[i3] Institutional Investment Podcast

John Livanas is the Chief Executive Officer of State Super, the $37 billion superannuation fund for public service and public sector workers in NSW. In this episode, we talk about the use of defensive overlays, dealing with the COVID drawdown and machine learning in investments. Enjoy the show! Overview of podcast with John Livanas, Chief Executive Officer of State Super 01:30 Peter Drucker’s book, The Unseen Revolution, provided inspiration to enter the pension fund industry 03:00 We are actually starting to see some of the benefits that Drucker described eventuate here in Australia 07:30 In Australia, every member can actually see their own money in their account. That relationship where you can see where your money is going and see the wealth accumulating creates a more stable system 10:00 On individual risk and financial literacy 12:00 The unique characteristics of State Super 15:00 State Super is unusual; it is probably where most of the funds will be in 10 years’ time. 16:00 We think the biggest decision is setting the investment strategy and then our internal team or TCorp will implement that 18:00 In 2017, we were called the biggest hedge fund in Australia, because we made money on the upside and the downside 19:30 During COVID, our downside protection triggered and that meant we never got into the negative. It is not about anticipating what will happen, but think about how these factors will take place 22:00 Using machine learning in the investment process 24:00 Machine learning didn’t work as well for the Ukraine invasion. That was more a secular relationship. But we did change our portfolio quite significantly 31:00 Machine learning will have a role, but I will still look to people to make the decision 35:00 State Super is not regulated by APRA, but often we look at the policies as if we were 37:00 Active manager do take a little while for that outperformance to come through

Matthew Culley is a Portfolio Manager on the Emerging Market Equity Team at Janus Henderson Investors. In this podcast, we talk about the best performing markets, tensions around China, the impact of the US elections and fighter jets. Enjoy the Show! Overview of [i3] Podcast with Matt Culley, Janus Henderson Investors 02:00 I initially wanted to become a fighter pilot, but then got glasses and that dream went out the door 06:00 Brazilian Jiu Jitsu taught me to stay calm under pressure and not panic when stock prices fall, and it also got me interested in emerging markets 08:30 There seems to be more interest in emerging markets ex-China mandates. What is your take on China? 11:30 Electric vehicles are not a hype in China; it is something that is actually happening 13:30 Large swaths of the Chinese equity market might be uninvestable for certain types of investors. 17:30 [If China invades Taiwan] I think this is going to be a much bigger question than what happens to equity assets. 20:30 A lot of Trump’s policies are inflationary: tariffs are inflationary, clamping down on immigration is inflationary, which is going to circle back to monetary policy 21:00 Harris will probably represent a continuity of current policies with a focus on domestic policies 23:00 What has crept up for developed markets in recent years is debt loads 26:30 US interest rates have historically been the achilles heel of emerging markets 30:00 The best performing emerging market over the last five years is not India, it is Taiwan. And it is not just TSMC 35:00 When you look at emerging markets, what you are going to notice is a distinct lack of Amazon. Local players are better suited to navigate the local regulations and payment systems 36:30 India is the only economy that can grow their GDP in mid to high single digits in the next decade or two 39:00 The impact of the Systematic Investment Plan on the Indian equity market 42:00 Any favourite companies in emerging markets?

In episode 102 of the [i3] Podcast, we speak with Andrew Spence, Chief Investment Officer of the $9 billion corporate super fund Qantas Super. Qantas Super recently announced to merge with ART and we took the opportunity to look back at the investment strategy that Spence put in place as the fund's first CIO, the innovations along the way and lessons learned. Overview of podcast with Andrew Spence, CIO of Qantas Super 02:00 I came on board when Qantas Super decided to split the CEO and CIO role into two roles. 05:00 When I started there were nine active managers in the Australian equity portfolio and no passive investments. Whatever the question was, the answer was not nine active managers. 11:00 The GFC meant we took a safety first, peer unaware approach to our portfolio. Because if members experience too much volatility they switch to a lower risk option 12:00 What I inherited was a bunch of commingled funds and no individual mandates. Then as we went through the GFC, what we found was that a lot of these products were gated and didn’t have the liquidity that was on the tin 13:00 There is increasingly less competition in the small and mid-market 14:00 Talking timberland 19:00 The delegation framework has been a competitive advantage for us 19:45 At the end of 2008, the chair of the investment committee came to me and said: ‘We seem to be holding you up a bit’. 21:00 The trustee’s role is to govern and the management’s team is to manage and be held accountable for the outcome they deliver 24:00 We saw a lot of member switching during the onset of the pandemic and that meant these members missed out on the recovery in the next 12 to 18 months 25:00 We didn’t hit any of our illiquidity tolerance levels, but we came close 29:00 Addressing sequencing risk through a glide path 33:00 I think it is important to make information is freely available across the team and is not just held by the CIO 34:00 By the end of 2019, the investment committee was pushing us to be more peer aware 39:00 Tax managed, centralised portfolio management saved us $250 million over 10 years 40:00 The partnership model has worked well for us 42:00 Backing managers early on in their career means we were invested in each others success

