Balancing $5.7T in Active and Passive Management with Lori Heinel

Summary

Masters in Business: "Balancing $5.7T in Active and Passive Management with Lori Heinel" Podcast Host: Barry Ritholtz (Bloomberg)
Guest: Lori Heinel, EVP & Global CIO, State Street Investment Management
Release Date: July 24, 2026

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Episode Overview

In this episode, Barry Ritholtz interviews Lori Heinel, Executive Vice President and Global Chief Investment Officer at State Street Investment Management. Heinel shares her journey from a religious studies major at Princeton to overseeing $5.7 trillion in assets. The conversation spans her career development, lessons from the 1987 market crash, the evolution of investing between active and passive strategies, the rise of ETFs and indexing, portfolio construction, the impact of AI and digital assets, and insights into the current market environment.

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Key Discussion Points & Insights

Lori Heinel’s Unusual Early Career Path

• Academic beginnings:
  • Studied Religion at Princeton before her MBA at Carnegie Mellon.
  • Explanation: “I happened to take a religious studies course, which I just absolutely adored… I thought from a personal point perspective, it would be an interesting way to get more insight into what was going on with some of these family members.” (02:23)
• First entry into Wall Street:
  • Considered law, then pivoted to finance via Wall Street analyst programs for pragmatic reasons.

Lessons from the 1987 Crash

• Trading Floor Experience:
  • Worked in fixed income during Black Monday; witnessed chaos unfold between equities and bonds.
  • “The first lesson I learned was that there are winners and there are losers in every market event and it's better to be on the winning side.” (05:38)
  • Describes market reactions and the birth of moral hazard: “We became accustomed in that moment to this idea of the Fed put.” (06:05)
• Money Flows:
  • Investors fled equities for cash-equivalent muni instruments yielding strong tax-free returns:
    • Ritholtz: “What was the Yield back in 87? Oh gosh, 7, 8, 9%?” (07:49)
    • Heinel: “On those it would have been in the sevens, probably.” (07:52)
    • Ritholtz: “Seven tax free.” (07:55)
    • Heinel: “Tax free.” (07:56)
    • Ritholtz: “Oh man, that's 10, 11, 12.” (07:57)
    • Heinel: “Exactly.” (07:59)

Career Development & Personal Moves

• Flexibility shaped by family and life events:
  • Transitioned cities for personal reasons; found opportunities in Pittsburgh, then Philly, ultimately leaning into asset management at SEI.
  • Key lesson: “Focusing on the client first” became a career throughline. (10:55)
• Learning from client interactions:
  • Related a story about solving a client’s real problem at an airport authority deal by listening deeply rather than assuming:
    • "Listen to the client. Don't just think because you're the expert, you know all the answers. They might need something different that you haven't thought of." (11:55)
    • Learning came not from seniority, but from empathy and curiosity.

Rise at State Street and Indexing's Evolution

• State Street's Role:
  • Drawn by breadth of platform; offered broad asset class reach and leadership in ETFs/indexing.
  • “They covered all asset classes. State street, as you know, had a prime position in ETFs and indexing.” (13:55)
• Managing landmark ETFs:
  • “There's a lot of complexity as you well know to running ETFs, but one of the benefits is that it’s one large pool of capital…” (15:41)
  • Customization is even greater for institutional separate accounts.

Active vs. Passive Management

• Core views on portfolio construction:
  • Foundational belief in blending indexing (core/satellite) with strategic active management:
    • “This combination of index exposure… coupled with maybe some satellite managers… just made a lot of sense.” (19:09)

Indexing's Continued Growth

• Still major “runway” for passive strategies, especially in fixed income and globally among newer investor classes:
  • “If you think about places like fixed income, we’ve only started to scratch the surface…” (20:54)
  • Rising adoption in emerging markets and segments like Trump accounts as default investments. (21:54)

Challenges of Active Management in Different Asset Classes

• Equities:
  • “It is absolutely empirically true that in many spaces in equities, the average manager just does not outperform.” (23:02)
• Fixed Income:
  • Active management has seemed to outperform, but recent factor analysis shows this is often due to “going down in credit quality or extend duration”—adjust for those, and advantage wanes. (23:02–24:35)
  • Increasing focus on factor-based approaches for fixed income alpha.

CIO Role & Investment Organization

• Broad oversight:
  • “We do have active capabilities as well… a couple hundred billion dollars…” (24:52)
  • Value in synthesizing views across index, active, and multi-asset teams. Macro calls done by committee; active managers tasked with generating alpha.
• Managing a global investment team of 600+:
  • Focus on hiring well, collaborating globally, and pressuring hypotheses.
    • “The most important job… is you hire well… you pressure test their theses… and you provide the sort of guidance and oversight and opportunities to collaborate…” (27:25)

Day in the Life as Global CIO

• Heavy client engagement, global travel (45 flights in Q1 2026), strategy, talent management, reading/learning.
• Partnerships & innovation: Collaborations with Bridgewater, Apollo, research on integrating AI, talent reviews, strategic vision.
  • “We spend a lot of time talking about what kind of resources do we need… how are we readying our teams to be good stewards and users of AI…” (28:39–31:34)

Alternatives & Private Markets in Portfolios

• Case for privates in 401(k)s:
  • “If you think about just that magnitude of opportunity that's lost if you can’t participate in those markets, it’s just incredible.” (32:08)
  • On private credit: Offers attractive illiquidity premia, high-quality investment-grade credit.

Gold & Alternatives

• Role of gold:
  • Advocated gold allocations for years for diversification, protection against tail risk, and fiscal risks.
  • “We were looking for other ways... that would provide some of that cocktail of diversification benefit that Fixed income just wasn't likely to provide. And so we settled on gold for lots of reasons…” (34:04)
  • Still retain a strategic gold allocation.

Crypto’s Role & Digital Asset Trends

• Personal story:
  • Skepticism about Bitcoin despite family involvement in mining in 2012 (humor about missed opportunity).
  • "It turns out you can." (37:36)
• Use cases:
  • Recognizes limited but meaningful use cases (e.g., in countries with unstable currencies). Belief digital assets, tokenization, and finance are important, but struggles to value crypto itself.
  • “There's something about the digital that is very compelling. And in a weird way, it may be that once that digital infrastructure gets more evolved, it'll make Bitcoin even less important.” (39:10)

Current Markets & Outlook (2026)

• 2026 Market Outlook:
  • Constructive on risk assets (equities), with focus on diversification beyond large-cap growth. War with Iran and inflation created volatility but strategic views held.
  • “Focus on equities over fixed income, but do so in a bit more broad-based way…” (41:05)
• Broadening market leadership:
  • Outperformance rotation from large-cap U.S. to small/mid-cap, developed ex-US, and EM.
  • “I'm kind of a traditionalist in that way. I do believe you want to be diversified and have exposures to multiple places.” (43:36–44:15)

AI, Investment Technology, and Productivity

• AI’s impact:
  • State Street has used AI, machine learning, and NLP in active strategies for years; biggest early wins are in process automation (commentary/RFP) and research copilot augmentation.
  • All AI uses remain human-overseen for now. (46:31–48:45)
• AI Capex:
  • Monitoring when capital spending stops translating to earnings.

