VOICES OF STANFORD: RUKAIYAH ADAMS
“The job is demanding. More than anything, it requires focus and a point of view. At times, it requires gravitas.”
The pivot point for Rukaiyah Adams’ approach to socially conscious investing came in 2012 as she walked between an off-site parking garage and the offices of The Standard, a Portland, Oregon, financial services company where she managed six trading desks and $6.5 billion in assets.
Her morning and evening routes took her past the city’s Occupy Wall Street encampment, and she often did something few of her colleagues did. She stopped to listen.
“They were protesting ‘The Man,’ and in that job I was essentially ‘The Man,’ ” recalls Adams, JD ’99, MBA ’08. “But because of the way I look, I was able to come and go freely and take it all in. I remember thinking that if these young people are trying to tell us something, I have to find a way to listen.”
On May 10, Adams will receive this year’s Stanford GSB Tapestry Award, which honors African American alumni who have woven inspirational leadership, intellectual excellence, and service to others through their professional and personal life.
What Adams heard on Portland’s streets in 2012 still shapes her investment choices today as chief investment officer of the Meyer Memorial Trust, which the late retail magnate Fred G. Meyer created in 1982. The trust awards about $40 million a year in grants and loans to organizations throughout Oregon, and Adams oversees an investment portfolio of roughly $750 million. She also chairs a board that manages approximately $100 billion of public pension and other assets for the state of Oregon and serves on boards of other civic organizations in her hometown and state.
Kirk Holmes, MBA ’87, president of the Stanford GSB Black Alumni Chapter, and part of the selection committee that singled Adams out, says she was chosen for the award because of her authenticity, power, courage, confidence, and humility. “I’m impressed by the things she’s doing and the things she cares about,” Holmes says.
Your Meyer Memorial Trust biography begins with a quote from writer Clementine Paddleford: “Don’t grow a wishbone, daughter, where your backbone ought to be.” What appeals to you about those words?
As the CIO, my job is to bring home the bacon for our business — we do not have any other source of revenue. The job is demanding. More than anything, it requires focus and a point of view. At times, it requires gravitas. So, that quote reminds me that although there are times when I wish things were different, we have to thrive in the world that we actually have if we are to succeed in the face of challenges that we want to wish away but cannot. The Meyer Memorial Trust could buy the stocks and bonds that everybody else is buying and be average, or we can try to be better because we have a specific point of view that allows us to outperform others. Our board has opted for the latter.
How was that point of view shaped by your Occupy experience?
As I moved into a CIO role managing a long-term portfolio, it made me think that if I don’t listen to these young people then I’m ignoring an investment risk. If we invest for 15- or 20-year horizons, the reality is that it will be today’s 20-year-olds who help us realize those investments and achieve our expectations over the long run. And if their points of view are significantly different than generations before — if they delay homeownership or stop buying cars and decide to ride bikes instead — we have to think about their values and what matters most to them because those dramatic changes have become investment risks.
Can you give a specific example of how that plays out in your job?
One of the people at Meyer who makes environmental grants asked me about our investments in commodities, which included oil futures. She felt our values were out of whack, because on the grant-making side of our business we promoted a clean environment yet we invested in conventional energy assets. For about a year she lobbied me to make a change. Ultimately, in 2014, I ended up selling oil and bought clean water assets around the world. And that has probably been my most successful single trade. That was because I started to listen to our grant makers.
What’s the most effective way to convince others to follow your lead on social investing?
Are there other ways to address big social issues through investing?
We’re evolving our housing portfolio. At Meyer, affordable housing is a very important area of grantmaking. Starting in the 1990s, we had investments in distressed housing — mortgages — that had been phenomenally successful. But that meant that the investment side of our business was undermining the help that we were trying to provide on the grant-making side in favor of affordable housing. So, for two years we studied affordable housing as an asset class in Oregon. What we found was that it behaved more like a bond than an equity. So, our challenge was to figure out how to invest to protect affordability, because that’s the social outcome we want.
How are you doing that?
