NEW YORK (MONEY magazine) -
Hilda Ochoa-Brillembourg sits flanked by friends at a long dinner table, a large David Hockney painting on the wall behind her. It is July 8 and three rooms of an elegant townhouse in Georgetown are filled with her friends and colleagues, a high-powered mix of diplomats, politicians, entrepreneurs, CEOs and members of Washington, D.C.'s cultural scene.
Her husband Arturo is reading a poem he wrote for his wife's birthday. The poem alludes to Ochoa's creative will, and it's true that the Venezuelan-born economist seems able to see possibilities where others might focus on obstacles, and has a way of coaxing order out of potential chaos.
Ochoa, the CEO of Strategic Investment Group, a firm that designs and implements global investment strategies for institutions, families and wealthy individuals, is, after all, someone who launched a firm just two weeks after the Dow plunged 508 points on Oct. 19, 1987 -- Black Monday.
She is also someone who pulled together -- and found funding for -- a new Youth Orchestra of the Americas, a group of 100 or so musicians, ages 13 to 25, from as far afield as the Yukon and Patagonia, that is now traveling around the world.
The same energy and commitment needed to pull off that feat gets poured into Ochoa's work on investing. Not only does she run SIG, she's a managing director at SIG affiliate Emerging Markets Management, a firm that manages emerging markets portfolios, and serves on the investment committee of the Rockefeller Family Fund.
She is also on the boards of the Harvard Management Company and the Group of Fifty, an organization of executives from leading Latin American private-sector companies. Ochoa thinks the U.S. stock market is behaving far more rationally than it was two years ago and is close to fair value. That said, "usually when something has been overpriced, it pierces through the fair-value line," she notes.
Going abroad
Ochoa has a more basic reason for advising clients against overweighting U.S. equities. SIG's expected long-term real (inflation-adjusted) return for U.S. equities over the next 20 years is 4 percent.
That's not bad, she notes. But it makes more sense to her to overweight emerging markets now, since SIG sees maybe twice the real return that they see in the U.S. market -- about 8 percent. And with emerging markets currencies about 10 percent undervalued relative to the U.S. dollar, "you have the currency kick favoring emerging markets and non-U.S. equities," she says.
Ochoa isn't a stock picker, but her firm does perform rigorous analysis on money managers in order to invest client money ($17 billion or so of it) in "best of breed" managers. In the emerging markets arena, SIG steers clients toward Templeton Developing Markets, among others.
For a global fund with a broader focus, Ochoa thinks Harbor International is so well managed that she doesn't expect much in the way of redemptions going forward, even though it has 33 percent in unrealized capital gains. Another favorite fund is Causeway International Value.
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Ochoa -- unlike fellow UIC member Bill Gross -- recommends tipping the scale toward high-yield bonds. "High-yield is very attractively priced, and we have a very liquid environment and a growing economy, so a lot of the credit risks will be reduced," she says.
While bankruptcies are swelling the supply of high-yield bonds, which can put pricing pressure on existing bonds, "you are getting paid for the worry," she asserts. Her firm recommends the high-yield bond funds at Loomis Sayles and Vanguard. In other areas of the bond market, Ochoa likes Vanguard Insured Long-Term Tax Exempt for municipal bonds and the Vanguard Short-Term Corporate Fund.
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