Inflation, Macro Forecasting, and the Consumer

• Inflation:
  • Expectation of further declines, but not likely returning to 2%. Cautions about commodity-driven shocks being “one-time” but still significant.
  • “You have to be a bit humble in this kind of environment when you're making any kind of bold calls.” (49:34)
• Resilient yet bifurcated consumer:
  • Acknowledges K-shaped recovery (upper-income households continue to spend, buoying economy).
  • “You don't need 100% of the consumers to participate, to have the consumer economy doing just fine. That’s a sad thing in a lot of ways, but it's just the reality.” (53:33)

Culture & Leadership

• Fearless Girl Campaign:
  • Heinel led the launch of the now-iconic "Fearless Girl" statue to promote women's leadership and diversity, placed facing the Wall Street bull.
  • “Before you know it, I'm booked on three or four or five news programs… telling the story about how the fearless girl and why we did it and how important it was to stand up for those who perhaps couldn't stand up for themselves.” (56:16)
• Support for the Arts:
  • Board service at the Boston Ballet, combining classical and modern performance, and a personal appreciation for the arts.

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Notable Quotes & Timestamps

• On client-centric problem solving:

  • “Sometimes the problem is not what you thought the problem was. And sometimes the answer, even though it's not optimal, it's the best answer.” — Lori Heinel (12:38)

• On balancing active vs. passive:

  • "It really is I want to accomplish some sort of outcome, some sort of risk based outcome for that client. But I also want to do it in a way that covers fees, provides opportunities for alpha or outperformance, but does so in a kind of measured way." — Heinel (19:09)

• On the rise of passive investing:

  • "There's still plenty of room for indexing to run... The net incremental dollar is coming from the retail client... and that's happening globally." — Heinel (20:54–21:57)

• On career advice for young professionals:

  • “You can do so many different things, you get access to technical acumen… I love the problem solving aspect of it.” — Heinel (61:08)

• On women in finance:

  • Describes creation of “Connected Women,” an informal mutual mentoring/wine club, for support and networking. (58:33)

• On investing early:

  • “I wish I started investing earlier and more often. I was a net creditor for many, many, many years because I wanted to have nice clothes and jewelry…” — Heinel (61:48)

• On gold:

  • “We still have in our strategic allocation portfolios, you know, a couple percent allocated to gold because we do think that it provides very distinctive benefits in certain kinds of crises.” (34:04)

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Important Timestamps

• Early career and 1987 crash: 02:08 – 07:25
• Active vs. passive evolution & State Street role: 10:38 – 20:54
• Fixed income insights & factor-based management: 22:16 – 24:35
• CIO day-in-the-life and team management: 26:57 – 31:34
• Role of gold & crypto discussion: 33:19 – 39:26
• Market and inflation outlook: 41:05 – 51:07
• Consumer health and economic resilience: 51:07 – 53:56
• Fearless Girl and Boston Ballet: 55:07 – 58:23
• Mentorship, books, and career advice: 58:23 – 63:34

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Conclusion

This rich interview provides both an insightful personal narrative and experienced perspectives on asset management, the evolution of ETFs and indexing, the delicate dance between active and passive strategies, the pressures and opportunities of innovation (especially AI), and the state of the market and economy in 2026. Lori Heinel’s approach is client-centric, pragmatic, and deeply informed by decades of hands-on leadership.

“Sometimes the answer, even though it's not optimal, it's the best answer.” (12:38)

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For further conversations with industry leaders, find previous Masters in Business episodes wherever you get your podcasts.

Transcript

[Barry Ritholtz]

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[Lori Heinel]

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[Barry Ritholtz]

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[Lori Heinel]

And I'm Karen Moscow. Join us each morning for curated stories on current events, politics, business and foreign

[Barry Ritholtz]

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[Lori Heinel]

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[Barry Ritholtz]

Listen to Bloomberg Daybreak each morning on Apple, Spotify or anywhere you listen.

[Lori Heinel]

Bloomberg Audio Studios Podcasts Radio news this

[Barry Ritholtz]

week on the podcast Another Banger Lori Heinl is Executive Vice President and Global Chief Investment Officer at State Street Investment management. She oversees $5.7 trillion in assets and that's as of the end of 2025. It's OB market has appreciated since then. She oversees index funds, ETFs, active strategies, alternatives, Multi Asset Solutions and really drives an incredible organization. I thought this conversation was fascinating and I think you will also. With no further ado, my interview with State Street's Lori Heinel. Lori Heinel, welcome to Bloomberg.

[Lori Heinel]

Thanks for having me.

[Barry Ritholtz]

So let's start out with your early career and your academic background. You study religion at Princeton before getting your MBA at Carnegie Mellon. What was the career plan with religious studies?

[Lori Heinel]

Well, that's a long story, but I'll try to keep it short. Bottom line is I went to Princeton because I wanted to get more of a liberal arts education. And what I realized pretty quickly is it didn't really matter what I majored in. I could major in economics, I could major in history, and I happened to take a religious studies course, which I just absolutely adored. And from a personal standpoint, I had a number of people in my family who were incredibly staunch practicing Catholics or other kinds of Christian religions, and they would do things that to me were quite odd at times. And so I thought from a personal point perspective, it would be an interesting way to get more insight into what was going on with some of these family members. So, short answer is that I decided to pursue that as A, as a academic undertaking. And then I got to a place where I needed to think about a career and my first thought was, well, geez, maybe I'll go to law school. Well then I realized I needed to make some money. So my second thought was, well, geez, you know, there's this analyst program thing that they have on Wall Street. Surely they recruited fine institutions like Princeton and lo and behold, that catapulted me into what became a really long career in finance by just moving from an institution like Princeton into an analyst program.

[Barry Ritholtz]

So let's move forward. You started Credit Suisse First Boston where you ran equity and fixed income sales. Then you ended up working with trading at Parker Hunter in Pittsburgh. Am I, am I getting the.

[Lori Heinel]

Well, I didn't start by running anything, so I started out as a two year grunt. Right. I think most of your listeners know what these analyst programs look like. I was effectively in investment banking for public finance. So we worked with hospitals, airports, municipal authorities. But I did all the kind of grunt work, if you will, all the numbers crunching behind the scenes and helping to run the deal models and things of that nature. And I just found that fascinating. I thought it was really amazing to connect both, you know, what's going on in the world with, you know, how finance supports that. And so I did that for a couple of years. And then at the end of the two year program, you're typically expected to go back to business school. Well, I still needed to make money because I had student loans to pay off. So I decided I wanted to stay. And that led me to an opportunity on the trading desk at First Boston, which really was a incredible opportunity because that was my first real introduction to markets.

[Barry Ritholtz]

So what did working on the trading floor teach you about markets?

[Lori Heinel]

So many things. I think the first and most important thing is I was there during the 87 Black Monday crash and I happened to be working in fixed income. So it was a really interesting day because of course at that time the First Boston trading floor was on two different levels. So you had all the fixed income was on one level, all the equities was on a different level. And we went dead silent in the first part of the day. And suddenly people were starting to realize what was happening. The market crashing, you know, 20 plus percent, 22% over the course of a day. Which of course today we've got calibrators that don't let that happen anymore. But then all of a sudden, towards the end of the day, things on the fixed income market started going crazy because now you had the Fed coming out, Alan Greenspan, saying, you know, we're going to go ahead and provide liquidity, we're going to make sure that there's, you know, active engagement to forestall any further recessions or other things that might be caused by this kind of major crash. So I guess the first lesson I learned was that there are winners and there are losers in every market event and it's better to be on the winning side. So I happened to be at that time on the bond side, which was the big winner that day. But then I think the other thing that I learned was that you have to be really careful about things like moral hazard. Because we became accustomed in that moment to this idea of the Fed put. And I think many years later we are still wondering about, you know, what that really does mean in terms of the reaction function.

