Thinking Like a CIO: Inside Modern Pension Investing | Allocator | Ep.34

Summary

• Global Allocation: Emphasis on international equities with a global market-cap starting point, careful US exposure caps, and slight tilts toward the rest of the world to mitigate concentration risk.
• Style Strategies: Integration of factor investing (including momentum and balanced factor exposure) particularly in EM equities, learning from past drawdowns in US value.
• Currency Policy: Active debate on currency hedging, viewing USD as a potential risk-off hedge post-2008, with flexible partial hedging rather than all-or-nothing positioning.
• Real Assets Expansion: Moving into private markets with infrastructure and real assets like real estate to complement equities and fixed income as diversified growth drivers.
• Alternatives: Considering hedge funds selectively, avoiding watered-down implementations and focusing on long-term, cost-effective, low-correlation strategies aligned with DC constraints.
• Manager Partnerships: Deep partnerships and segregated mandates with major managers (e.g., Amundi, Invesco, Robeco) to secure bespoke structures, research access, and alignment.
• Process & Governance: Quarterly investment forums with humility toward consensus, efficient-markets orientation, and TPA-like cross-asset collaboration within clear governance guardrails.
• Outlook & Risks: Recognition of US tech concentration, regime-dependent dollar behavior, and the importance of balanced portfolios targeting CPI+3–4% with smoother drawdowns.

Transcript

[music] is is quite a powerful um thing to do. So I I do think it's worth deeply getting [music] into it and a quarterly basis is kind of about right but it's quite helpful to frame it [music] with a little bit of humility to kind of say well look we better understand what the consensus is and better acknowledge that's probably priced [music] in and has quite a good chance of actually being right. So, you know, where where do we actually have [music] conviction in something that's differentiated from from consensus is the question that everyone's got to answer really, isn't it? >> Imagine spending an hour with the world's [music] greatest traders. Imagine learning from their experiences, their successes, and their failures. Imagine [music] no more. Welcome to Top Traders Unplugged, the place where you can learn from the best hedge fund managers in the [music] world, so you can take your manager due diligence or investment career to the next level. [music] Before we begin today's conversation, remember to keep two things in mind. All the discussion we will [music] have about investment performance is about the past and past performance does not guarantee or even infer anything about future performance. Also understand that there's a significant risk of financial loss [music] with all investment strategies and you need to request and understand the specific risks from the [music] investment manager about their product before you make investment decisions. Here's your host, veteran hedge fund manager Neils Krop Len. [music] Welcome or welcome back to another conversation in our series of episodes that focuses on markets and investing from a global macro perspective. [music] This is a series that I not only find incredibly interesting as well as intellectually challenging, but also very important given where we are in the global economy and [music] the geopolitical cycle. We want to dig deep into the minds of some of the most prominent experts to help us better understand what [music] this new global macrodriven world may look like. We want to explore their perspectives on a [music] host of game-changing issues and hopefully dig out nuances in their work through meaningful conversations. [music] Please enjoy today's episode hosted by Alan Dunn. Thanks for that introduction, Neils. Today I'm joined by Dan Mikolskis. Dan is chief investment officer at People's Partnership in the UK. It's one of the largest UK pension providers, managing 40 billion pounds in assets under management. Dan has been in the markets a number of years. Uh previously an extensive career as a consultant with Lane Car Clark and Peacock Readington and Mercer and also experience in the U sell side in trading. Dan, great to have you with us. How are you doing? >> Oh, great Alan, thank you so much for having me. I'm really looking forward to the conversation. Thank you. >> Not at all. No, great to have you. And I didn't mention and I am a reader of your uh your LinkedIn blog. Uh how often is that? >> Oh, it's slips a little bit more recently. I used to do it uh every couple of weeks. Now it's more like once a month. Um I know, you know, I try and make it worth reading. So, you know, when when I've got enough good stuff to go into it, I try to try and publish one. >> Absolutely. We all start off very ambitiously thinking in terms of weekly or bi-weekly and it does slip, but no, it's a always an enjoyable read. It covers a lot of topics. So, I enjoy that. Um I mentioned um you kind of your career um trajectory a little bit in terms of background in consulting and we always like to start off by getting a sense on um how people got interested in investing in markets in the first place. So what got you interested uh in in investing to start? >> Well yeah I suppose my my career sort of um started off the sort of an actuarial route really. I mean yeah most of my career as you say has been in been in consulting. I did have that little diversion uh when I moved to Australia and worked more in investment banking and talk more about that if you like but I mean most of my career has been been in consulting and and I um I studied actuarial uh qualification as a as a graduate and but I was doing my master's degree at university and um did an actuarial science module there and for my sins was quite was quite drawn to it in terms I I think of the sort of practical applications of some of the of some of the mathematics and I was also quite drawn to the idea of doing a professional qualification ation. Um I mean if I'd known how many sort of weekends in my early 20s I'd end up spending studying rather than um going out then I might have reconsidered that but anyway I considered it a bonus that you could study for a professional qualification. Sounds a bit mad to say that now but anyway that that that was where where sort of things started off and you know I was sort of directed to sort of the investment consulting side of those firms and actually it's very interesting the time period we're talking here was sort of early 2000s. It was almost in the early years really of investment consulting as a as a thing. I mean that was sort of brought into being by the pensions act 1995. So it was probably late 90s early 2000s that these firms were considering having an investment consulting sort of practice as separate from the sort of actuarial uh piece. So they were reasonably well established at the time. They weren't brand new, but looking back now, it was still the kind of early years of that as a as a branch of uh the sort of actuarial um genre, if you like. Interesting. And then over time, obviously, you've transitioned more um from consulting into being a CIO uh and a people's partnership. It's obviously a a business that has grown quite rapidly. Um you know, I mentioned 40 billion pounds in assets under management. I think when we chatted previously it was only 20 billion a year or two ago but but definitely would be helpful I think for our listeners just to give us a sense of the what people's uh partnership does and and kind of the history behind um you know its origin and and evolution. Yeah, absolutely love to. I mean, I've been at People's Partnership for about two and a half years now. Uh, and it's been fascinating learning uh some of the some of the history of the organization, which obviously I've not I've not been part of for for most of his history, but um it it is a really interesting organization. Um and you know, I think it's a sort of a model that that has a lot more sort of wider applicability, but people's partnership it used to be known as BNC, which stood for buildings and civil engineering. Uh and it was a sort of um in industry sort of multi-employer kind of federated employer trade union kind of um roots in terms of group of employers in the construction sector coming together and creating an entity that could offer financial products to the workers in that industry on a profit for member basis uh and effectively offer financial products to suppose underserved communities you might say at that time and the genesis of the organization was in the 1940s uh quite a while ago. uh and the sort of the first products were uh holiday pay stamps um which weren't um common at the time but then over the decades obviously the the construction industry in the UK grew massively and various sort of other products were offered I think things like insurance um and those sort of things and culminating in a sort of a multi-employer stakeholder pension scheme which um was then sort of um gave gave rise to the the people's pension which was uh sort of set up in obviously in response to autoenrollment in 2012 which is so where regulations changed in the UK so that employers had to enroll all their staff into a scheme and because of the profit for member um ephoses rather than a profit for shareholder type thing the