Adam Schenck, Milliman

Adam Schenck joined Milliman as an intern in 2005 while earning his master's in financial mathematics at the University of Chicago. He became the first trader in the firm's financial risk management group, helping life insurers hedge complex guarantees through the financial crisis, and the group has since grown into one of the largest sub-advisors in the ETF industry, advising on roughly $242 billion. In April, Milliman launched its first ETFs under its own name: MHIG, the Healthcare Inflation Guard ETF, and MHIP, the Healthcare Inflation Plus ETF.

In this episode, Adam explains why one of the world's largest actuarial firms started with healthcare. Health is Milliman's largest business, and the firm has tracked healthcare cost inflation for clients since the 1950s. He walks through the figures that frame the problem: a 65-year-old couple retiring today needs more than $600,000 for healthcare in retirement even with Medicare and supplemental coverage, and a family of four on a typical employer plan spends about $37,000 a year, a cost that has grown more than 6% annually since 2005. MHIG seeks to match Milliman's Health Trend Guidelines index, which tracks healthcare claims inflation, while MHIP targets that benchmark plus 2%. Adam breaks down the four building blocks of the portfolio: healthcare equities chosen by following the money to the companies that benefit from current inflation drivers, which is why Eli Lilly is the top holding; broad equities that capture inflation elsewhere in the economy; gold as a drawdown diversifier; and a Treasury strategy calibrated to wage inflation.

Adam also covers how the funds rebalance monthly using actuarial nowcasts of healthcare trend, how AI monitors FDA, CMS, state regulatory, and legal filings each week to manage company-specific risk, how individuals can use Milliman's online calculator to size their allocation, why cash has almost never kept up with healthcare inflation, and how insurers, employers, and other institutions can use the funds as a healthcare inflation hedge.