[Barry Ritholtz]

So take me back to 1987 for a second. I was in grad school at the time, but I can only imagine the fixed income trading floor were people sitting around their feet on their desk sipping lattes like. Or did anyone say, let's go down to the equity floor and look at the chaos and carnage.

[Lori Heinel]

Well, the first thing we're doing, we're sitting there doing the crossword puzzles. There were lots of days and I was in muni bond trading, so it was a bit of trade by appointment. Very sleepy, very sleepy at times. Obviously fixed income markets got a lot more interesting throughout my career, but at that time it was not uncommon. In the early morning we do a few trades and then we'd have a little break, we'd go get some lunch, we'd do a little crossword puzzle. So that day was different, right? So we had our normal morning and. But by the time you got to the early afternoon, it's like, wow, something's really happening here. And you started to see major moves in bond markets, including in the muni market. And so suddenly it was very different, more chaotic even on our floor.

[Barry Ritholtz]

So money was flying out of equities. Did it roll right into just safe harbor in bonds?

[Lori Heinel]

Well, cash was the big place, right? So we had these variable, variable rate demand notes offerings which were seven day resets and so they acted like a form of cash. So we saw massive demand almost immediately in that particular market because it was a cash substitute. But with the tax advantages, what was

[Barry Ritholtz]

the Yield back in 87? Oh gosh, 7, 8, 9%.

[Lori Heinel]

Well, on those it would have been in the sevens, probably. You look at the spread.

[Barry Ritholtz]

Seven tax free.

[Lori Heinel]

Tax free.

[Barry Ritholtz]

Oh man, that's 10, 11, 12.

[Lori Heinel]

Exactly.

[Barry Ritholtz]

Wow. Amazing.

[Lori Heinel]

Yeah.

[Barry Ritholtz]

So, so before, after Credit Suisse, but before State street, you had a couple of really interesting positions. You were head of investments at Citi Private bank, you ran global investment products for sei. You led new business development at Mellon Financial, and you were chief investment strategist in Oppenheimer Funds. What, what's the throughput, what's the common thread in all of those?

[Lori Heinel]

Well, some of those were personal. So at the time that I was in New York, I met my then to become husband. We're since divorced, but at the time we were engaged and we ended up moving to Pittsburgh. He got a job there and so I followed him there. So the Parker Hunter was really, you know, personal reasons needed to find something to do, totally different city. I had grown up in Pittsburgh, so in some ways it was a real blessing because that's where we ended up having our two children. And so it was great to have that support network at a time where I wanted to continue to work through my early child, childbearing years, if you will. And then I think after that we consolidated on the east coast because we real, we both realized. And he was in finance as well. He stayed in investment banking. That we wanted to have more opportunities. And Pittsburgh's a great city for many, many reasons, but it's not a place where you have a lot of opportunities in finance. So we ended up settling then in Philadelphia. So once again I was on the prowl for a role. And that led me to first Mellon Financial where I did business development and started from scratch, built a book over a couple of years and then got very fortunate, recruited by a headhunter to go to SEI Investments. And I would say that that was where I really got the bug in asset management. So SEI has two primary business lines, at least at the time they were a back office outsourcing firm. And then they also had a pretty meaningful investment management arm which was an outgrowth of their early consulting days. And so I was hired to basically build the asset management franchise for their community and regional banking division. And so I would travel around the country, you know, meeting with trust officers and financial advisors and other kinds of practitioners at these small regional and community banks and encouraging them to transition their business from, you know, do it themselves, buying individual stocks and bonds into a platform like sei. So for me that was a really eye opening experience. One it just really opened up my eyes to all of America. I traveled literally around the, around the country, but also just looking at the different needs that these types of clients had and how we could serve them.

[Barry Ritholtz]

So you're starting with the client's objectives and perhaps their future liabilities. You have to determine what's the most efficient combination of vehicles, risk exposure, what's that process like? And is that sort of the through line of all these different positions?

[Lori Heinel]

So the major through line of all the positions is that focusing on the client first. So maybe if I can regress just half a beat. One of my most formative experiences was when I was an investment banker at First Boston. We were working on a deal for the Arlington Airport Authority. And at the time they were doing what was called a pre refunding, where they were basically, you know, issuing new debt to pay for old debt and try to reduce their debt servicing costs over time. So pretty common activity. And at the time we kept running all these numbers and we kept showing the director these amazing discounted net present value savings that she was getting from the deal. And every time she would leave the room and say, this is not what I expected, this is not what I wanted. This is not the deal that I need to have happen. And you know, I'm the most junior person running the numbers. We've got the VPs, the MDs, everybody else around the room, and they're all men, turns out, and they're like, she's crazy. What's wrong with this woman? We're delivering amazing net present value savings. So I happened to run into her in the ladies room and said, you know, really helped me if I understood better why this isn't working for you. And it turned out that statutorily that they could only keep the savings in the first year for the authority, and then every subsequent years of savings would basically reduce the tax liens against all the the or the fees that they were collecting at the airport. So they didn't actually get savings from anything. After the first year. I was like, okay, got that, we're going to front load it and off we go. Right? So that taught me a lot of lessons around 1. Listen to the client. Don't just think because you're the expert, you know all the answers. They might need something different that you haven't thought of. And it also taught me that it doesn't have to be the most experienced person in the room that's gonna have that insight. Because it took me five minutes to figure out what we'd spent meeting after meeting trying to gel through. Nobody asked that question and nobody asked that question right. Cause they just thought they knew better. Because every other client wanted max net present Value savings period, full stop. So that's one of the, I think the big threads that went throughout my entire career that sort of you gotta really listen sometimes the problem is not what you thought the problem was. And sometimes the answer, even though it's not optimal, it's the best answer.

[Barry Ritholtz]

So how did you find your way to global CIO at State Street?

[Lori Heinel]

Yeah, well, the good news is I once again, sort of another theme in my career once I sort of got to more of a senior level was I mostly got recruited because I would have, you know, exposure and, and I'd get sort of known in the industry. And so I got a call out of the blue from a headhunter. And at the time I was very happy. I was living in New York City. I was actually, had got divorced by that point in time, was living in Jersey City and working in lower Manhattan. So I had a fabulous, you know, six minute commute across the ferry, which I relished. But I felt like maybe I didn't have the next step available to me at Oppenheimer Funds, which of course is now part of Invesco. And so I got a call and they were looking for someone who would run their investment professionals more from the sales and commercial side. The people that they called like portfolio strategists. So some people know these people as client portfolio managers, but they also wanted somebody who could be groomed for other opportunities within the investment organization. And you know, one thing led to another. Did a little flyer to Boston, had a couple conversations. And what I really liked about, you know, what State street had to offer at that point in time was it was a very broad platform. They covered all asset classes. State street, as you know, had a prime position in ETFs and indexing, which, you know, this would have been, you know, 2014. And while certainly those instruments were very widely available and adopted by investors, nothing like the ramp up in terms of growth that we've seen over the last decade plus. And so what I saw was a place where I could have the ultimate toolkit working with the ultimate global client base to solve problems for those clients using my expertise.

