Institutional Investor Podcast Series
Included in this series:
Craig is ultimately responsible for all aspects of Willis Towers Watson's investment philosophy and process. The various research teams (Manager Research, Asset Research and Thinking Ahead), the portfolio management team within the fiduciary business and the content that makes its way into advisory portfolios are all ultimately his responsibility. This ensures there is a single investment philosophy and approach for all clients, regardless of location or type of engagement with Willis Towers Watson.
In the concluding part of our asset class mini-series, Craig discusses best practice portfolio construction under a Total Portfolio Approach, and why it’s expected to deliver better returns than the traditional Strategic Asset Allocation Approach. He also addresses a number of related questions around active vs passive, simplicity vs complexity, and conflicts of interest.
Ben and Joe are senior members of the Private Markets Solutions team. Ben is based in the US and Joe in the UK. Between them they provide solutions to clients looking to access the full range of private assets, including private equity, private debt and real assets. They, and the broader private markets team at Willis Towers Watson, seek to create best-in-class private markets portfolios for our clients around the globe.
Ben and Joe talk about private equity investments. Companies are increasingly choosing to stay private these days, given the ready availability of private funding and greater freedom to pursue a long-term vision. We discuss the opportunities for generating enhanced returns, and the mechanics of getting into (and exiting) these investments.
Sara and Victoria are senior members of the Manager Research team; Sara is based in the UK and Victoria in the US. Liquid Diversifying strategies include hedge funds, alternative beta, insurance-linked and multi-asset strategies…so basically anything liquid and diversifying!
Sara and Victoria discuss how hedge funds have moved with the times, and play a useful defensive role in a well-rounded portfolio. Have they really shaken off their “Wolf of Wall Street” reputation to embrace Inclusion and Diversity? And do they still have the “magic sauce” that simpler / more mechanistic approaches cannot replicate?
Sara and Victoria are senior members of the Manager Research Credit team; Sara is based in the UK and Victoria in the US. Liquid Diversifying strategies include hedge funds, alternative beta, insurance-linked and multi-asset strategies…so basically anything liquid and diversifying!
Sara and Victoria talk about alternative beta strategies as a way of diversifying away from mainstream market exposure (or “beta”). Examples include risk premia funds and strategies based on investor behaviour, often “systematising” approaches previously seen in hedge funds. There’s been a lot of innovation in this space in recent years that’s still under the radar.
Duncan is in his 20th year at Willis Towers Watson, and leads our Secure Income Assets business, with c$2bn of assets invested in low risk real estate and infrastructure assets designed to provide stable and inflation-linked cashflows to institutional investors.
In the third of our asset class mini-series, Duncan Hale discusses the case for investing in illiquid assets, including the additional returns available. We go through interesting examples especially in the area of Secure Income Assets. For the right investor, these assets boast very attractive features including attractive yields, long-term inflation cashflows, strong security and positive ESG impact.
Kate and Eunice are senior members of the Manager Research Credit team; Kate is based in the UK and Eunice in the US. They have over 50 years’ combined experience in the industry. Between them they cover the full range of credit assets from government bonds to illiquid private credit and seek to find and create best in class ideas to fulfil our clients’ needs for return-seeking and liability matching.
Kate and Eunice talk about bond investing in the second of our asset class mini-series. How can an institutional investor get to grips with so many different ways of investing in credit, and the attractive opportunities in areas outside of the mainstream markets? We also talk about the importance of considering sustainability in both avoiding downgrades and seeking returns linked to ESG themes.
Heidi and Stu are members of our global equity portfolio management team - Heidi is based in Australia and Stu in the UK. Between them they have over 25 years of experience in the industry. Both Heidi and Stu have a specialisation in managing equity portfolios on behalf of our clients, seeking to construct “better equities” portfolios that can deliver high and sustainable returns over the long term.
Heidi and Stu talk about equity investing in the first of our mini-series exploring different asset classes, starting with a look behind the headlines around the market rally and the Gamestop “short squeeze”. We then consider the potential pitfalls of both passive and active investment – the former is challenged by increased concentration and structural changes of climate change, whereas the latter should mean more than hiring a good manager and hoping for the best.
Martin and Tessa are part of our asset research team, between them they have more than 25 years’ experience translating capital markets views into portfolio actions. Katie leads our Multi Asset Growth Solutions business, with c$5bn of assets invested across equities, credit, liquid alternatives and private markets.
What sorts of new year resolutions should we be considering for our investment portfolios? Our three guests are cautiously optimistic about future returns, especially in the near term. We talk through three key macro-economic themes – central bank and government policy shift, China’s financial opening and long-term sustainability – and translate these into portfolio actions. And how well have our recommendations from last year fared through the COVID crisis?