organization was able to offer that pension to organizations of all different sizes from big employers down to the much smaller kind ofmemes two three person organizations um and that really was key I think to our success in that we were able to to um to sort of yeah bring on board uh really says 100,000 employers that use us uh as their vehicle for auto enrollment. Uh and that's led to a huge amount of members, a huge amount of people around the country paying into people's pension um every month really, which has has sort of um you know compound these things compound over time, don't they? And what that's meant over the last few years is quite a quite an astronomical growth in terms of the AUM. Uh as I say, I joined the business two and a half years ago. We've just gone through 20 billion AUM. Uh and recently we just crossed 40. Um so that's that's just the last couple of years really in terms of the growth and that that sort of trajectory is um is what's going out into the future as well. >> Great. So about 100,000 employers and how many ultimate members would you say? >> 7 million. Uh so it's a huge proportion and about 2 million of those are actively contributing every month. Uh we have a lot of deferred members as well. That's partly because a lot of the employers that we service are in um the sort of sectors of the economy like uh retail, hospitality, construction where where people might do contract work and so three to six months contract, they pick up a pension with us and then they'll leave and go to another job. So by the nature of the kind of se segments of the economy, you end up with a lot of deferred members who have relatively small pots and then you got that core of the active members um sort of two million uh kind of contributing um every month. Great. Um, and I mean are there parallels to this model elsewhere or was it I mean obviously it has origins going back to 1940s. That's not a new idea but we see auto enrollment has come in in the last decade or so. I mean is it modeled on the Canadian model or models elsewhere or would you say it's more unique to the UK? >> Uh well that's a very good question. I mean it's very similar to how the Australian super funds are set up. >> Okay. So that there is uh Seabus which is the construction industry super fund in Australia is you could view that as a pretty close cousin of of us really. Um and yeah in Australia you've got a much bigger grouping of these industry super funds that that came up around particular industries. is obviously you've got Host Plus in the hospitality space uh restster in the retail space um and and and so forth and and they're they're operating the same kind of profit for member model um and so I think it's a little bit more common uh in Australia you also see it a little bit in the Netherlands so some of the funds there are sort of on an industry basis um I forget the exact names now but there one of the larger ones there is a sort of healthcare industry fund um which again is set up on on that kind of basis. So yeah, it is models that you see elsewhere actually and if anything um it's maybe been a little bit underappreciated uh in the UK. I suppose you can view that auto enrollment was sort of grafted on top of the existing pensions landscape in the UK which was mainly a commercial sort of retail sort of landscape um without necessarily a lot of thought being put into um the the nature of the institutions that were going to uh going to grow our house with that. >> Very good. So I mean in practical terms then you are a large basically DC pension serving you know 7 million clients effectively. Um I mean I guess that puts you in in as in in the category of asset owner. Is that fair to say? I know that's u a term that we increasingly hear these days is the kind of the the power of the asset owners and and how they think about managing funds. Um I mean does that shape your your thinking in terms of how you organize the business and set your investment strategy? >> Yeah, absolutely. And that and that was my big kind of thing I suppose when I joined the business two and a half years ago was that um that we should consider ourselves to be an asset owner and should set ourselves up uh very deliberately with a the asset ownership model at the forefront of of our thinking. Now that might sound like the most obvious sort of statement ever, but it's kind of not because where UK DC trusts came from they came from a you know they were sort of startup in some ways of starting from ground zero in terms of assets and obviously when you do that you have to set yourself up with the most efficient cost-effective cheapest simplest model you can for very understandable reasons. So UKDC grew from necessity out of very basic approaches to asset ownership which was basically you know passive pulled funds single provider. Um and to be honest that worked really well. I mean passive done pretty pretty damn well for the last 1015 years. So you know good investment outcomes good value for money you cheap to oversight what's not to like sort of thing. Um and so certainly that that got us um that that's got us pretty far. But my yeah my view was at 20 billion we we' we should have it was time to sort of move on and grow up that model and and certainly certainly at 40 billion I think you you you can and should have a bit of a different approach to to asset ownership and that there are a variety of approaches to asset ownership model actually and I guess part of my part of my point was you your decisions around your asset ownership model are kind of upstream from all your other investment decisions. you know, you can talk about do you want to be in US equities, global equities, emerging markets, you know, private debt, infrastructure, what have you. Um, upstream from all of that is is your ownership model and how you want to set yourself up. So, I suppose my my thing is that you ought to spend some time thinking about that and kind of getting that right first before you start trying to kind of, you know, grab all the nice shiny things and talk about your latest ideas and, you know, whether you want to be long this that or the other. [snorts] >> Yeah. And I mean so what are some of the kind of considerations that you have to think about when you're in that setup phase or you know what are the different routes you could go down that you've considered? >> I think the first one was team that was the the first sort of um key key plank of it. I mean we we sort of >> we sort of took it down to about four or five different different pillars there but the team was one partnerships was another segregated mandate sort of direct ownership was another systems was another one and governance being another one. And I think those are the kind of main areas um that you got to consider and you got to decide where you where you sort of land on it. And but yeah, that team has to come before everything. Um and and I sort of my viewers, we we wanted a um a pretty specialized kind of senior seasoned uh investing team that could have specialists across all areas. Um but we wanted that team to stay pretty kind of lean and focused. So we're at about 30 individuals at the moment, 30 people full-time on the investment team. um which is a lovely number because we can get all of us in a large conference room which we we do that twice a week and just get all on the same page. Uh it's really really nice. So we'll probably grow a little bit from that. But that kind of 30 to 50 number I just think is a real sweet spot um for for a team and obviously the the asset management is an outsourced model and we're deliberately um as as part of our our philosophy is relying really heavily on those managers um to get a lot of resource out of them and and do a lot of the work that in a different world we might have a a large team of analysts set up to do but we're trying to run run run it sort of very efficiently if you like with that relatively focused team of kind of um kind of senior your investors. So that that was the starting point getting the team right. >> And I mean obviously as you say key a key element to it. Um I mean what's the kind of attraction or the pros and cons of working in a in in a kind of a a large asset owner in this space you know in terms of is that an attractive place to go? Are you finding for for for investors or or you know is it does it attract a certain type of person or what would you say about that? Yeah, absolutely. It is an attractive uh place to work. He he says extremely self- servingly obviously. But you know, I I've seen our look our profile uh has changed massively over the last two two and a half years. Um and we've Yeah, I think we've really put ourselves on the map. We had a fantastic advertising campaign back end of last year that I I can't take any credit for. I wasn't involved in that, but is that's really put ourselves on the map as well as just the growth and some of the headlines. So, a lot of things have come together to to to make it um just I think a we have a far more well-known proposition now. Yeah. Therefore, far more attractive. You when I I joined the business >> there was a bit of a sense of gosh, wow, these people seem really big, but I've never really heard of them. Is it actually real? What are they actually doing kind of thing. Um and we're well we're well past that now. You certainly talk to asset managers, everyone knows who