[Barry Ritholtz]

And, and just as a point, State street has the Spiders, the Spy, which is the biggest institutional ETF for the S&P 500 and the gold spiders GLD, which obviously gold is way off its highs, but that's another giant etf. What is it like overseeing what really has become the standard bearers for both index funds and ETFs?

[Lori Heinel]

Yeah, well, look, there's a lot of complexity as you well know to running ETFs, but one of the benefits is that it's one large pool of capital so you can run it as a single proposition if you will. You have one account, so there's definitely complexity there. But in some ways that's more straightforward than the separate accounts book of business that we manage for institutional clients where literally every S and P exposure, Russell Exposure, Bar AG exposure is going to be customized to that particular client. So what's really interesting about our platform is that we have both these, you know, large scale funds, if you will, ETFs, but we also have this massive separately account separate account management business which we can deliver to institute institutional clients at a very price competitive and very customized way.

[Barry Ritholtz]

Really interesting. Coming up, we continue our conversation with Laurie Heinl, Executive Vice President at State street, discussing a day in the life of a global CIO helping to oversee $5.7 trillion in client assets. I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio. This message is brought to you by Apple Card Sometimes life's journeys take you on the roads less traveled. That's why Apple created the Titanium Apple Card to use anywhere in the world where MasterCard is accepted. Plus, with Apple Card, you can earn unlimited daily cash back on every purchase every day, whether you're in Paris or Pulau. And no matter where you are with Apple Card, you won't pay annual fees or foreign transaction fees. No fees, period. That's the power of Apple Card. Apply in the Wallet app on iPhone and use it right away with Apple Pay. Subject to credit approval. Variable APRs for Apple Card range from 17.49% to 27.74% based on creditworthiness rates as of January 1, 2026. Existing customers can view their variable APR in the Wallet app [e-mail] Apple Card issued by Goldman Sachs Bank USA, Salt Lake City branch terms and more at applecard.com as markets move and headlines break, what matters most is context. A Bloomberg subscription gives you unmatched reporting, sharp analysis, and powerful tools that help you connect the dots. Visit bloomberg.com podcastoffer to learn more. I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio. My extra special guest today is Lori Heinel. She is Executive Vice President and Global Chief Investment Officer at State street, where she helps to oversee $5.7 trillion in assets. So so let's talk a little bit about State Street. I recall way back when they launched Spy I want to say that was

[Lori Heinel]

over 30 years ago, something like that,

[Barry Ritholtz]

the first U.S. eTF. And they've been a pioneer of indexing and ETFs, you know, ever since. How do you look at the role of indexing in portfolios? How has this changed not only over your tenure at State street, but over your entire career?

[Lori Heinel]

Yeah, well, I think the first thing I would say is that once upon a time it wasn't really possible for people to get index replication right. So that was the great innovation of something like spy, where suddenly every individual investor could buy one security and effectively get the market. And for much of my career, particularly in the early part of my career, it was all about beating the market, right? Let's get the best active managers who could beat that index. And what you find for decades now is in many markets, especially large cap us, it's really challenging to do that net of fees. And so I've thought for many decades now that this combination of index exposure, where it was really hard to find managers who could consistently outperformed, coupled with maybe some satellite managers or specialist managers or managers in other parts of the market, think emerging markets, small cap, adding your risk budget and your active management budget there just made a lot of sense. So when I think about portfolio construction, it really is I want to accomplish some sort of outcome, some sort of risk based outcome for that client. But I also want to do it in a way that covers fees, provides opportunities for alpha or outperformance, but does so in a kind of measured way.

[Barry Ritholtz]

So State street saw record inflows in 2025 into, I think this is the ETF and index business. 180 billion net inflows, management fees up 13%. And in gross growth, where do you see the growth coming from in this space? I keep hearing indexing is over, ETFs have had their day and yet year after year it seems to be the big winner.

[Lori Heinel]

Well, I think there's still lots of room for indexing to run because if you think about places like fixed income, we've only started to scratch the surface relative to what you see on the equity side of things. So increasingly, or even seeing, quote unquote, exotic fixed income, things like emerging debt, things like high yield, which we've had, index products for quite a long time, become much more adopted by clients globally because they see that as a great way to get access again to a market in a way that they can really understand the risk and manage it within the portfolio context. So I think there's still plenty of room for indexing to run. I think the other thing is we've seen a major shift in terms of the client segmentation, if you will. So once upon a time the big investors were the large institutional investors, you know, the defined benefit plan, sovereign wealth funds. Those investors are still important, but increasingly the net incremental dollar is coming from the retail client, whether it's through defined contribution or rollovers or, you know, other kinds of, you know, assets that they might have. And that's happening globally. And those investors are really early to the ETF if you will journey and have lots of opportunity there. And then most recently you'll have seen that we were selected for the Trump accounts as the default investment. So that's another vector of investor that we think comes online into the indexing platforms.

[Barry Ritholtz]

Really interesting. I want you to push back on my understanding of indexing in equity and indexing in fixed income. So here's what I have been led to believe over many, many years of academic study and research and lots and lots of great academic analysis. It's really, really hard to beat the market through active management of equities. It's relatively easy to beat the market through reducing risk, changing duration, improving credit quality through active management of fixed income. How accurate or inaccurate are those statements?

[Lori Heinel]

So this is a classic of it depends on how you think about the problem, right? So first, it is absolutely empirically true that in many spaces in equities, the average manager just does not outperform. We have all those studies from all the various, you know, research that substantiates that in fixed income. To your point, there is more evidence that active managers can add value. But what's been interesting over the last decade or so is this rise of better understanding of factor based investing on fixed income factors on fixed income factors. I mean, factor investing has been around for a long time, decades. But within fixed income in particular, I think we've gotten more and more sophisticated models that help us to disaggregate where those returns are coming from. And what we found is that a lot of those active alphas, if you will, out of fixed income managers are really one of two things. They go down in credit quality or they extend duration. And when you actually neutralize for those two things, suddenly the active fixed income managers don't look quite as heroic as they did before. You adjust for those things. So one of the big trends that we're really leaning into in fixed income is that applying that factor based lens to fixed income to be able to more stylize the portfolio, but do so at A very competitive fee level and deliver alpha. But alpha through indexing plus some factor exposures versus kind of just classic fundamental bottoms ups kind of security selection.

[Barry Ritholtz]

Really, really interesting. So what's kind of fascinating about your role is much of the capital you oversee is deliberately designed to not take an active view. What does it mean to be a CIO at a firm like that? Where do your views show up?

[Lori Heinel]

Yeah, well the first thing I need to just make sure everybody understands is that we do have active capabilities as well. They're certainly not the massive amount of the, you know, assets that we oversee. But if you look at our fixed income equity and multi asset class strategies that are active in some way, that's a couple hundred billion dollars. So it's not tiny. It would still make us a pretty significant player in this market even if that's all we did. So we do believe that there are opportunities for active managers to outperform. It's just one of those things where you need to understand, you know, how much to allocate to those active managers. Make sure you're picking the very best because obviously there are some that can outperform. But I think from a view perspective, it's actually very valuable having all the different perspectives at the table. We have a chief economist and chief geopolitical analyst. They really help us with what are the expected growth rates around different economies in the world. What are, what are inflation expectations going to look like? What's the sort of backdrop against which we're, against which we're trying to invest so that we have some sense of our rates likely to move up or down. You know, our, is growth likely to be supportive for earnings? Some of those sort of macro factor setting types of things. And then I think within our active teams and we have a multi asset class team in particular, they're deploying capital, they're deploying capital into equities, fixed income subsectors, commodities, gold, cash. And so they have a view on which of those areas are going to do best. And obviously we have lots of discussion amongst ourselves about whether, you know, I personally agree with those views or don't agree with those views. But ultimately it really is a committee that gets together and makes those macro calls and then within our individual active capabilities we've got, you know, fundamental and quantitative equity and fixed income. Those portfolio managers are basically charged with, you know, doing the hard work to figure out, you know, how they are going to generate alpha. And we've been quite successful. About 65% of our strategies are outperforming on a trailing 13 year basis.

