DEFINITION of 'Chief Investment Officer (CIO)'

A chief investment officer is an executive responsible for managing a company's investment portfolios. The chief investment officer (CIO) usually oversees a team of professionals who have responsibilities such as managing and monitoring investment activity, managing pensions, working with external analysts and maintaining good investor relations. They will also develop short-term and long-term investment policies.

BREAKING DOWN 'Chief Investment Officer (CIO)'

For example, a CIO could be responsible for the investment activities of a university's endowment. They would report to the trustees, develop a strategic asset-allocation plan, and make recommendations on investments or the use of outside money managers.

The role of the CIO is often combined with other areas of finance within a company and taken on by the chief financial officer (CFO). The corporate title CFO is seen much more often than the CIO. The duties of a chief investment officer may often include deciding what feasible amount of an organization’s operating funds may be put towards investment activity with limited overall risk to the organization. This typically includes tailoring and making changes to the portfolio of the company’s investments in order to create a desirable balance between risks and return on those investments.

The investment activity, if managed properly, should not introduce a threat to the liquidity of the organization or its ability regularly support its operations. While the chief investment officer may follow guidelines set by the board of directors, this executive may also offer advice and recommendations to the board on potential ways the investment strategy and policy may change. CIOs may face high expectations for the performance of the investments they choose to make. Even in challenging market cycles, wherein yields remain low for extended periods, the CIO may be expected to navigate these challenges and uphold the fiscal security of their organization.

CIOs can be found performing their duties at banks, investment firms, and other companies that have funds set aside for such purposes. Part of their role includes exploring innovative and new approaches to the investment process. Some of the skills needed to perform this job include having in-depth knowledge of asset classes, investment products, and strategies for generating desirable returns.

Certification as a financial analyst and an understanding of financial markets may also be seen as assets for those who seek to take on this role. Experience and familiarity with the overall financial needs of the organization and how they might be influenced by an investment strategy are also sought after.

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