we are and gets it and gets to growth. And when you're talking to to people who might want to come onto the team, it's it's the same now. They've really um kind of seen that. So that that's changed a lot over the last two years. >> Yeah. And obviously what comes with size and scale is more clout and I guess more flexibility as you say, more recognition in the market. I mean obviously it it gives you the ability to to negotiate on things like fees, I guess. I mean outside of that, what else does that kind of size and and and scale bring? Um I I think uh yeah the ability to negotiate with managers is a big unlock for quite a lot of things. Um and it's not just it's not just give me cheaper fees although that is obviously a part of it. It's a lot of other things as well. It's about how you know how bespoke you can get the structuring on the fees. is not just give me the fund for slightly cheaper. It's can we talk about some kind of SMA where the the whole structuring of the fees is completely um you know completely bespoke to what we want um and that takes a lot of time and effort and focus from a manager to to deliver that. So you need that you need the bigger size to sort of get them um kind of get them interested there. But yeah, you also get a lot of access to to other um s sort of areas that the managers can deliver. So doing research projects, getting insights in strategy and macro, uh even collaborating with managers on on policy work, uh you know, with we we have a huge number of of touch points with the managers that we that we work with and and people throughout their business, give give us a lot of their time and and effort. And I think that's um you know, that's partly because we we have big mandates with them that are that are growing fast and they they they see the the value in in kind of investing in that in that relationship as well. So, so I think yes, you can get a get a lot of um a lot of value out of there. So, another point to to make is on systems. So, with the managers we we've worked with, we have kind of developed and delivered sort of systems and portals. So, we have various views into the portfolios that they run for us. Um, which is just really helpful from our perspectives. it makes it so much more efficient uh and and easier to um to sort of stay on top of those portfolios given large proportion of our assets is with with the manager and then we have a system that can give us a direct view into it. Um yeah, it's a really nice uh setup much easier than if we had you know 10 dozen managers and tracking Excel spreadsheets back and forth sort of thing to to get a sense of it. >> Yeah. And obviously I guess as well what comes with size is the the possibility of running strategies inhouse. I guess if you have sufficient assets it can become um commercially feasible or plausible um to run in house as opposed to going out to market. How do you think about that? Or is that something that will could become even more of a consideration if assets grow even more or not? Are you very much in the outsource model? >> It's I mean it's it's it's a road that some some large global asset owners have gone down. You know, I spent spend a bit time in Australia talking to the Aussie super funds and a lot of them have started to go down that that model where they look to insource a proportion of the of the asset management. Uh I I think there's typically sort of three reasons why people do that. One is cost. Um but there's that's not the only one. I think it's cost probably um control and then alignment. Um, and I think it's sort of ah, yeah, I think some combination of those uh, really are coming into play. I think people don't want to give the impression it's just a cost thing. Um, because that that that can sound a little bit um, I don't know, a little bit kind of uh, excessively uh, kind kind of capitalistic about it, I suppose. But the cost thing um, that depends a lot on what your current baseline is in terms of the fees you're paying. >> Um, and and and that baseline varies a lot. So, um, yeah, if if you're paying decent fees, active management, then I can see why there'd be a big saving, but equally, if you've got your fees baselines in an already pretty low level, the the cost one might not actually be as big as you think in listed markets. Um, certainly. Um, so so that that's an interesting one to explore. That varies a lot whe whether that's a good trade-off or not. And the other ones are equally as interesting. So alignment is a key one because you know this principal agent issues are yeah they're really real in investing. Um and >> you know I've often talked before about you you get the sort of traditional view of investing where an investor owns stocks and companies and it's as simple as that. >> Um and then the investor makes all the decisions you know about asset classes sectors buy sell all that. Whereas in practice what what in practice there is is there's a quite an elongated chain of um providers and so forth in the mix. You know in some cases you might have something like um you know a trustee, a consultant, a provider, a platform, a manager, an index provider um all sitting between an investor and um and what they're investing in. You could easily have seven or eight layers uh between. And when when you got a chain like that, the principal agent problems at each link in the chain can really mount up and can really end up meaning that that things aren't actually being done in the in the in the interests of of the end of the end saver at the end of the day. So, so get getting alignment in that chain is really important and collapsing down that chain. Uh so, so I thought about that. I think asset owners can collapse the chain down a little bit by having direct control in segregated mandates and bringing some of those decision-m inhouse. that there is the thinking that in housing asset management is kind of the ultimate alignment because you're kind of you know you're you're doing it internally and I would say yes probably but I think it is also possible to really work hard on the alignment with external managers as well and that that up to now that has been our focus to be honest with you is is trying to say c can we really rethink the way we're um allocating these assets how we're choosing our managers really really get the max alignment we can with an external manager. And I I think you could go quite far there actually. You really can if if you do that right. Um you know it's it's a very different situation than allocating to a pulled fund in a manager versus um sort of crafting an SMA with a manager that's just deeply deeply aligned with you in in so many um different kind of ways. So yeah, I think um the insource versus outsource is an interesting um discussion. Yeah, we're we're more focused on an outsourced model over the current planning horizon. And I think when you chisel away at them some of the benefits of of insourcing, not not always as big as as might uh as might be perceived because you can bear down a lot on the costs and you can actually do more on alignment than you think. So you shouldn't shouldn't shouldn't sort of knee-jerk thinking that it's all about bringing it internal. >> Yeah. Interesting. I mean you touched a lot on the kind of external managers the it being very much a partnership. Um obviously when you have such large amount of assets you know all asset managers are presumably queuing up outside to do business. So it's there's a lot of choice. How do you think about you know going from that global universe of managers down to a more manageable you know short list to consider. >> Yeah it's a fantastic question. We we've been through that process now about uh four times. Um and and so yeah the ones obviously the big ones there that got announced last year with the appointment where we went to Amundi to manage uh developed market equities, Invesco on fixed income and Rabico uh on emerging market equities. All of those were were quite lengthy processes and you know part of that process be familiar to anyone who's done a manager selection piece that there's some common elements to it. You want to have some kind of starting point in terms of a universe tool. Yeah, we use the likes of uh investment on liquid side, global fund search. Uh you need you so you need somewhere starting from a universe. You need some basic kind of screening to get you down to a sort of fairly large but manageable number. So 20 odd something like that. And then we would typically do a kind of model portfolio um sort of exercise with with the 20 odd and then look to cut that down to a sort of shorter list ultimately getting down to a short list of about I don't know six to 10 managers where you then you're going really deep uh with the multiple meetings over the course of a of a long period of time. Um and yeah we come up with a balanced scorecard and score them and all sorts of things there. But end to end that process for us has taken us about 9 months. And um yeah, you you learn a lot about the managers over that period of time. It's it's really interesting. That's where the kind of partnership bit really comes through because that's not so much about ticking boxes, but you do just learn a lot by how they show up in every single interaction? Um you know, are are the people briefed? Do the people understand um what you want the whole time? Is there consistency in terms of