[Barry Ritholtz]

Really interesting. You mentioned a variety of different colleagues and portfolio managers and economists and strategists, but really, it's just the tip of the iceberg. You lead a team of over 600 investment professionals and they're located around the world. How do you keep an investment organization that large and that dispersed all on the same page, all coherent, all moving together?

[Lori Heinel]

Well, I have a lot of help, so I think any manager will appreciate that. The most important job, you do it. Once you're in a leadership position like mine is you hire well, right? And you let your good people do their work and you pressure test their theses and you make sure, as you said, that everybody's singing from the same hymn book where they need to be or that they're doing their own thing when that's appropriate. And you provide the sort of guidance and oversight opportunities to collaborate all those good things. You know, our business in one sense is a simple business. We're here to serve our clients. We have all the tools at our disposal to serve our clients. We, you know, gather together routinely to develop thematics and market outlooks and other kinds of collateral that both myself and the other senior executives can take to our clients as ways to engage with them and demonstrate our facility with markets and our capabilities and insights. And then, you know, basically I let the team do what it does best, which is deliver the results.

[Barry Ritholtz]

So walk us through a day in the life of a global CIO with $5.7 trillion. I would imagine that day to day events are just so overwhelming. No two days really look exactly alike.

[Lori Heinel]

No, it's a, it's a bit of a crazy day. It's one of the things I love about the job. But I would say the first thing is I spend a lot of time with clients. So in the first quarter of 2026, I was on 45 planes traveling around the globe, Middle east, luckily before the war started, Asia, Europe, multiple times across the US as well. So I spend a lot of time talking to clients of all types. So we have, as I mentioned earlier, a large institutional base of business that some of the largest central banks, sovereign wealth funds across the globe. But we also have a lot of private clients. We have private banks that we work with, large broker dealers that we work with. Sometimes I'll even meet directly with end clients, depending upon the forum. So that's, I would say that's probably a good chunk of my time. I do a lot of time or spend a lot of time rather on things like strategies. So we have an executive management team which gets together and talks about, from a business standpoint, where do we want to emphasize? What does that require all of us to do so for investments? One of our big efforts over the last couple of years has been innovation. Since Yixin Hung joined us as CEO in 2022, we've been very aggressive in terms of launching new products and new spaces, including partnerships with firms like Bridgewater and Apollo. So a lot of the strategy for what do we want to do to be relevant to our clients globally, ultimately, it comes from the investment team's ability to execute against those mandates. And so we spend a lot of time talking about what kind of resources do we need, what kind of research can we do that addresses the client problem we're trying to solve? How do we partner effectively with these third parties where they might contribute some content? We ultimately own the portfolio construction, and we might have our own research that we want to bring into the mix. And so one plus one equals three. But ultimately, we're accountable to that for our clients. And then talent. I mentioned earlier that you need to have really good people. So we just came off of our annual talent reviews, where I get all my CIOs in a room. We work with our HR business partner, we go through our top talent, succession planning. What kind of vectors do we see coming on the horizon? AI right now is a huge theme. So how are we readying our teams to be good stewards and users of AI and adopt that in ways that we can make better efficiencies and better judgments? And then the last part of it is there's a lot of reading, listening, consuming information. Again, I am expected to, you know, be the face of State Street Investment Management from a client standpoint. And so I didn't know what's going on in the world. And as you know, the world's been a really crazy place this year.

[Barry Ritholtz]

It certainly has. You mentioned Apollo and Bridgewater. The criticism about privates and things like 401ks or target date products is they're expensive. All right, so you don't have the illiquidity issue, but they're complex. What's the case for putting private assets into a 401k?

[Lori Heinel]

I think there are a couple of things. You know, first and foremost, if you look at the equity side of the ledger, more and more capital creation is happening in private markets, meaning pre ipo. I mean, back in my early part of my career, and I'm sure yours as well, if a company came public at 100 million, that was A big number, let alone like a billion. That was a trillion. Well now, yeah. So fast forward, you know, and now we're talking literally in hundreds, if not hundreds of billions or even trillion dollars. So if you think about just that magnitude of opportunity that's lost if you can't participate in those markets, it's just incredible. So that's number one. If you look on the fixed income side, I think, you know, we've launched Pride, which is a collaboration with Apollo, and, and there again, this is investment grade credit that just happens to be issued in private markets instead of public markets for all manner of reasons. It could be that the company wanted to move quickly or they didn't want to go through the, you know, the filing process, or there might be some specific assets that they want to collateralize with with the loan. And so those are really high quality investment grade assets, but they collect a premium for an investor because they're done through the private markets instead of the public market. So to us, those are just natural extensions of what clients should have access to.

[Barry Ritholtz]

Makes a lot of sense. And we mentioned earlier gld, what an incredible run gold had in the 2010s, pretty much right up through last year, it since off on about 20, 23%, something like that. When you're thinking about equity and fixed income and alternatives and you see a metal which has been widely traded for thousands of years, can I say 10,000 years, that some people have been called barbaric. How do you contextualize how GLD trades and what is driving the psychology of those investors versus all these other asset classes?

[Lori Heinel]

Yeah, so again, I want to take us back a little while because we were advocating for a position in gold and client portfolios for six, seven years, so long before we had this run up to 5,000 plus. And the basis at the time, obviously interest rates were very low. So you didn't have an opportunity cost today that's different. But what we were seeing was that fixed income wasn't likely to play the role it historically played. Diversifying portfolios, you had no income, you likely didn't have a lot of diversification benefit from fixed income because how much lower could rates go, you know, if the market crashed and we weren't even sure it was going to provide capital preservation. And we were right. Like if you fast forward a couple of years, that turned out to be a bit of a challenge as well. And so we were looking for other ways or other exposures to put into the portfolio that would provide some of that cocktail of diversification benefit that Fixed income just wasn't likely to provide. And so we settled on gold for lots of reasons. And oh, by the way, we were also writing a lot at that point in time about concerns with fiscal profligacy and the fact that the US debt burden was getting large. And this is several years ago now, it's obviously much bigger now. And gold to us was kind of an interesting asset that would benefit from any kind of debasement concerns or any these other sort of issues. So we advocated clients to add it many years ago. Of course, very few of those clients did so until it went up to 3,000. Then suddenly you started to see more interest, and then 4,000, you start to see a bit more interest. But I would say gold still plays an important role in a portfolio. It doesn't have to be a huge exposure. It protects against a number of different tail risk risks in a portfolio. Yes, it's expensive from a carry cost standpoint right now, given the give up and fixed income. But we still have in our strategic allocation portfolios, you know, a couple percent allocated to gold because we do think that it provides very distinctive benefits in certain kinds of crises.

