Jul 8, 2019 · 1h 20m · capital-allocators
Ash Williams – Florida SBA's Reigning Chief (Capital Allocator, EP.104)
0:00 / 0:00
gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of Capital Allocators, host Ted Seides interviews Ash Williams, Executive Director and CIO of the Florida State Board of Administration, exploring his leadership of a $200 billion public pension system. Williams discusses his career journey across public service and Wall Street, modernizing institutional compensation, executing low-cost internal investment strategies, and safeguarding fiduciary integrity against political pressures.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Ted holds 15.7% of the talking time here. How this is scored →
Ted as informed peer 5.6 Guest teaching 3.8 Guest disagreement 0.8 Ted pushing back 0.0
speaking balance: gold is Ted, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 21:25 Defending fiduciary independence against political divestiture demands
Ash recounts forcefully resisting Governor Lawton Chiles' directive to dump tobacco stocks, drawing a sharp boundary between political policy and fiduciary duty.
Hardest push from Ted ▶ 53:25 Ted questioning short-term performance pressure under public scrutinyTed presses Ash on how he survives inevitable periods of short-term underperformance when politicians and the public are eager to point fingers at transparent benchmarks.
Biggest teaching moment ▶ 55:15 The airplane life raft defense of fixed incomeAsh details his masterclass to an advisory council member on why a portfolio holds negative-yielding bonds, comparing them to emergency life rafts on a yacht.
Ted holds their own ▶ 33:50 Ted anticipating AAA ratings on defaulted asset-backed paperTed demonstrates his deep familiarity with the financial crisis by immediately identifying the toxic collateral as AAA-rated paper before Ash even specifies it.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Ted as informed peer | Guest teaching | Guest disagreement | Ted pushing back | Why |
|---|---|---|---|---|---|---|
| Florida Heritage and Entry into State Government | 4 | 3 | 0 | 0 | Ted opens the interview by playfully referencing Ash's Florida heritage, prompting an engaging autobiographical narrative. Ash details his ancestry and early career entry into the Florida legislature in a storytelling manner without confrontation. | |
| Modernizing Pension Law and Navigating the S&L Crisis | 4 | 4 | 1 | 0 | Ash recounts expanding allowable pension allocations from fixed income into equities and navigating the S&L crisis as chief of staff to the state regulator. Ted listens attentively as Ash details the institutional breakdown of sand-state thrifts and Governor Chiles' sharp fiduciary advice. | |
| First SBA Leadership Tour and Direct Real Estate | 6 | 3 | 0 | 0 | Ted probes the composition of the SBA portfolio during Ash's first tenure and specifically asks about direct real estate ownership. Ash outlines the rare direct principal model and gives specific asset examples like Corte Madera Town Center. | |
| Tobacco Divestiture Conflict and Transition to Wall Street | 5 | 4 | 2 | 0 | Ash explains his departure from the SBA over the governor's push for politically motivated tobacco divestiture versus his strict fiduciary stance. He shares the quantifiable financial cost of public pension divestment before describing his recruitment to Schroders. | |
| Leadership at Schroders and Boutique Growth at Fir Tree | 5 | 3 | 1 | 0 | Ted explores Ash's transition from Schroders' corporate British culture to Jeff Tannenbaum's boutique firm Fir Tree Partners. Ash details the cultural contrasts, the value of repotting oneself intellectually, and institutional scaling. | |
| The 2007 SBA Cash Pool Crisis and Return | 6 | 3 | 0 | 0 | Ash details the 2007 SBA local government cash pool run caused by illiquid subprime paper and an administrative panic. Ted interjects knowledgeably about AAA-rated structured paper, anticipating the exact rating dynamic. | |
| Sponsor: Ridgeline Front-to-Back Investment Technology | 6 | 4 | 0 | 0 | Following the mid-roll ad, Ted inquires about stepping into the SBA in late 2008 and restructuring compensation. Ash describes exploiting distressed secondary sales and leading a multi-year public governance overhaul of employee incentive compensation. | |
| Asset Allocation Principles and Low-Cost Internal Execution | 7 | 4 | 0 | 0 | Ted and Ash discuss macro asset allocation, internal factor replication, and the active-versus-passive matrix. Ted presses on what drives Florida's lowest-in-class CEM cost benchmark, and Ash highlights internal indexing and buying factor recipes rather than finished cakes. | |
| Navigating Public Sector Governance and Benchmark Transparency | 6 | 4 | 2 | 0 | Ted asks about travel budget constraints and public scrutiny. Ash offers an unfiltered assessment of political term limits, media soundbites, self-funded trustee governance, and holding trust by publishing daily two-decimal performance benchmarks. | |
| Structural Risk Management, Fixed Income, and Real Estate Deals | 6 | 5 | 2 | 0 | Ted asks how Ash handles short-term drawdowns and political second-guessing. Ash recounts educating an advisory board member who demanded eliminating negative-yielding bonds by comparing fixed income to parachutes and lifeboats on an airplane. | |