who you're speaking to? Um what you know, what's being talked about? And and that doesn't come through on a one-off meeting. obviously but over a 9month period of time um it sort of comes through and and obviously that the managers I just sort of mentioned that that generally the larger end of the spectrum obviously Mundy and Invesco probably both in the largest 20 managers in the world kind of thing so that you know we're talking big organizations here all the managers we were talking to there were big um were big organizations and and that that comes with it with its pros and cons doesn't it big organization means you got loads of cool stuff but big organization means it's big and it's just can be can be tricky to navigate. So seeing how our our key relationship point person navigated that for us over the period of time we were assessing them was also quite important. And then the role of the um yeah that relationship point person became really key over that over that period of time and sort of understanding how they operated seeing how they how effective they were at getting the the um res resources of the organization and and bringing it to bear. um was was quite interesting and quite a big um differentiator actually because um yeah I just think some some managers done that well some have sort of underappreciated maybe that um that that side of it and then I get why I guess as I've been a consultant for a while I think there was a time there when it was very much a productled uh sort of marketplace where consultants were very focused on give us your best product give us your best product in this category I don't know your best global active bond fund and your best um you know multiffactor equity fund and and this wasn't particularly a a focus on the relationship and extracting the value from that um but but I think things are shifting there with more bigger asset owners and the partnerships being able to deliver those relationships I think um is a real real skill and it's brilliant when it's done well it really is um and there's quite a lot of dispersion across the industry in terms of how effectively um that that can be delivered and yet as I say you don't you don't discover that in a one-off meeting cuz everyone looks great in a one-off. It's the nine months of interaction and the back and forth that that uh sort of reveals that to some extent. >> Yeah. Interesting. I I mean I guess most or all large asset managers would would talk about their solutions capability and you know internally we talk in terms of kind of consultative sales but it sounds like there are quite notable differences in how good they are at delivering that. Um is that it? Yeah, that that's been our experience for sure and and it yeah it's certainly depends on the individuals that you've got and um and how that sort of process works. It also reflected a little bit of the culture of the managers. think a little bit like again when you go through a long process you do sort of get a sense of the culture you know how how flat is the culture is it hierarchical you know how sort of clunky and bureaucratic is it internally to get things done you know these are things where I think it's very tempting as a manager to feel like your internal kind of inefficiencies are somehow invisible but they absolutely do over a period of time they come through and as a client you can sort of sense if there's you know it's really clunky getting going from one side of the business to the other or in trying to go from one office to another or one one function to another whereas other ones who are flatter or or have a more open culture or whatever um can make that a little bit easier. Uh so yeah I think there's a whole lo of considerations there that that um are worth focusing on and perhaps have been a bit underappreciated. Yeah. And I mean, you know, there there is that kind of trade-off between, you know, building deeper relationships with a smaller number of managers and and keeping the the kind of the the the perspective broader and considering lots of managers all the time. Um, I mean, how do you think about that trade-off or what's kind of correct number of relationships you want to maintain? I mean, could you use one asset manager across multiple asset classes or not? Or how do you think about that? Yeah, we've been constantly debating that honestly um to where the right the right thing is there. I I yeah, I sort of had this quite strong view that the right number of manager relationships is less than most asset owners have basically. Okay. And yeah, it was pretty common like in the UK even for a modestly sized asset owner could easily have two dozen managers on on the roster. That happens very frequently. I do think that's too many. Um, but we started to have those conversations around that there is a limit to that. There are some areas we're looking at where I've become convinced that you do lose something if you're trying to get a manager to stretch over too many different areas. Um, and also um, yeah, what about boutique managers? Smaller managers have have something to offer. Um, and you sort of struggle to fit them into the the sort of thing I've described. So yeah, we're starting to develop approaches to saying well okay this is our core number of really core partnerships and that number I think might be quite small. I can see that maybe never being above maybe half a dozen kind of really really core um partnerships because we have to invest in those as well. We we absolutely need to uh spend a lot of time you know people on my team >> you know we'll be talking on a daily basis to some of these managers. We have these um structures set up for all the you know all the meetings that we're holding with them over an entire year. we kind of set that all up. So we absolutely need to invest outside and you can't do that with a big number. But then there's a second question of can we find ways of slotting in smaller more specialist allocations into that without without breaking the model. Um which is something we're looking at at the moment. some really sort of exciting kind of operational potentially ideas, some ways of delivering uh slightly more specialist managers uh in a way that um is still kind of preserve some of those efficiencies and doesn't doesn't doesn't kind of break that model because Yeah, you're right. Even big managers can't do everything. There's some really good stuff that you can go to if you can access the specialists. >> Yeah. And I mean, you're talking about partnerships, so it's presumably they're providing more than just obviously running a portfolio in a segregated mandate. Um it's I suppose research assistance or bespoke projects things like that is that part of the value ad yeah absolutely and what you know one example we used a lot early on when we were talking to them to try try and try and bring bring it to life was that this question of um you know sort of macro insights if you like as as a general um as a general thing um and this sense that obviously I can I can say to any manager can I get a call with your chief macro strategist everyone will say yes and then there'll be a bunch of emails backwards and forwards try and find a a time that that will go in the diary in like four weeks time. We'll both dial into the meeting. It'll be a bit of like, oh, why are we here again? And then they'll they'll they'll slot into their usual kind of patter which they've done load of times and not be very good, but you know, probably on average 50% of it will be relevant to me and 50% won't and and that that's it. And then we'll it'll be a lovely meeting. We'll say thanks very much, close the meeting and that'll be it. >> That's one version of it. Whereas I was saying what the partnership is more like is if we have someone on their macro team who's kind of you know going into the office in the morning kind of thinking ah we've just changed our view on European equities I must get on the phone to Dan and his team and let him know because I know they care about that and that's something they can they can do. It's having that ongoing thing in the diary where every single month we're keeping up to say, okay, you've changed your view there, right? Okay, what do you think about Japan? Are you still neutral on the US? Where are you thinking about this? Well, what about the dollar? And just keeping tabs on it all the time so that we can sort of synthesize that information and make it far more relevant to us because it's very easy for someone to pop up and say, yeah, short the dollar kind of thing. But it's different to say well okay but what did you say three months ago and six months ago and when did you change and what's your conviction level uh and what's your time horizon and you only learn all that stuff by having an ongoing conversation with them over a period of time really understanding how they think about it. Uh even to the point where you know with the managers we work with for example we get input from their sort of central uh strategist teams and then also some of their multiasset risktakers. Now, those are different viewpoints and they might not always agree and that's fine, but it's really interesting to know is is that a is that a strategist call or is that the multiasset risk takers call and so you're starting to tune in to the different ways they those different teams work, the different way their incentives