[Barry Ritholtz]

So today we have bitcoin cut in half from the high. And a lot of the narrative around crypto sounds like sort of a digital refresh of the historic narratives around gold. How do you think about crypto? Some of your competitors have aggressively pushed into it, others have very much steered clear. It might be a little early to declare which side is winning, although anything that gets cut in half kind of comes with a little bit of a black mark on it. How do you think about crypto these days?

[Lori Heinel]

Yeah, so I want to just first share a story. So back in 2012, so this is many years ago now, my daughter and her boyfriend started mining bitcoin. And of course being in this industry, I thought they were crazy.

[Barry Ritholtz]

Like, you can't just, was it 100 bucks back then?

[Lori Heinel]

It was, it was under a thousand. I think it might have been 5 or 600. So it wasn't quite as low, but it was still very, very low. And I thought you can't just like manufacture money doesn't grow on trees. You can't just manufacture it, you know, on a computer. But at the time, turns out you can. It turns out you can. So I was very skeptical. But I kicked myself for not having at least bought a couple because at the time I could have put $10,000 into it and I'd be 10 million. We might not even be having this conversation today, who knows?

[Barry Ritholtz]

We would it would just be on your yacht off St. Barnes. Well, there you go.

[Lori Heinel]

Which wouldn't be half bad, right? It wouldn't be half bad. So in any event, I've never really understood the case. Now, what I will acknowledge is that over the years, I did learn of a couple use cases that made sense to me. So I can remember seeing a woman from Pakistan present, and she was talking about, like, why Bitcoin is so popular in Pakistan. It was because at least they had a stable currency because it was pegged to the dollar effectively. And so people preferred being paid in Bitcoin instead of getting paid in Pakistani.

[Barry Ritholtz]

Interesting.

[Lori Heinel]

So I thought, okay, well, that's. That's interesting, but that's a, you know, tiny little use case. But I never really understood because you don't have anybody who's got the taxing authority or the backing of it. Whereas even with gold, you've sort of got the central bankers as the collective in some sense, back.

[Barry Ritholtz]

Gold, sure.

[Lori Heinel]

There's still massive buyers of gold, and in fact, that's surpassed treasury holdings. So I never really got it. But, you know, you fast forward and suddenly you've got an asset that's up to 30,000, 40,000, you know, over 100,000 at one point in time. And. And you're like, am I wrong? Like, what am I missing? So, I don't know. The jury's out. We do believe in the sort of the digital ecosystem very much. We're trying to work on tokenization, and we're working on all kinds of other sort of digital finance types of endeavors. So there's something about the digital that is very compelling. And in a weird way, it may be that once that digital infrastructure gets more evolved, it'll make Bitcoin even less important. Right? Because now suddenly you'll get all the benefits of Bitcoin in terms of the tradability and all those kinds of things without having to have the exposure to an asset that I don't know how to price that asset.

[Barry Ritholtz]

Wildly volatile, to say the very least. Really interesting. Coming up, we continue our conversation with Lori Heinold, global CIO at State street, talking about the current market environment. I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio, the Bloomberg this Weekend podcast.

[Lori Heinel]

News, politics, and the lighter side of Bloomberg. Forget healthspan. Midlife men face pressure to extend hotspan.

[Barry Ritholtz]

Hotspan.

[Lori Heinel]

Hotspan, yes.

[Barry Ritholtz]

So millennial men.

[Lori Heinel]

You have to stay hot for, like, several more decades. David.

[Barry Ritholtz]

Okay?

[Lori Heinel]

So you need to work on this.

[Barry Ritholtz]

I Gotta work on this.

[Lori Heinel]

This is like, this is a really not so telling me that the Bloomberg this Weekend podcast. Subscribe today on Apple, Spotify or wherever you listen.

[Barry Ritholtz]

I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio. My extra special guest this week is Lori Heinel. She is executive Vice President and Global Chief Investment Officer at State Street Investment Management, the asset management arm of State Street. With 5.7 trillion with a t trillion in assets. And that's as of year end 2025 and we're up 10 12% since then in the market. So do the math. I'm going to say over 6 trillion. Let's talk a little bit about the current market environment. Your your global market outlook was titled Forward with Focus. That sounds like you were constructive on risk assets. I always put a question mark where I see but you must stay agile. Explain what that means.

[Lori Heinel]

Yeah, well, so to your point, we did see 2026 as being still a pretty good year for investors. We thought that earnings were going to continue to do well. We thought that inflation, while not quite back to the 2% target that the Fed had set, was marching in that direction and would possibly give some more room for rate cuts in 2026. And so when we talk about being agile was focus on equities over fixed income, but do so in a bit more broad based way like don't just put all your eggs into the large cap US trade, look at small caps, maybe even look at things like emerging markets, places where you might get a bit of broadening out of the market. As we saw, you know, maturation in 2026. Of course the altercation war with Iran turned out a bit on its head and so for a short moment we were revisiting whether that was going to be. Obviously inflation became a bigger sticking point once again or a bigger concern once again, concerns about whether you're going to get that broadening out or whether investors would just sort of go back to the trades that they knew and loved and had more security in. But I think as we get into the middle of the year we're seeing that our views were largely rewarded. That sort of moving to small cap and other parts of the market certainly have done quite well on a year to date basis. And you know, we obviously are still worried about fixed income and rates and what that might mean as inflation remains a bit more tricky. But you know, the prints that we're having every month are all over the place. Just as we're speaking, we're having a Good cpi, print. Right. So while we think that the Fed is likely on hold for the balance of the year, we don't see rate hikes in the offing.

[Barry Ritholtz]

Huh. Kind of interesting. We'll talk a little bit about CPI and PPI in a bit. I. You mentioned something that I want to explore because it's so interesting. So the magnificent seven. In 2025, only two of the seven outperformed the S&P 500. I think it was Nvidia and Google. And this year, if you're looking at small cap or mid cap, you're looking at growth or value, you're looking at Europe, you're looking at developed X us, you're looking at em, everything seems to be outperforming large cap US growth. Is this just the reason to have a diversified portfolio or is it indicating, is this a cyclical shift or is this suggesting something else?

[Lori Heinel]

Yeah, well our view is generally to have a diversified portfolio at the margin we might favor large cap or favor Europe or favor emerging markets at different points in time based on relative value trading. But we do think that it's incredibly difficult to time those inflection points perfectly. And as you noted, coming into this year you still had a lot of momentum and flows into the things that had done well in the past, including some of those large cap names that you mentioned. So, you know, I'm kind of a traditionalist in that way. I do believe you want to be diversified and have exposures to multiple places. But I do think that this AI enthusiasm, I believe in it in terms of a technology, but when you look at the massive amount of spending that is now being undertaken by some of these companies, you know, they've gone from leveraging balance sheet cash to make those investments to now accessing fixed income markets in a massive way and even in some cases issuing equities. So you do have to sort of wonder whether that, you know, that vein alone is going to be where the money is going to be made going forward. I'm not saying that, you know, they can't still generate good earnings, but there are plenty of other places. If you think about energy, if you think about utilities, you think about all the ecosystem required to enable that AI transformation and then perhaps most importantly, you know, the real economy and how sectors like finance or healthcare or other things are going to benefit from these technologies, I think we're just at the tip of the iceberg in terms of what that will mean for innovation and productivity.