| Assessing Character, Internal Culture, Proxies, and Airbnb Engagement | 6 | 4 | 0 | 0 | Ted asks about manager character, internal team culture, and the operational scale of voting 11,000 corporate proxies annually. Ash explains Florida's proactive governance role, citing their corporate engagement with Airbnb on Israel boycott issues. | |
| Private Equity Strategy, Legal Safeguards, and Manager Diligence | 7 | 4 | 1 | 0 | Ted probes private equity allocation, fee structures, legal terms, hedge fund patience, and diligence hurdles. Ash outlines structural leverage in GP terms due to Florida statutory non-indemnification rules and eliminating managers based on behavioral red flags. | |
| Personal Passions, Industry Pet Peeves, and Core Life Lessons | 5 | 4 | 2 | 0 | Ted closes with rapid-fire questions covering personal hobbies, unresearched cold pitches from vendors, cyber risk, and parental wisdom. Ash shares a vivid anecdote about staring down litigation threats using in-house legal muscle. |
Statements from this episode (16)
Florida SBA Manages 60% of Its Real Estate Directly With No Leverage
“To this day is a unique model in that we manage about 60% of that book, or a little over half, in what we call our principal portfolio, which means we own the properties directly, and we manage them ourselves, and we often have them with not a great deal of le…”
Fiduciary Duty Must Trump Political Divestment Mandates For Pension Managers
“Listen, we really need to separate the fiduciary duty and the political policy as it relates to health and dangerous products like cigarettes, because I can't really hold a manager accountable for beating the S&P 500 and then tell him he can't own one of the f…”
Tobacco Divestiture Cost Florida $500 Million and California Billions
“One of the consulting firms did an analysis of the impact of tobacco divestiture on public funds. I think Florida's piece of that cost about five hundred million bucks. I think California was a couple of billion.”
Florida's $34 Billion Cash Pool Faced 80% Redemptions in 48 Hours
“In about 48 hours, the cash pool of the SBA, which is a, like I said, about a thirty-four billion dollar pool, received redemptions for something on the order of 80% of its assets.”
Florida SBA's 2007 Cash Pool Held Under 3% Illiquid Assets
“The proportion of the illiquid assets was tiny. It was less than three percent. It was not life threatening. It was not really even material to the size of that pool, given a normal liquidity environment.”
Florida SBA Bought Cheap Secondaries From Cash-Strapped Endowments During 2008
“So there were lots of very prestigious institutions, endowments and what have you, who were longer illiquid investments, and particularly those subject to capital calls, than they realized they were. And they got in a liquidity pinch In late oh eight, early oh…”
Tactical Asset Allocation is a Bad Strategy That Failed Miserably
“What was tried in the eighties and to a degree in the nineties that failed miserably was the idea of making active judgments and jiggling around the tactical asset allocation as people now call it. Just a bad idea.”
Securities Lending and Index Reconstitution Trades Consistently Beat Passive Benchmarks
“Through a combination of SEC lending and playing the names that the index providers signal in advance are going to be added to or taken out of the index, doing those two things will get you enough marginal revenue that you can beat the index pretty consistentl…”
Florida SBA Operates at Half the Cost of Institutional Peers
“We have been the lowest cost provider for three or four of the last five or six years per CEM. Our costs on average are about half those of our peers.”
Active Management Outperforms Passive Indexing in Emerging and Frontier Markets
“As you move out of the U.S. Into non-U.S. Equities, and the further afield you go into emerging markets and eventually into frontier markets, then the attractiveness of active versus passive becomes compellingly active.”
Politically Governed Pension Funds Face Systematic Resource and Compensation Suppression
“If you're under a state legislative body, any politically derived body, chances are you're going to be suppressed for compensation, for resources, including travel, training, materials, systems, risk controls. Everything.”
Pensions Hold Fixed Income for Crash Liquidity, Not for Yield Returns
“It's not to get the marginal negative three percent. It's there because if the bottom falls out of the equity market, There will be a flight to safety, which will be fixed income. That will be the liquid asset that will be appreciated at the time, and you can …”
Florida SBA Must Fund $700 Million in Negative Monthly Cash Flow
“We have negative cash flow to the tune of seven hundred million or thereabouts a month.”
Florida SBA Will Never Adopt the Canadian Pension Direct-Investing Model
“Well, we are not in a position to do transactions directly other than our real estate area, and I don't think we ever will be. That's the province of the Canadian model, and you're just never going to see that here.”
Florida SBA Claims Credit for Reversing Airbnb's Disputed Territories Policy
“We engaged Airbnb. They have done a one 80 on the policy that they were pursuing in the disputed territories. It was announced publicly about two weeks ago.”
State Laws Give Florida SBA Superior Legal Terms in PE Contracts
“I think the majority of them we would have some superiority in terms, and the reason I think that's a pretty safe statement is there's some things that are required under Florida law that are inconsistent with most GP's documents. So, for example, one thing we…”