operate. Um, so it's really interesting and um it's been great and I think all that comes down to us kind of synthesizing all that in an effective way and bringing that information together um you know into the meetings that we have every quarter where we're looking at our our allocations and it's just far more useful when my team has been in almost constant contact with a small number of these kind of strategists and then they my team can kind of come into the room and represent all that rather than us just having a one-off call with a with a strategist who says, you know, buy this, sell that, buy the other kind of thing, but we never spoke to them before, so we don't know if that's new views or something they've been talking about for 10 years, you know. >> Yeah. Interesting. I mean, obviously you're long-term investors. Um, you know, you have to be cognizant of the news flow, but I guess you're not overly reactive. So to what extent are you using those macro insights, you know, dayto-day, week to week in kind of asset allocation or and or or even within asset classes uh um at all? >> Yeah, it's a really good question. I mean, I spend a lot of time trying to make the point that it is important to step away from from the noise. Um and when it comes to most headlines in markets, most headlines you see coming across Bloomberg, I do think a decent starting point is it's pretty much all noise actually. Um, and and you got to remind yourself of that. And I also try and remind my team that most of the time consensus is probably about right and it's probably already priced in. Um, so I think markets do a decent job of pricing stuff in. And you you you better know what is priced in. There's no point sitting there saying, "Oh, you know, I I love US equities or whatever without recognizing that that is already um pretty well priced." So in that sense, I'm quite far across the sort of efficient markets side of the world. There is there is a butt which is I I do think you can do a little bit better than that. Um emphasis on a little bit and it is worth doing that because we're we're a 40 billion fund so if we can just add a little bit through that dynamic allocations or whatever it's worth doing. Um but you got to have a bit of humility about it. I think you got to set yourself some clear guard rails and some kind of expectations for how much you're going to you're going to really achieve. I think we can definitely add a little bit more by um by leaning into and out of some of those regional allocations here and there, but you don't want to get car carried away that you can suddenly some kind of active um macro trader swinging around all over the place because that would be um I just think that would be going going too far. So yeah, we do have a quarterly process. We have a quarterly um quarterly investment forum where we try and um you know, all the key investors on the team kind of sit down for half a day. We try and run through all the positioning that we have in the in the portfolio. And the idea is to sort of reunderwite that on a quarterly basis. Now it doesn't mean we change it every quarter and quite often we don't but I I think it's a really helpful practice because when it you do come up and want to make a change it's so much easier having had that conversation three four times sort of flagging the indicators you're looking for then it sort of happens then you have so much more conviction in that change. So we're probably only making changes like once a year. So maybe less than that in these areas. But I think to inform that a quarterly conversation that kind of starts that starts with kind of macroeconomics and then works its way all the way through to kind of regional allocations um you know duration maturity allocations and credit and fixed income sort of thing is is quite a powerful um thing to do. So I I do think it's worth deeply getting into it and a quarterly basis is kind of about right. But it's quite helpful to frame it with a little bit of humility to kind of say, well, look, we better understand what the consensus is and better acknowledge that's probably priced in and has quite a good chance of actually being right. So, you know, where where do we actually have conviction in something that's differentiated from from consensus [music] is the question that everyone's got to answer really, isn't it? So [music] from an asset allocation perspective, I mean obviously I guess you're looking at the traditional asset assets, bonds and equities, but beyond that is it real assets? Um is it all liquid, any privates, any alternatives or where do you draw the line? Yeah. So, at the moment, we're just um we're just sort of embarking on um moving into um into private markets and liquids and and hopefully the next year or so, we'll we'll have established a program probably across infrastructure and real estate to to sort of move into real assets. Um but as things stand today, it's it's generally um liquid markets portfolio. And um but if I could just take a quick step back, I suppose maybe think about how we talk about how we think about asset allocation. Um you know in general sort of we sort of run this process to try to start with beliefs then map it through to objectives put a bit of a framework around that and then research and then have a strategy that comes out the back. So it's beliefs, objectives, research, strategy. Um and so we try to spend time on all all parts of that but particularly getting the beliefs right uh could can get you quite a long way. Um and so there what we're trying to do obviously is returns in excess of UK inflation. And I think that's what drives um yeah drives good outcomes for members uh members pensions over time. That's what gives them a ability to accumulate a pension and then and then sort of spend it down. Um you know various beliefs around needing short and long-term measures of risk and volatility is not really a great measure of risk. Often we're looking more at the chance of a member falling short of that um of that long-term return outcome. So it's kind of long-term probabilities. some areas we do care about draw downs because members approaching retirement um do care about falls in the value of their pension. So yeah your belief can set out some principles around around how you going to do it and then you can kind of translate that into clearer objectives. So in the growth phase, inflation plus 3%, inflation plus 3 4%. You can generally show that at the current contribution levels, that is a decent kind of accumulation rate that gets people to a decent place. And then when when people are approaching retirement or at retirement, it's inflation plus a little bit, maybe inflation plus 1%, one and a half%, something like that is is more what you're what you're sort of going for there. So that that gives you a bit of a return, you know, hurdle to go at. And and if you focus on the and that sort of mirrors the the two asset allocations that we run really uh we've got we got one main default and that that has two main um components to it a sort of growth component and the pre-retirement component. Um so so pretty kind of pretty kind of clean structure. Uh and then those kind of growth returns you know say inflation plus 3 to 4%. That's a sort of an equityish return and a lot of our peers are 100% equities at that point. But we sort of hold a belief that there is some value in a slightly smoother return stream than that. And our kind of philosophy there is that we would like to see different return drivers driving that that growth, not just equities. So trying to put together a growth portfolio ideally that leans on equities, fixed income and real assets as kind of three growth drivers that are kind of working together uh to deliver sort of equityish like return in the growth phase which is basically what we're here for. Uh and then the pre-retirement phase as I say that's quite different. That's a much more focus on getting the draw downs as low as possible but still um yeah still doing a little bit better than uh than inflation. Not surprisingly, that's a more of a fixed income shortdated type type allocation um that you sort of get to there. But we we also work in terms of trying to map those targets to kind of a reference portfolio which we can then map down as a as a bit of a clearer benchmark uh for the asset classes because that those inflation targets are are a great starting point, but they're obviously not um they're not investable directly. So they don't give you as good a um day-to-day benchmark as you might need. >> Yeah. Interesting. Um I mean obviously it's you're not you're not all in on equities. You're saying you're kind of diversified growth in the sense of real assets um and presumably in the fixed income. You're looking at credit as well. I mean obviously it's been a tremendous run the last 15 16 years bull market uh since 09 which begs the question you know is there tougher times ahead at some point and what what that might look like. Um you know people always point back to say 1966 to 82 we had high inflation you know asset markets uh went sideways and suffered investors had suffered real um losses I guess or negative real returns in some asset classes. I mean, I guess that that must be a key consideration in your mind. Uh, but is there anything you tactically would do about the risk of that type of scenario? >> Yeah, I mean, well, look, we're