In episode 101 of the [i3] Podcast, we speak with Damon Callaghan and Sam Byrnes of asset management firm ECP. ECP was established by Dr. Manny Pohl of Hyperion Asset Management fame and in this episode we talk about the opportunities and challenges of artificial intelligence when investing in Australian equities. Enjoy the show! 01:00 How we got started in investing 04:00 Sam: My dad was CEO of Bega Cheese and that got me both interested in business and also made clear that I didn’t want to work in a factory 06:00 Who is ECP? 09:30 Artificial Intelligence and the Australian stock market 13:00 Parallel processing and the ability for GPU’s to work in tandem 15:00 Where do you see the best use cases in Australian companies? 17:00 Hub24 is a good example of AI being used well 22:00 Is AI disruptive, or does it merely cement the dominance of the large incumbents? 23:30 Xero vs MYOB 29:30 Can you defraud a chatbot? 30:00 Corporate use of AI will be a lot slower than what the hyperscalers would like 37:00 Consultants will be the biggest winners from this 37:30 Ethical considerations in implementing AI. Adobe and copyright 45:00 The future of AI is hyper personalisation

It is our 100th episode of the [i3] Podcast and we are celebrating this with an in-depth discussion on innovation in private equity, especially mid-life transactions, with David Morse, Managing Director and Global Co-Head of Private Equity Co-Investments at Neuberger Berman. Enjoy the show!   Overview of Podcast with David Morse of Neuberger Berman 01:00 Starting in mid-market lending, but liking what the guys on the other side of the table did more 03:30 Deal flow in Private Equity has been low and portfolio companies are for more than 6 years, an eternity in PE 06:00 Prior to 2022, you had the “rocket fuel of private equity”, cheap debt and distributions exceeded capital calls. But you get to the third quarter of 2022 and all of those sources of liquidity have dried up 09:00 What we saw was that seller expectation was still quite high, but buyer expectations had come down dramatically, because the cost of capital had gone up 12:30 Today, PE transactions are not leveraged buyouts anymore, it is a very equity heavy transaction 16:30 Mid life transactions are co-investments into the private equity space. They focus on companies that have been owned for a few years, but are still performing well and needs capital to continue its value creation plan 19:00 When you are a GP, there are really only three sources of capital: private debt, secondaries (continuation funds) and co-investments (including mid life deals) 22:00 The problem in PE is not the returns, it is the distribution. And that is why there is an opportunity for private debt, secondaries and co-investments 25:00 Should we re-lever assets? 31:00 Distribution levels are at their lowest since 2010 and so LPs say: ‘I cannot commit to your next fund until I see some cash back’. If you ask me who is going to blink first, seller expectation vs buyer expectation, then I’m going to say seller expectation first. 33:00 Investment banks told us that their backlog of signed M&A agreements was higher in Q1 of 2024 compared to Q1 2021, the record exit year of all time. 35:30 The deal flow that has collapsed is one private equity firm selling to another private equity firm 37:30 In terms of the deal being done, we’ve seen a shift towards up market 38:30 We subscribe to not just interest rates ‘higher for longer’, but ‘higher forever’

In episode 99 of the [i3] Podcast, we speak with Julian McManus, who is a Portfolio Manager on the Global Alpha Equity Team at Janus Henderson Investors. We spoke about global equities, the role of the Magnificent 7, Japanese equities and hybrid cars. Enjoy the show! Overview of Podcast with Julian McManus, Janus Henderson Investors 02:00 Getting into Japanese equities fresh out of law school 04:00 We still invest in Japan 07:00 Abe’s reforms and book value quant trades 08:00 The Japanese government has woken up to the urgence to create national champions in strategically important industries 09:50 Japan is going to be one of the most important semiconductor manufacturing hubs globally outside of Taiwan 11:00 Toyota and the demand for hybrides 14:00 There is still a notion among some investors that you invest in US stocks and international is where you go on vacation 15:30 Tech companies outside of Magnificent 7, why haven’t they increased alongside? 16:30 Many investors have trouble paying more than 25 times, one year forward earnings for any European stock 19:00 Yes, there is geopolitical risk in TSMC, but TSMC is not living in a vacuum 20:00 We are of the position that China will never be able to invade Taiwan 22:00 Because we have a large position in (defence company) BAE Systems, that allows us to have a large position in TSMC as well. 23:00 We own three of the Magnificent 7 25:00 We believed for a very long time that Apple and Tesla were overvalued and avoided those 28:30 The uncomfortable question about AI is: Are you going to reinvest the productivity gains or let them flow down to the bottom line? 30:00 On the dangers of overdiversification 36:00 Rates are typically something we don’t want to take a bet on 37:00 Defence spending will need to catch up in Europe