Adam and Shahrazad help our clients globally embed the best of our sustainable investment research and solutions into their portfolios and ongoing investment decision-making. Our sustainability expertise spans asset and thematic research, manager research and engagement, proprietary analytics and tools, as well as portfolio solutions. Put simply, sustainable investment is a key tenet of our people, processes and portfolios, and we believe it is central to successful long-term investor outcomes.
Adam and Shaz talk about the regulatory momentum behind sustainable investment and the actions that investors can and should take on this front. Institutional investors have great power to influence change – the time has come to exercise this power and in particular to stop ignoring the impact investment decisions have on the wider world. In dealing with climate change, a “carbon journey plan” could be a useful framework for setting a strategy and putting actions into context.
Adam and Shahrazad help our clients globally embed the best of our sustainable investment research and solutions into their portfolios and ongoing investment decision-making. Our sustainability expertise spans asset and thematic research, manager research and engagement, proprietary analytics and tools, as well as portfolio solutions. Put simply, sustainable investment is a key tenet of our people, processes and portfolios, and we believe it is central to successful long-term investor outcomes.
Adam and Shaz discuss sustainability, ESG and stewardship, including what lessons COVID-19 has taught us about ESG-integrated strategies. Looking ahead, to what extent do they think sustainability factors will influence investment returns, and what are the dangers in doing the bare minimum? They also look at different ways of investing sustainably, from tilting and exclusions to positive impact investments.
Chris and Nimisha are responsible for overseeing our manager research efforts across the world. The manager research team aims to identify skilled asset managers and engaging with them to create optimal investment vehicles for clients. An assessment of the Inclusion and Diversity culture forms a key part of this research.
We pose some challenging and sensitive questions for our two experts. What’s wrong with a simple meritocracy? How much does a strong culture really add to returns? How do we make sure we get true cognitive (rather than superficial) diversity? And should we look beyond gender and ethnicity, to consider socio-economic class and other factors?
Liang and Paul are investment experts who work with asset owners from around the world to help them formulate their investments in China. In addition to providing recommendations on the strategic allocation to China discussed in the podcast, they support clients in the area of asset manager selection and practical portfolio implementation drawing on more than twenty years of research in this space.
Liang discusses the possible paths for US-China geopolitics and continued globalisation – how might these forces shape our future, and what size of allocation to Chinese investments is sensible as a result? Paul then goes into the practical aspects of investing in China – is now the right time, is China the right place, and who are the right people to do it for you? In this episode, we will cover the major opportunities and risks (and some Chinese proverbs).
Becka and Tim are investment organisation experts who work with investors around the world to help them improve their effectiveness across all aspects of their organisation. In addition to helping with the strategic thinking discussed in the podcast, they work with clients on core foundational elements such as governance arrangements and effectiveness, building better decision-making frameworks, understanding and enhancing organisational culture, and developing and deepening organisational beliefs and comparative advantages.
Tim and Becka focus on longer term considerations. The future is VUCA (volatile, uncertain, complex and ambiguous) and we need a way to make sense of it so that we can act now or prepare appropriately. Can we take advantage of the “inflection points” resulting from the seemingly inevitable shifts like a huge leap in technology and artificial intelligence, climate change, or more speculative shifts, for example in how financial industry participants reconfigure themselves in response to changing consumer preferences? And what of the “unknown unknowns” that even sci-fi film makers fail to foresee?
Becka and Tim are investment organisation experts who work with investors around the world to help them improve their effectiveness across all aspects of their organisation. In addition to helping with the strategic thinking discussed in the podcast, they work with clients on core foundational elements such as governance arrangements and effectiveness, building better decision-making frameworks, understanding and enhancing organisational culture, and developing and deepening organisational beliefs and comparative advantages.
Tim and Becka describe how investors should think about the inter-related issues around governance, investment, operations, clients, people and business across different time horizons. How much attention should those at varying levels of seniority devote to these timeframes? We also discuss some specific examples over the short and medium term, including taking into account “externalities” and “having the right people on the bus”.
Nimisha is responsible for overseeing manager research efforts across fixed income, from traditional core fixed income to alternative, smart beta and private credit. This includes sourcing compelling investment opportunities globally and finding ways for clients to access these themes. The manager research team aims to identify skilled asset managers and engaging with them to create optimal investment vehicles for clients.
Nimisha explains what has driven the downturn and subsequent recovery in credit markets during the COVID crisis. With a varying outlook across different areas of the credit landscape, she also sets out her views on different ways of lending money, in terms of the type of borrower, loan structure, securitisation, liquidity, and looking for “bargains” in fallen angels and distressed credit.
Katie is the Head of our Multi Asset Growth Solutions business, which has c$4bn of assets invested across equities, credit, liquid alternatives and private markets. Our multi-asset solutions aim to maximise risk-adjusted returns for investors whilst having a positive impact.