still pretty equity heavy, right? So, so we're by no means um, you know, bearish bearish or or pessimists on the equity front. Um, but yeah, you're right. Equities have had a great 10-15 years. Strategies that were 100% equities have have done really well. So, you know, well done to the people who embraced equities to that extent. What I would say is looking back at longerterm studies and actually I I just got an email that the the 2026 UBS long-term return study is out makes this point again that actually over the long term um balanced portfolios that are majority equities but have you fixed income in them as well have actually done almost as well as just equities. You don't give up tons of return for for the balance but you you need but you do have a much smoother ride on on the V front. So, I think that's probably where we're coming from. It's not so much saying, >> "Oh my gosh, terrible things could happen to equities. We're we're bearish and we're going to going to get all defensive." It's more just saying, "Well, equities are great, but maybe there's there is a bit of value in just trying to take a slightly more balanced um perspective on it than um to being a 100% 100% kind of equities. And what about I mean there's a whole raft of issues you know even for a long only equity investor in terms of you know what's the you based and you know a lot of talk about you know the UK market has been abandoned by UK investors etc. equally you know you take a global index you end up with a lot of US exposure a lot of concentrated exposure in high growth technology stocks. So what's your starting point about what's a sensible way to to think about your equity allocation? Yeah. So, um the starting point is is the right question and ours is um global market cap starting point. That's that's a clear sort of belief that we have there and I'm pretty um you I'm definitely on the side of as I sort of said of market efficiency in that sense is that the starting point in in global listed equities should be global. I think in other asset classes, by the way, you can justify more of a home bias for different reasons. But in global listed equities, I I think um you know, they do a pretty good job of pricing in the future. If a particular region is going to have better revenue growth or EPS growth, that will be reflected in the prices and therefore reflected in the allocation. So starting point is global. Um but like in so many areas, we do set ourselves up so that we can control those allocations ourselves if we want and make changes to them. So, so we have a regional approach to our equity benchmarks for example. So, we have a North American portfolio, European, Japanese, UK, um, Asia-Pacific, emerging market sort of thing. Um, and we we allow ourselves a bit of a tracking error budget to lean into those allocations a little bit. Um but we try and keep ourselves honest by not trying to deviate too much from the global um the sort of global sort of portfolio because obviously we've seen over the last 10 years it was very fashionable for a large part of the last decade to be underweight in the US overweight emerging markets and until recently um that have been a very very painful trade. So I think you got to be really cautious um in in in the sort of way you're doing it. Um but the concentration point is a really good one. So that that is I I will take that although I'm sort of quite as I say quite far on the efficient market side. I think that is a that is a sort of a legit knock on the global index approach to the world that there isn't a great answer to. It it would appear that those global indices are somewhat lacking in diversification you might say which is a bit of an odd an bit of an odd thing to say. Um, so yeah, there's there's a few levers you've you've got to kind of lean against that, but one of them is to yeah, to sort of cap your if if you've got that regional approach that we've got, you can sort of put a cap on your US exposure at say half the portfolio, let's say, which then kind of um kind of waters down the effect of that concentration a little bit. So I I think concentration is something um to to to think about. It's it's it's difficult to come up with a good sort of theoretical market efficiency type type argument around it. And so I think people will have their own approaches to it. But that's certainly one of the things that's in our mind when we're looking at those regional allocations and and the concentration there trying to get you know proper diversification in. I I think the way things have gone your US versus rest of world allocation is one of your top level strategic decisions as an asset owner these days it's going to make a big difference has made a massive difference over the last 10 years obviously last 10 years more US the better >> um you know going forward that's going to be a big a big kind of decision and our stance has been you know lean slightly away from the US and more towards rest of the world which um yeah done okay I suppose the last last year or so but um we'll see and another is is is obviously what you do with the dollar and your currency hedging there in terms of in terms of that the the global indices as well as being concentrated uh in technology and in certain companies obviously give you a lot of dollar exposure um and uh yeah written multiple very long papers on on what that means and and what you should do with it. I think there's quite a good argument that from a UK investor perspective, it's actually a pretty decent um hedging asset to hold dollars. Um and and so you should think um should think hard about how much of that you want to sort of hedge away. It might be quite nice to hold dollars. There have been certainly been certain regimes post08 where holding dollars is kind of almost like a free tail risk hedge. Um so that's another thing we we do think about a lot what we're doing with those dollars. And is that something that you would review as part of your kind of quarterly process? Obviously, there's a lot of now debate about the dollar as you say, it has had that role of kind of risk uh off characteristic in in stress periods which has been beneficial say for non- US investors, but you know, obviously we've seen a shift in sentiment in the last year. You know, people questioning will that always be the case? um you can get carried away by the news and the short term sentiment but but there is kind of a a structural argument there that that might play out over many years. What's your thinking on that? >> Yeah, I mean it's actually something we we we review and we've been doing quite a lot of work around it recently. It's such a hard always such a hard topic to pin down because there are so many ways of approaching it, so many angles to it. um we can't take the view you've got to try and step away a little bit from the um just a view on the levels of the currencies because um you know who knows on that really they really can go in any direction I think the analysis we've seen that you know managers have done for us and so forth and unless sterling is at very extreme valuation levels it is quite hard to forecast the trend what you can get a bit more confident on is the risk properties so what happens to the dollar in in in sell-offs Um but again there you've got very much a sort of a regime type type thing at play where since '08 which is nearly 20 years now the dollar has been a really good riskoff hedge generally um between sort of 1970 and '08 it was sort of fineish um actually there was some there's some stuff on this in the latest UBS yearbook as well I was looking at it yesterday um if you want to go even back before 1970s which is a bit questionable how relevant that might be but um it's got different properties again. So even with the risk side, you've got a bit of a sense, well, are we still in that kind of post08 regime in terms of how it's behaving? There are some arguments that it's um might have changed, but you know, has it really do do we really think the dollar is not going to strengthen if there's a big a big kind of sell-off and obviously the other point is you don't have to choose all or nothing in terms of the hedging. You can have a percentage level and and then it's just kind of well what sort of range do we think is is decent? Where do we want to be in that range? um how much flexibility we want to want to sort of give ourselves. So those are sort of the things we're um we're trying to um try trying to nail down, but whether the pound goes up or down against the dollar is something we're trying not to stake too much of a um you know a view on un unless it was at really extreme levels which yeah to be fair it was a couple of years ago obviously um but but more recently it's I think not it's not really been extremes in the last last little while. >> Yeah. I mean the other area which um you know you talk a bit of the efficient markets hypothesis I suppose there are areas where it might have been breached uh is with kind of factors and you know style premium and um quality or size and momentum and things like that. Um what's your thoughts about integrating those kind of factors into the the long equity portfolio? >> Yeah, that's certainly something we're we're doing a little bit to to some extent. I mean our our emerging market equity portfolio uh that we've got with Rabico integrates um integrates factors and it's