In episode 98 of the [i3] Podcast, we are speaking with Will Liang, who is an executive director at MA Financial Group, but is also well-known for his time with Macquarie Group, where he worked for more than a decade, including as Head of Technology for Macquarie Capital Australia and New Zealand. We discuss the application of AI in financial services and wealth management, ChatGPT and how to deal with AI hallucinations. Overview of Podcast with Will Liang 02:30 When I was young I contemplated becoming a professional Go player 05:00 2016 was a life shattering moment for me; Lee Sedol was defeated by AlphaGo 07:00 I think generative AI will be a net positive for society 08:30 The impact of AI on industries will not be equally distributed 15:00 Brainstorming with ChatGPT or Claude 16:00 AI might help us communicate better 19:00 AI hallucinations are actually a fixable problem 22:30 Myths and misconceptions in AI 27:00 Most of the time when ChatGPT doesn’t work is because we are prompting it in the wrong way 28:30 Thinking Fast & Slow; AI is not good at thinking slow 29:00 Losing our jobs to AI? It is important to distinguish between the automation of tasks versus the automation of jobs 35:00 When implementing AI, look at where your data is and try to bring your application closer to the data 39:00 Don’t trust any third party large language model, instead deploy an open source model into your own cloud environment 43:00 You ask ChatGPT 10 times the same question and it will give you nine different answers. That is a problem. 45:00 Deep fake is a real problem 50:00 Future trends: AI agents 53:00 Generative AI will be more of a game changer for private markets than public markets

In this episode of the [i3] Podcast, we speak with Felicity Walsh, Managing Director and Head of Australia & New Zealand for Franklin Templeton about leadership, fostering a great work culture, mentorship and lab coats. Enjoy the show! Overview of Podcast with Felicity Walsh, Franklin Templeton 01:00 Hanging up the chemistry lab coat and safety specs, and joining Watson Wyatt 05:00 Defined benefit post GFC and getting into client acquisition work 07:00 Differences between UK and Australian pension systems 10:00 When I came to Australia there was no depth in the inflation-linked bond market 13:00 Joining K2, not as different from an asset consultant as you might think it was 17:00 Making my own glossary of hedge fund terminology 19:00 In the early days of K2, there was a clear separation from Franklin Templeton. We even had our own fridge 22:00 On leadership style: “I’m very keen on a flat structure, which is not always how fund management firms operate”. 24:00 In a small team, you need to keep the job varied and interesting 29:00 Culture is incredibly important when you work for a global company 33:00 On the importance of keeping distractions away from your team 35:30 There are certain people whose counsel I seek from time to time, but they are not people who I initially thought were going to be mentors 40:00 Removing the distinction between retail and institutional teams 44:00 Focusing on community this year 46:00 Integrating the acquisition of Putnam investments

In episode 96 of the [i3] Podcast, we speak with Maria Elena Drew, Director of Research – Responsible Investing, at T. Rowe Price about the challenges and opportunities of transforming investments into net zero portfolios. How does it affect your objectives and engagement with companies? Enjoy the show! Overview of Podcast with Maria Elena Drew, T. Rowe Price 01:00 When I was at school, I didn’t think this was a career path that was out there. At university I studied economics and geology. 04:00 As a young analyst I covered Enron and they had a very bullying approach to investors 06:00 I realised ESG was not about telling you what you can and can’t invest in, but to use information on governance and environment to get better investment ideas 07:00 I started to ask at least one ESG-related question in company meetings and without fail the answer was helpful to me 10:45 The ability to determine whether there is alpha generation from ESG is really difficult 15:00 What is your true net zero objective? Do you want to have no exposure to high emitting companies? Or do you want to help companies with their transition to net zero? Those are two very different portfolios 19:00 Track progress along the way: setting net zero status targets 20:45 We think the net zero status is a smart way of going about it, because it is forward-looking 23:30 If your objective is really just greenhouse gas emissions, then you really just incentives your manager to do sector selection 28:00 Divestment ultimately sits with the client direction 29:00 An exclusion list makes more sense for passive investors, than for active investors 31:00 If you don’t have a decarbonisation [plan], then you are making a very strong bet that all of this regulation is not going to come through 33:00 What if institutional investors leave it up to companies to sort this out? What risks do they face? 36:00 Do you allow companies to rely on carbon credits/offsets to achieve their net zero target? 40:30 Pushing companies to go too fast can be counterproductive Maria Elena Drew also spoke at the [i3] Equities Forum 2024 in the Yarra Valley, Victoria, on 20 February 2024