You can’t be a top CIO without having the best venture capital partnerships in your portfolio. And gaining access to those funds is like gaining access to any elite club. For a black woman, it’s tough.
What we came up with was seeding an affordable-housing Real Estate Investment Trust that we hope will eventually become publicly listed. Through the REIT vehicle we can permanently protect affordable housing and at the same time have a lower risk of default than a U.S. Treasury. Because of that pivot, we now treat housing less like an equity and more like a bond. This clarity was a breakthrough in aligning socially responsible investing with modern portfolio theory. It sits in the sedimentary layer of our portfolio instead of being the kind of asset that we invest in for high-octane returns. This could make a big difference because if investors are getting double-digit returns from rental housing investments, rents will remain “too damned high,” families will be displaced, and we will continue to undermine social cohesion. So now we seek equity returns in assets other than housing.
You often talk about wealth in a racialized context. Is that risky?
The same race dynamics that play out in society also play out for CIOs. For instance, you can’t be a top CIO without having the best venture capital partnerships in your portfolio. And gaining access to those funds is like gaining access to any elite club in the United States. The social dynamics are the same. For a black woman, it’s tough.
Has talking about race ever worked in your favor?
We had a European partner for decades, Baillie Gifford, that wanted to invest in late-stage private assets — Uber, Lyft, things like that. One trip there I was talking to them about the dynamics of race and how I was struggling to get exposure to top venture funds, and they asked if I wanted to be part of their fund. This was a rare opportunity for us; I’m not sure it would have happened in the United States. It was only because I was candid about my challenges that I got the opportunity. I learned to just tell it like I see it.
Do you think the issue of wealth inequality feels more critical in recent years?
It feels more critical to white folks. There’s always been tremendous wealth inequality for African Americans. We have long known about the inequality and rigged wealth systems. There’ve been periods where African American wealth has increased, but it always snaps back to near zero. What I think is happening now is that a larger swath of white people are realizing that there’s permanent inequality, that they may be ensnared by the unequal system, and they’re talking more openly about it.
Your Twitter account includes a quote from tennis player Arthur Ashe: “From what we get, we can make a living; from what we give, however, we make a life.” How does that idea play out in your life?
I’ve done all these things because I made sacrifices and trade-offs. I don’t have children and only recently got married. We fetishize success without reckoning with what it takes, especially for women I know. It takes decades of sustained focus at the same time that your body is best able to bear children. I appreciate the recognition; but, in receiving it, my biggest hope is that we can be clear-eyed about what is being celebrated. In my case, I hope it is the impact as well as all of the very real decisions it takes to achieve it. Now that I’m older, doing well personally is not enough to get me up and going in the morning. I’ve started to focus on service to my community. That quote resonates with me because of the unique reality that women in my generation have come to accept: You can have it all, just not at the same time.
How does your Stanford law degree inform your investment decisions?
In good and bad ways. Lawyers are taught to find out as much information as possible before they make decisions. But, I have to make most investment decisions with only 20% to 30% of the information I would like to have. I just don’t have time to get to 90% certainty. As a result, almost every day I have to turn off that urge for certainty so I can press forward into risk-taking, trusting that I can make good judgments based on many years of experience.
Any books, professors, or experiences at Stanford GSB that influence you today?
Some of the lessons I was skeptical about as a young adult resonate clearly with me now. Jeffrey Pfeffer taught a class called Power in which we read about women in power and how they hold it, how they get it, what really matters. I also had a class called Business Operations, which was basically about the timing of things arriving and departing. There’s this formula called the PK Formula, an algorithm that helps you predict times for when things arrive at a place. That formula has proven more important than I ever imagined in thinking about the arrival of investors into socially responsible investments. When I was in law school, Michelle Alexander was a young professor who taught legal research and writing and criminal procedure. She would go on to write The New Jim Crow: Mass Incarceration in the Age of Colorblindness. I would see her around the law school sharing her ideas. I realize now that I was marinating in some innovative ideas from the best minds in the world. I loved, loved, loved my years at Stanford.
May 9, 2019 | by: Martin J. Smith
originally published on Stanford Graduate School of Business website