something we're looking at more widely. I mean in I've got a decent amount I'd say now of experience with that over the last 1015 years you know in previous roles have you advocated reasonably strongly for factor-based strategies and then obviously saw you know there was some pretty ugly performance there and that kind of I don't know what was it 2018 to 2022 type window. Um, so I think you've got to any sensible strategy there has to learn the lessons of that period of time and has to have a sensible answer for what went wrong there and why and what have you done differently. Um, and my take on it is that it was it was particularly value that got very very badly or value in the US got very badly hammered over that period of time and some of some of the multiffactor approaches in hindsight were a little bit too overweighted to US value. Um and so something that really ensures it's not suddenly getting over its skis to any one factor and also feel that you momentum was the thing that has sort of saved um some of the uh some of those multiffactor things recently and sometimes momentum gets underplayed because there's a bit of a sense like is it a real factor sort of thing but the data would show over the last few years that you definitely need that there. you want that to be there and have a strong strong presence in the signal as well um to be able to to to sort of work. So um you know I'm not sitting here saying I've got the the best factor models myself or obviously we're an allocator so we're looking at to managers to say well have you learned something from that period of time what what have you learned how can you sort of be sure that your factors are more kind of evenly uh sort of evenly spread today but but you know looking around the world I mean actually factors work pretty decently in in EM for most of that time um so so when you look back at the data it was the US experience that just really clouded a lot of um a lot of you know European values worked pretty well uh for the last few years. So it's about trying to you make sure that you're you're genuinely balanced and if if one factor fails in one region that doesn't doesn't somehow drag down the the performance of the whole of the whole product. >> Yeah. And what about alternative investment strategies like good old sort of hedge funds? Um I mean in theory these we can access strategies that have a low correlation to equities and you know boost to sharp ratio more um stable risk adjusted returns you know if you believe all the the literature and the marketing etc. um is it that they are not appropriate for an asset owner for a structure like yourselves or or is it costs or would you consider them >> I think um we certainly are cons considering it and starting to look at it. I think where it comes down a little bit to the asset ownership model again because because DC has evolved from a basic asset ownership model. Those strategies are basically just off the table because the ownership model and the cost constraints just just ruled it out from the get-go. Um that isn't the case anymore, I don't think, because we've got a more sophisticated model. Um you I'm pretty sure at our scale we could we could access versions of it that that would work in the in the cost constrained way as well. Um but I I do think again you got to face into some of the issues that those strategies have have experienced. Um and again a few of my reflections would be that um some of those strategies that did badly were the more where allocators um imposed quite a lot of constraints or implemented a more kind of watered down version of it to satisfy cost constraints. Those were some of the versions that didn't do well. So I I think you got to be quite wary of watered down versions of it just to satisfy your your approach. The the right approach is to get your model sophisticated enough to do the proper versions of it rather than do the kind of dumb down ones would be one point. Um and and then there just has to be enough recognition that generally equities do go up and do do well. So they shouldn't be about totally trying to hedge and um shouldn't focus too much on spending a lot of premium on reducing risk because that is just over the long term. That is just a drag. Um so so you've got to find strategies that make sense in that long-term growth context. We're not looking at hedging this quarter's returns. We're looking at something that works over the long term. Um, and I think again some of the strategies that have underwhelmed in the 2010s got a little bit obsessed with trying to control risk to the nth degree to the point where, you know, you pay you pay it all away in in in premiums and you're left with something that doesn't really do much after fees. Um, I still think there's some good there's some good there and I would love to look more at how we could, you know, bring some of those kind of hedges um into play a little bit in in a kind of sensible way. um you know in a in a construct that doesn't bleed away too much uh premium doesn't pay excessive fees and and and um and kind of works against that longer term um that kind of equity stream but that that's definitely a sort of next couple of years type project I'd say for us >> okay I mean the big buzzword in pensions and public pensions has been TPA total portfolio approach is there something relevant in your model you know being a DC provider but obviously you do have the kind of flight path uh offering things. How do you think about TPA? >> Um, it's definitely relevant. It's a helpful framing to to think about uh some of it because it again just goes back to the asset ownership uh model point. You know, my my one of my sort of views, maybe slightly pushy views, is I think the concept of TPA almost originated with some of these much larger asset owners where the internal team became very large and um things became awfully siloed between the different asset classes. And so they needed a way of kind of reinventing a more centralized process that that that could be a little bit more nimble. Um, now if you set yourselves up with a smaller, more focused internal team, like I said at the start, then I think you're you're naturally thinking in that way a lot more. just the way we've kind of set the team up naturally sort of um engenders that kind of cross asset collaboration and the kind of single centralized group that's taking decisions across the portfolio um is yeah it's not far away from from what we're trying to do but on the other hand you know DC members I think broadly do want an SAA type thing I I I don't think you can take it to the to the extremes but DC members are expect I think that they have a right to expect a certain sort of asset allocation and to be able to have a sense of this is what the equity bond real asset split is. I think intrinsically that the members do want that. So I I I don't think you can take it to the nth degree of saying oh no no no we'll deliver CPI plus 3% but it could be anything in that portfolio from one day to the next um is probably not the way to um to see it but but yeah as soon as you're working in an internal team you become quite tuned in to this balance of governance between it being team centric and board centric uh approaches with a board-centric approach being very much here's the sea we sign it off with some ranges you know you go and implement it the teamcentric approach being where you have a lot more freedom and um yeah when you're operating in that environment like we are you get quite tuned in to the differences there uh and definitely debating where we where we want to sit on that where is the comfort that we have with our trustee and with our governance as to as to how far we can move on it where do our regulatory permissions allow us to sit so I think it's a very useful spectrum as you're considering your your ownership model um and your governance but I think in some ways it's sort of invented as a solution to a problem that we don't have at the moment as a relatively uh smaller more flatter asset owner. >> Fair enough. Um I mean you talked about balance scorec card in terms of evaluation of external managers as you know the manager selection process in terms of how you think you know people's partnership the investment team themselves should be evaluated. How do you think about that? And um is it balanced cards? Presumably it's not just returns you know performance over what kind of time period and what other factors uh are relevant? >> Yeah, I mean in terms of the performance it's a three lenses approach and even just looking at performance is quite quite complicated and nuanced because you got three different um benchmarks effectively and then you've probably got at least two different time periods that you care about. So you got like at least a six factor scorecard just on performance. So the the three lenses on performance are peers, um reference portfolio, um and the inflation targets of the funds. So those are three different um comparators. They all give you different but useful information. They can all tell you slightly different things at different times. Um so I think you need to synthesize all those together. And then in terms of time scales, you know, I am a fan of looking at long-term returns, which I think generally means at least trailing five years. So I love to focus on like a trailing 5year number. But the issue is that doesn't