[Barry Ritholtz]

So when you're looking at this enormous capital spend that you referenced and we didn't even bring up all the private credit that's been pouring hundreds of billions of dollars into that. How do you judge when the spending is productive and producing sufficient returns there? Given how the fire hose of capital, there has to be some misallocation and there are going to be some winners and losers. But, but when does the next incremental dollar become bad money after good? How can we tell?

[Lori Heinel]

We're watching for when does that capex not translate into incremental earnings?

[Barry Ritholtz]

So let's stay with the idea of artificial intelligence. You work at a very large asset manager. I would imagine the biggest shops have a little bit of a lasting advantage in deploying AI, not only looking at their own language models that they've created internally, just the ability to deploy that capital way that makes them more to deploy that technology in a way that makes their capital more efficient, more productive. How are you looking at AI from the perspective of the finance sector?

[Lori Heinel]

This is a whole podcast in its own right. But let me just, I guess, share a couple of thoughts. First and foremost, we've been on the AI journey for over a decade. We've been using machine learning and natural language processing and other types of technology in our active strategies for over a decade. And I think it's important to also know as a G sifi, we're a highly regulated, regulated institution. So we've also spent many, many years on the infrastructure, governance, other things to deploy these types of tools, being mindful of cybersecurity threats, privacy, all the other things that you would expect a large bank to be worried about. So where we are now is, I would say the biggest places that we're seeing AI support our business are in more things that are operational in nature, that are repeatable processes where we can deploy some technology and free up people to do other, more interesting things. If you think about some of the marketing elements, things like RFPs or commentary writing or other kinds of client servicing elements, they lend themselves beautifully to leveraging this technology because you have, you know, a database of information. The question might get asked in a slightly different way and the AI can actually feed back the most relevant answers. And then you have a human in the loop, always in our environment today that ultimately owns the final product. But those are, I think, the sort of early wins for us is that kind of efficiency gain, leveraging people to do more higher order things down the road. Will this get more integrated into our investment process and philosophy? We're experimenting with a lot of things. We've got the, the concept of a Research co pilot, which lets a portfolio manager, you know, survey hundreds, dozens, whatever, you know, research reports and do so very efficiently using an AI type of a tool. They still have to, you know, pressure test whether the results are getting back makes sense. And they still ultimately make the decision about what they're going to do with that information from a portfolio standpoint. But we see lots of opportunities for that kind of augmentation of the human as well.

[Barry Ritholtz]

Let's talk a little bit about inflation. We've had a series of things that have contributed to it. Tariffs, war in the Middle east, etc. Here we got the best CPI print we've had in five years. But that's primarily been because we briefly thought the war was over and oil prices plummeted it. Now the war is back on. And I track things like the producer price index is six and a half percent. We know that's just going to push into final prices over the next few quarters. So. So how do you think about inflation and fixed income and specifically. And has macroeconomic forecasting in this environment just become, I don't want to say impossible, but, but so challenging?

[Lori Heinel]

Well, macroeconomic forecasting is always difficult. And I would say what we've also seen over the last several years is data revisions coming in at a massive level too. So what you see in a print one day, whether it's the payroll data or the GDP or whatever, a quarter later might be changed pretty dramatically. So you have to be a bit humble in this kind of environment when you're making any kind of bold calls. But I would say our quarter core view is that inflation will still trend lower over time. We think it might not get back to the 2% level, but we aren't necessarily thinking that 6% is something that's sustainable. The good and the bad news here is that when you have inflation shock coming from things like commodity prices, they rebase. So you get that one time shock and then you're done unless there's another shock on top of that. So at some point that sort of recalibrated rates in its own right. I think the thing that we've been most surprised by this year is the underlying resilience of the US economy. In particular, we were thinking that labor markets were going to be under a lot more pressure than they ultimately have been, at least so far. We thought that the inflation coming from the war would filter into other places like fertilizer and food and other things which may still happen. Right. We haven't gotten through the farming cycle here in the US but we're not seeing the consumer while they're stretched. We're not seeing the consumer necessarily pull back the way that we thought that they might. So you know, the second half will be a very interesting second half.

[Barry Ritholtz]

Yeah, to say the least. Let's stay with the consumer. There's a couple of things that I've noticed that's kind of interesting. If we look at the second quarter sector breakdown, consumer discretionary, worst performer of the group, essentially flat. If you look at consumer spending, there's a greater reliance on short term credit and credit cards than just salary increases. And then consumer sentiment and I think we can all agree the University of Michigan sentiment measures become broken over the past few years but still, whether you call it the vibes, the sentiment, whatever consumer seems to be shockingly negative. I don't disagree with you about the resilience of the economy but how do we figure out what's going on with the consumer and their importance to the ongoing resilient economy?

[Lori Heinel]

Well, I think the first thing is that I agree with everything you're saying but there are also offsets. So people are getting tax refunds, you've got other benefits coming through from the one big beautiful bill. So you do have some other things that are still propping up the consumer at the margin. And employment still is a, is pretty strong here in the US 4.2%. So you still have pretty good sort of underpinnings if you will. But it's clear that the average consumer is feeling like they're losing ground. Right. There have been, you know, lots of articles about even couples that are making over $100,000 feeling like they have food insecurity. Well that's a problem for sure and it probably means they're going to pull back somewhere else. But my point is that in the aggregate, whether it's from Capex and other corporate spending, the sort of K shaped consumer economy where the upper echelon, if you will, is being benefited by housing prices which while they're plateauing have come up a lot but asset prices are going up a lot still. There's still a lot of resiliency there, so.

[Barry Ritholtz]

So I'm glad you brought both of those up. The pushback I get from bearish colleagues are a yeah, the economy looks good but it's almost all driven by the upper quarter and I think that's being generous on the quartile side. But the other criticism is hey, all of this AI related Capex is masking underlying weakness, although I don't see that weakness in much of the data. What's your response to those sort of criticisms?

[Lori Heinel]

Look, I think that the good and the bad news is that you don't need 100% of the consumers to participate, to have the consumer economy doing just fine. So that's, that's a sad thing in a lot of ways, but it's just the reality. And by the way, companies are generating productivity from things like the deployment of AI already and we think that that's very constructive.

[Barry Ritholtz]

And then speaking of productivity, we really haven't talked about. Everybody talks about the Magnificent Seven. What about the other 493 companies in spy that are becoming more efficient, more productive, more profitable? How do we contextualize that?

[Lori Heinel]

Well, we think we're in the very, very early inning. So I mentioned earlier we've got active teams. Right. And this is their domain. Right. So these are people who are in the tech sector, in the healthcare sector, in the finance sector, doing the hard work to understand who the winners and losers are going to be. And the mantra over and over again is that the companies that adopt technology for efficiency gain, for innovation, to create competitive moats are going to have a really good Runway from that deployment. So we are quite optimistic in terms of what that means for long term prospects.

[Barry Ritholtz]

So before I get to my favorite questions, there were a couple of items I had to talk to you ask you about that are a little more off the beaten path. You were chosen to lead State Street's Fearless Girl campaign. Explain what that is and why you were chosen to take that role. Yeah.

[Lori Heinel]

So this is true serendipity. Right. So as with anything, these things take a village. Right. And so we had this placement of what is now the iconic statue of the Fearless Girl, initially down on Bowling Green, facing off against the bull. And I had been one of several people who had been involved in that effort and got a call the night before the statue was going to be placed and somebody said, can you go to New York like now and be there when we place the statue just in case there's a tension, just in case some of the networks pick it up.