John Bowman is President of the Chartered Alternative Investment Analyst (CAIA) Association. In this episode we look back at the growth of the alternative investment industry, in particular private equity, discuss ESG and take a look at the upcoming paper on the total portfolio approach Overview of podcast with John Bowman, CAIA 02:00 I got involved in international equity investing through a few Boston wealth managers at SSGA. 6:45 I’m integrated by the power of capital allocation to solve some of the world’s problems 08:00 At the CFA Institute, I often found myself on the same stage as the CAIA executives 10:00 The term ‘alternatives’ is a term that CAIA wants to make extinct 16:00 On the growth of alternatives: We’ve got this ecosystem now where companies can stay private for longer or even permanently now, that investors can take advantage of 17:00 The first generation of private equity relied a lot on leverage, but that is not the case anymore. Investors won’t stand for financial engineering 23:00 Public governance models in the US tend to be pretty hands on…, even meddling if I might say 24:00 CAIA papers: 'Portfolio of the Future', 2022 (https://caia.org/portfolio-for-the-future) and 'The Next Decade of Alternative Investments', 2020 (https://caia.org/next-decade) 24:30 Most practitioners under 40, who analysis investments, have only operated in an environment where there was zero cost of capital, non-existent inflation and double digit capital market returns. But this environment was not normal 26:30 The best kept secret in investing 29:00 Knowledge management and operational alpha 32:30 AI is likely to be the next supercycle, but… 37:00 I don’t think we can outsource our fiduciary responsibilities to the machine just yet 40:00 Do we need to disentangle ESG and look closer at the underlying factors and how they affect clients, because you can’t average out ESG factors? 42:00 Upcoming paper on the total portfolio approach with input from CPPIB, Future Fund, GIC and New Zealand Super 46:00 Launch on 19 March 47:00 TPA changes the role of portfolio managers

Andrew Fisher is the Head of Investment Strategy at the Australian Retirement Trust (ART), a $260 billion pension fund in Australia. In this episode of the [i3] Podcast, we reflected on the merger with QSuper and the implications the larger scale of the fund has on the investment strategy. Enjoy the show! Overview of Podcast with Andrew Fisher, 2024 01:00 Merging two funds with different investment philosophies 04:00 YFYS performance had already started to impact QSuper’s investment management’s style 06:00 QSuper’s capital markets capabilities is top notch 08:30 You can look at the two funds and say how different they are, but you can also say how complementary they are 13:00 Ever considered using a reference portfolio? 14:30 I’m not sure whether a merger like this really ever is finalised 17:00 Any learning from the QSuper merger that you can apply in future mergers? 19:00 We consistently get surprised by our growth. We are essentially doubling every five years 23:00 You would expect traditional private market assets and infrastructure to have the best pass through of inflation costs, but it was actually the alternative private markets assets that turned out most resilient 25:00 Office and Retail Real Estate 30:00 The one thing people don’t speak enough about is how resilient equities have been during this whole inflationary period 32:30 I don’t think the job is done, but I think central banks have done a really good job 34:00 What we are trying to do with our decarbonisation strategy is to mitigate the risk from the trend towards low carbon without taking too much investment risk

In episode 93 of the [i3] Podcast, we speak with Michael Bonte-Friedheim, the Founding Partner and Group CEO of NextEnergy Capital, a firm that specialises in investing in solar energy plants. We talk about the role of subsidies, the growth of the sector and the fact that ESG in solar isn't just about renewable energy Overview of Podcast with Michael Bonte-Friedheim 01:00 The genesis of NextEnergy Capital 04:00 Solar is our choice of technology 05:00 The technology of solar hasn’t changed a lot, but the efficiency and the cost of components has changed dramatically. So much so that in most countries, solar energy does not require subsidies 10:00 What makes one solar plant more attractive from an investment perspective than another? 12:00 ESG issues in solar: integration of solar plant in landscape and community 16:00 On floating solar plants: water evaporation and birds 20:00 The impact of the Inflation Reduction Act 21:00 Solar in China 23:30 More and more institutional investors are breaking down what is in that infrastructure and real asset bucket 28:00 Solar Plus 30:00 Solar is expected to double in size over the next few years 31:00 Biodiversity – what happens to soil if you leave it alone for 40 years? 35:30 The NextEnergy Foundation receives five per cent of our group’s profits