Katie continues to explore innovative investment ideas. In this Part 2, she covers investments linked to the themes of technology (including cyber security and developing a vaccine for COVID-19!) and meeting the needs of vulnerable members of society. She also considers how incorporating these ideas can provide long-term downside protection and deliver more stable outcomes for the whole portfolio.
Katie is the Head of our Multi Asset Growth Solutions business, which has c$4bn of assets invested across equities, credit, liquid alternatives and private markets. Our multi-asset solutions aim to maximise risk-adjusted returns for investors whilst having a positive impact.
Katie explores some of the more innovative investment ideas we’ve been putting forward. In this Part 1 of our conversation, she covers investments linked to the theme of long-term climate change: solar power, agriculture and forestry. Within this overarching theme of climate change, different investment structures are available, across the full spectrum of risk and return.
Jess leads the Strategic Advisory team in Australia, which advises clients on governance frameworks, beliefs and objectives, organisational design and product strategy. The team has worked with some of the leading asset owners around the world to establish global best practice in a number of areas including governance, Total Portfolio Approach and portfolio construction.
Jess talks about good and bad examples of decision making by asset owners. How could a chairperson deal with the loudest and quietest voices in the room? How do the Australian Superfunds operate, and do they get better results? Should the rest of us stick to our comfort zone instead? And how are things different now that meetings are conducted remotely?
Luba leads the global research function that comprises Manager Research, Asset Research and Operational Due Diligence. Her team includes more than 100 researchers around the world responsible for conducting economic and capital markets research, evaluating asset management firms in a variety of different asset classes, coming up with investment recommendations and creating new investment solutions where there is demand from asset owners but no solutions exist.
Luba describes what culture means in the context of asset management, and how this is a key consideration in the manager rating process. Why is the common model of relying on an individual star investor no longer suited to the modern investment environment? Can different cultures be equally good? And how has ESG thinking been elevated by the current situation?
Josh is responsible for the operational due diligence program in Investments. The program maintains oversight of over 175 asset managers across North America, EMEA and Asia Pacific. The operational due diligence team conducts due diligence on traditional and alternative investment managers and funds, including hedge funds, private equity, real estate, reinsurance and long only equity and bond funds.
Josh judges how well the asset managers are doing with handling a financial crisis while working under unusual conditions. What is the worst thing that can happen when operational processes fail, and how close is he to giving an “ODD fail” to an asset manager? The conversation also touches on risks that have wider relevance given the prevalence of home working, including concerns around cyber security.
Craig is ultimately responsible for all aspects of Willis Towers Watson's investment philosophy and process. The various research teams (Manager Research, Asset Research and Thinking Ahead), the portfolio management team within the fiduciary business and the content that makes its way into advisory portfolios are all ultimately his responsibility. This ensures there is a single investment philosophy and approach for all clients, regardless of location or type of engagement with Willis Towers Watson.
Craig discusses what asset owners should be thinking about and doing in this environment. Would he ever recommend less diversification? And what is the one thing he would “impose” on investors if he didn’t have to answer to to anybody?
David is responsible for the firm's economics and capital markets research. This covers the following areas: central economic and market forecasting, asset allocation, business cycle scenarios, analysis of mega and micro-trends, and corporate financial risk management. David is also a member of our Investment Assumptions Committee which guides investment policy for clients worldwide.
A continuation of our conversation with David Hoile, on how things may develop from here. David’s team have prepared a number of future scenarios for the battle against COVID-19, and the likely implications for investment markets. The team are also launching a COVID-19 dashboard linking medical indicators with economic indicators, to shed light on which scenario is more likely to come to pass.
David is responsible for the firm's economics and capital markets research. This covers the following areas: central economic and market forecasting, asset allocation, business cycle scenarios, analysis of mega and micro-trends, and corporate financial risk management. David is also a member of our Investment Assumptions Committee which guides investment policy for clients worldwide.
David summarizes movements in the investment markets up to the first week of April against a backdrop of the COVID-19 outbreak. Find out how far the level of economic activity has fallen, how recent equity falls compare to historic bear markets, and why government bond prices have been so volatile.
Willis Towers Watson has produced these podcasts for general information purposes only and they should not be considered a substitute for specific professional advice. In particular, their contents are not intended by Willis Towers Watson to be construed as the provision of investment, legal, accounting, tax or other professional advice or recommendations of any kind, or to form the basis of any decision to do or to refrain from doing anything. As such, these podcasts should not be relied upon for investment or other financial decisions and no such decisions should be taken on the basis of their contents without seeking specific advice.
Any commentary on investment managers or financial instruments in these podcasts are not intended to imply, nor should they be interpreted as conveying, any form of guarantee or assurance by Willis Towers Watson of the future performance of those investment managers or financial instruments.