[Barry Ritholtz]

And just to, just to flesh that out a little bit. Everybody knows the Wall street charging bull is actually not on Wall Street. It's on lower Broadway. It's a massive 25 ton statue. The Fearless Girl is proportional. Real life. A 10 year old little girl sort of just standing up to the bull.

[Lori Heinel]

Her little, you know.

[Barry Ritholtz]

Right. Hands on her hips. Almost like a Degas sculpture.

[Lori Heinel]

Exactly.

[Barry Ritholtz]

Standing, staring down the bull. So, so tell us what happened when you fall to New York.

[Lori Heinel]

So I fly down. I, you know, show up the next morning bright and early, and, you know, there's a little bit of milling around. It happened to be a rainy day, so there weren't too many people out and about. But suddenly it started to get a little bit of interest. And so we had a couple reporters, you know, come by and say, what's happening? We explained to them that this was a moment where we were trying to, you know, advocate for everybody's future and used it as an opportunity, given it was International Women's Day, specifically, that that was the timing of the placement. And so one thing led to another, and before you know it, I'm booked on three or four or five news programs over the next 48 hours and telling the story about how the fearless girl and why we did it and how important it was to stand up for those who perhaps couldn't stand up for themselves.

[Barry Ritholtz]

So, very successful campaign. And where is the fearless girl today?

[Lori Heinel]

Well, she is now opposite the New York Stock Exchange. So one of the things that happened is that she started to attract so much attention that they were worried about the safety risk, because as you know, where the bull is, it's a very narrow street there, and people were milling onto the street. So we got a permanent or semi permanent, at least for now, placement in front of the New York Stock Exchange. And that's where she's been since.

[Barry Ritholtz]

That makes a lot of sense. That's a good location for that. So I know you serve on a couple of boards. The one that really jumped out at me, the Boston Ballet. Tell us a little bit about what that's like.

[Lori Heinel]

Yeah, so I've always been a great fan of the arts. I was a gymnast as a child. I wasn't a ballerina, but I think there's a lot of rhyming there. And I've always been a fan of ballet as an art form. And the Boston Ballet is very interesting because they are trying to consolidate both the legacy classical repertoire with a lot of more modern, contemporary, avant garde kinds of repertoire. And so they did a collaboration with the Rolling Stones, for example, where we did a ballet set to some of the Rolling Stones music. And so it's just been a great way to meet people in the cultural community in Boston, but also be part of art making. That, you know, I find just fascinating.

[Barry Ritholtz]

Really, really interesting. So I only have you for a few more minutes. Let me jump to my favorite questions, starting with who were your early mentors? Tell us about who helped shape your career.

[Lori Heinel]

Yeah, so I would say I didn't really think about mentors when I was younger. I would say my bosses were my mentors in the sense that they stretched me, they gave me opportunity. I talked earlier about that situation at First Boston where we were in front of the airport authority and, you know, I would not have had the opportunity to be in a room like that in a lot of companies. But I think my boss felt that I'd done the work and I deserved a place at the table. So throughout, particularly my early career, I would say it was my bosses who stretched me, gave me opportunities. And then I would say about mid career, I, with another colleague, created this group called Connected Women. It was a very informal type of a thing where a number of women, sort of similar vintages got together regularly and we became vintages. Vintages, if I ever use that. We drank a lot of wine, so I can use the word vintages. So it was really a wine drinking club. But there was a benefit that we got to know each other well, our professional and our personal stories, and so we could help each other out. So when we were, you know, looking at career situations, it was a. A good circle of friends that I could turn to who were in similar states in their careers and trying to make it on the corporate ladder that I could lean on.

[Barry Ritholtz]

Really, really interesting. Let's talk about books. What are some of your favorites? What are you reading currently?

[Lori Heinel]

Yeah, so, you know, I tend to like biographies. Read a bunch of the, you know, Chernow Titan and House of Morgan and the Walter Isaacson, you know, Stephen Jobs. And I like biographies because they meld history with leadership, with whatever the topic is. So obviously with the Titan and House of Morgan, it's a finance centric kind of a story. And with Jobs, it was a technology centric. But seeing how those leaders navigated innovation, their time, the people around them, I just find that fascinating. Much better than reality tv in my opinion. Well, to say the least, it is reality tv.

[Barry Ritholtz]

Speaking about tv, are you streaming any Netflix or Amazon prime type shows?

[Lori Heinel]

Yeah. So right now I am on a bit of a hiatus. I've been trying to read some fiction, so I'm doing some Toni Morrison right now. I went to Princeton, as you probably remember. And so I've been trying to do a bit more reading in my spare time.

[Barry Ritholtz]

Our final two questions. What sort of advice would you give to a recent college grad interested in a career in either investing or asset management?

[Lori Heinel]

Well, the first thing I would say is it's a fantastic career. You can do so many different Things you get access to technical acumen. You have the interpersonal piece of things you have to solve problems. I love the problem solving aspect of it. And I think it's something where no matter what your preferences are, you can find your vein. Right. You know, I happen to make my way to Global Chief Investment Officer, but there are people in marketing or people in distribution or people in processing, and all of those are just absolutely fascinating careers. It's never a dull moment.

[Barry Ritholtz]

And our final question, what do you know about the world of investing in asset management today? Might have been useful back in the 90s when you were first getting started.

[Lori Heinel]

Yeah, well, I wish I started investing earlier and more often. I was a net creditor for many, many, many years because I wanted to have nice clothes and jewelry.

[Barry Ritholtz]

I can't tell you how often I hear that, which is really just a backdoor admission of the power of compounding.

[Lori Heinel]

And maybe that Bitcoin, that was my other thing I probably should have done

[Barry Ritholtz]

in 2012, if you had a crystal ball. But what's the big insight that would have been useful to know generally about markets?

[Lori Heinel]

I'm not joking about the early and often. And truth be told, I'm 100% equity invested even now, so I'm a big fan of equity. So back in my day, it was the 100 minus your age, which would put me squarely not in the 100% equity category if I followed that rubric. But I think a lot of people would just be served by being in equities, you know, over the long term, unless you only have a couple years and who knows, that's where the money is.

[Barry Ritholtz]

This is a little hindsight bias, but I am always shocked. It's literally a chapter in the book of people who are 20, 30, 40 years old that have a substantial fixed income. I understand it's ballast that offsets the volatility of equity, but really, until you're over 50, maybe even over 60, do you. And getting closer and closer to retirement, do you really need to have 40% of your portfolio in bonds? It doesn't make a whole lot of sense.

[Lori Heinel]

Well, look, I mean, for a lot of institutional clients, it makes perfect sense. They're liability matching. Right. And they need that fixed income. And I think if you need liquidity or you're, you know, going to have your children's college education or weddings or things like that in a couple years, absolutely. Fixed income plays a role. But if you have the ability to not touch that investment capital, I think equities is the way to go.

[Barry Ritholtz]

Thank you, Laurie for being so generous with your time. If you enjoy this conversation, well, check out any of the 649 podcasts we've done over the past 14 years. You can find those at Apple podcasts, Spotify, Bloomberg, YouTube, wherever you get your favorite podcast. I would be remiss if I didn't thank our crack team that helps put these conversations together each week. Alexis Noriega is my video producer. Sean Russo is my researcher. Anna Luke is my producer. I'm Barry Ritholtz. You've been listening to Masters in Business on Bloomberg Radio.