change very fast. So you also need to have a pulse on what's going into the front end of that fiveyear. So I often like to look at the one year five years. So you look at the last one year and the trailing five years against each of those kind of measures and you can sort of put that into like a red amber green type scorecard to get a pulse of um of where you are. And then again we have to do that across the two different products. So you start to see how the returns monitoring thing becomes quite um quite complicated. But I'm a big fan of having a a clear repeatable framework on that stuff because the worry in investing is you can just show your stakeholders a slightly different picture of returns every quarter. You can always find the number that looks good and show it and you really shouldn't do that because what's what's better is to say let's agree that these are the this is the framework. Every quarter we'll show you the same thing and we'll stare at the same 12 numbers. Um, and over time we we'll uh we'll we'll sort of get get some really useful information out of that. So yeah, it took us a little while to settle on that uh perspective, but that's similar to I think how the Aussie super funds would would do it in terms of that peer view, the rel the reference portfolio and the um inflation targets view. Um and obviously yeah as I say out of those the reference portfolio is obviously completely investable. So that um very uh that very clearly drills down to the exact benefit that the team has sort of delivered versus something else that could have been pursued. It's a very very clear counterfactual. Um you know the peer group is also more or less a counterfactual. So I think it's quite helpful to know what would our portfolio have done had we sort of outsourced it to the peer group. Um yeah albeit not quite as directly investable. It's harder to stick that into a, you know, a barer model and get a track and error out of it, but you got a rough idea. Then you got the inflation targets, which are sort of more of a, they're obviously more of a longer term kind of kind of guide and they're absolutely not investable. I would love to be able to invest in something that could do CPI plus 3%, but of course that doesn't exist. Um, but they're the sort of longerterm yard stick that you want to be um you want to be near to, but obviously recent years those have been really challenged. So that's been one of the issues. Yeah. 2022 being still within the five-year window, um you know, it's been a real struggle to get um to get funds in line with even quite modest inflation related targets. Um even if you all the theory says that it should be very achievable to do sort of inflation plus 3%. Um no one was doing that during uh 2022 23. Um yeah, we we're over the fiveyear now because equities have been strong. Yeah, we are just about ahead of that over the 5y year view now, which is obviously really nice. Um, but that was um tricky during that period of time as well, which is why you need to have the other views on it because if you're offside on that measure, you might not be doing anything wrong because the peers and the reference portfolio might have the same issue uh inherent in them. Um, and you might have even done slightly better than peers but worse than the reference portfolio kind of thing. So those three perspectives um have have been quite helpful in in um in looking at returns but it it means that it's a slightly more uh nuanced conversation than than just you know are you up or down. >> Very good. Well we're just conscious of time. We do like to wrap up uh just getting some perspective. Obviously you've been in the markets a while on the consulting the investing side. I mean for people earlier in their career are looking to develop a career as a CIO in a as a either as an asset owner or elsewhere. I mean what what would you suggest or what what are the things that were helpful for you through your career would you say? >> Um yeah a few things. I mean I I get asked that question a little bit. I mean one thing that was really helpful for me you know starting my career at a at a consulting firm and a global firm was was was really really beneficial especially that period of time. Uh got us all sorts of insight into loads of different um how loads of different pension schemes operated. As a consultant you get exposure to loads of managers. So that that breadth of exposure for me was um was was was super helpful. Um but you know, not not everyone's going to be going to be in that position. So So a sort of more general piece of career advice that that um has always served me well is I think really making the most of every kind of opportunity you're in and really really learning your craft in every single role. Um because I think sometimes people can be very focused on right I've got a role. What's the next thing, what's the next thing? And people can be very you know might do a year 18 months in a role and be very keen to move on. Whereas I think there's real value in as I say taking you know at least three three four years in a role I think is what it takes to learn the craft of that role really deeply uh learn it and understand it and appreciate the situation you're in because every situation is going to be a bit unique. For example, you might be in a global firm in an overseas office. You might be a UK firm in a UK office. It could be a a founder growth company which very particular kind of company. It could be an employeeowned partnership. It could be a profit for member organization. You know, I've worked for all those kind of organizations. They're all brilliant in their own ways. They all have their own issues. And unless you spend real time in it and really kind of absorb it. I don't I think you can risk not really taking that lesson on properly in your career as to what it's like to work in the overseas office of a European company or the UK office of a US company. um you know or work for a cyclical or counteryclical part of the business. So I I think learning your your craft in each area is really important and then sort of developing that a little bit more. I think what you know when I interview people what is often deeply impressive to me is when someone is sort of able to say right here's my philosophy of how you should do XY Z thing and in some ways the more simple that XY Z thing is the better right because it shows they've really thought about something quite simple and and it shows a lot of agency and curiosity and loads of of good things so it's one thing debating your philosophy of investing but you know let's say something simple as what makes a good end of day email to go out to an asset owner. Yeah, it really impresses if someone says, "Hey, here's my philosophy. What should that be on the email?" Because I've spent time thinking about that. I didn't just do what my boss told me to do. I thought to myself, what do the people reading it want? What helps? What decisions are they going to make? What are the information that they need to make those decisions? How can I make it quicker? How can I make it more accurate? Yeah. So, a lot of people will just sit there, do what their boss told them to do, and then pass it on. Whereas if you spend that time learning your craft and really think, yeah, what is my philosophy of how to do this very specific thing, I actually think that's very impressive to people as you go through your career and you build up a series of those um sort of philosophies and obviously you can sort of go up the the ladder when you're early in your career. It might be what's the philosophy of how to send out this email or do this very specific process as you get further along in your career. It could be a philosophy of how you run a team, how you run a portfolio, how you build an organization, you know. So, you can't jump straight to that. I think you got to learn how to build it up um by by thinking that. But but it is a different way of of thinking. Yeah. That sort of Yeah, as I say, shows I think a bit of curiosity, but also a bit of agency that you can actually go and own something and change something. And that to me, I think is always differentiated and is always impressive. >> Very good. Well, I I think that's definitely good advice and uh we should all reflect on our end of day emails now and develop our philosophy. But thanks very much for coming on, Dan. It's great to get that perspective on the DC pension landscape and uh the tremendous growth in in in that side as well. And for anybody who wants to keep a breast of your work, obviously your LinkedIn newsletter, I think it's called your Thursday investment fakes, uh is probably the the place to find you. But um thanks a lot and from all of us here at Top Traders Unplugged um thanks for tuning in. We'll be back again soon with more content. >> Thanks for listening to Top [music] Traders Unplugged. If you feel you learned something of value from today's episode, the best way to stay updated is to go on over to iTunes and subscribe [music] to the show so that you'll be sure to get all the new episodes as they're released. We have some amazing guests [music] lined up for you. And to ensure our show continues to grow, please leave us an honest rating and review in iTunes. It only takes a minute and it's the best way to [music] show us you love the podcast. We'll see you next time on Top Traders Unplugged.