of credibility and experience in decision-making, advocating for weighted opinions based on expertise (36:50).

Encouraging Self-Awareness

Anurag concludes by urging professionals to assess their own strengths and knowledge levels, fostering an environment where informed and balanced perspectives drive successful outcomes (36:56).

Conclusion

Anurag Chandra's insights offer a compelling blend of strategic governance, emotional intelligence, and innovative investment practices. His journey from managing a struggling pension fund to leading a top-performing one, and now navigating the complexities of a family office, provides valuable lessons for institutional investors and individual allocators alike. Emphasizing the importance of teamwork, balanced intelligence, and cross-functional skills, Anurag underscores the multifaceted nature of successful investment management in today's dynamic financial landscape.

Notable Quotes

• Anurag Chandra on IQ vs. EQ:
  "I would have loved to have been a genius. Who wouldn't? ... the people who are resourceful tend to outproduce the people who just have extreme raw intelligence." (00:11)

• Anurag on Team Success:
  "I have all the respect in the world for the folks who... solve really hard problems. But I don't ever want to minimize that." (02:51)

• Anurag on Emotional Intelligence in Finance:
  "It really comes down to just relationship building and understanding that if you take the time to bring people along with what you're doing, it creates trust." (07:42)

• Anurag on Governance Overhaul:
  "We could add 50% volatility to the portfolio without injuring our ability to make those important monthly payments." (19:44)

• Anurag on Being a Polymath:
  "The more things you're interested in... the more you can synthesize data and information across disciplines." (33:31)

Note: Timestamps correspond to the podcast transcript for easy reference.