Mike Comparato is Managing Director and Head of Real Estate at Benefit Street Partners, a credit-focused alternative asset management firm owned by Franklin Templeton. In this episode, we cover Mike's views on the turmoil that the commercial real estate market is facing and the impending debt maturity wall that could set off a hurricane. Overview of Podcast with Benefit Street Partners’ Mike Comparato 01:00 Our family has been in the real estate sector since 1946 04:00 There is a storm out there [in the CRE sector] and there is no question of its severity. It is just a question of when it is going to hit 05:00 Commercial real estate is a very credit and debt intensive asset class 05:30 The ‘debt maturity wall’ and its market impact 06:30 People are just not lending to hold liquidity 08:30 If you just waited in the past 40 years, thing just got better 09:45 “There is a lot of damage that is coming” 14:00 We are making equity-like returns in credit products. It is not often that you get to say that. 14:30 Multi-family real estate credit 16:30 The regional banks were the top credit providers for construction loans in the US 17:00 The banking space is in a much worse place than people think it is. It is very simple: if banks aren’t lending, then that means things are bad at the bank 19:30 The COVID-19 pandemic changed the demand for office forever. We are talking about a change that might not be recoverable 21:30 No one is making loans on office buildings right now. 23:00 Who knows how many young professional jobs, such as paralegals, will be replaced by AI 25:30 The data centre space is something that we have always avoided, because I’m always scared that we are going to wake up and someone has discovered a new technology that makes data centres completely obsolete. Whenever you have something in real estate that has a very specific use, it is very scary if it doesn’t have some kind of alternative use. 27:00 The retail apocalypse never happened. But why? 32:00 The number I would have to put on writing a loan for an office building would be so high that it basically means the asset is worthless

This year we celebrate 20 years of New Zealand Super. We speak to the fund's CEO, Matt Whineray, about the evolution of the fund throughout the years, do a deep dive into its strategic tilting program and cover responsible investing, AI and much more. Enjoy the show! Overview of Podcast with Matt Whineray, CEO of NZ Super on 20 years of the fund 01:00 NZ Super started investing in September 2003 and now has a 20 year track record 03:00 One of the key starting points was to get the risk position right and get the board to understand this position 04:30 The 20 year track record: the country is about $40 billion better off as a result of the creation of the fund 07:00 The fund invested in private equity only two years after the beginning. 8:30 The strategic tilting program; the philosophy behind it and the early days 14:00 There are times when you get tested and 2013 was one of those times 15:30 I borrowed this one from [AQR’s] Cliff Asness: ‘Don’t size a strategy so that when it goes wrong you are dead’. 18:30 The amount of risk that we allocate to our strategic tilting process is definitely the highest of all of our internal strategies 20:30 The strategic tilting program has evolved from trading once a month to trading every day, sometimes multiple times a day 22:00 Introducing the reference portfolio; the beauty about the reference portfolio is that there is real clarity about the decisions that are being made 26:00 Since inception the decision was made that we always hedge the reference portfolio 100 per cent back to NZ dollars, and that is one that is always debated at reference portfolio reviews 28:00 Managing NZ equities in-house 31:00 What else do we do internally? Portfolio completion credit strategies, direct investment and strategic tilting 33:00 Embracing responsible investing 36:00 There is no downside to us helping our friends in the region 37:00 Preparing for the drawdown period 41:00 New Zealand Super has been experimenting with an AI portfolio. What is this? 44:00 Leaving the fund after 15 years and Matt’s favourite moments with the fund 45:30 Early 2020, I had a radio interview where I was telling the interviewer that we just went from $48 to $35 billion. The fact I could say that is a testament to our stakeholder management and the education we’ve done along the way

In this episode of the [i3] Podcast, we speak with Jay Sivapalan, Head of Australian Fixed Income at Janus Henderson about the company's 2023 Australian Insurance Report, a survey of insurance companies and their plans for their investment portfolios. The survey found that no less than 9 out of every 10 insurers plan to change their strategic asset allocation! Overview of podcast with Jay Sivapalan: 01:00 Discussing the 2023 Australian Insurance Report by Janus Henderson Investors 04:00 Every 9 out of 10 insurers are revisiting their SAA 05:00 Top three concerns for insurers 05:50 Changes in the portfolios, especially life insurers look to add risk in the portfolio 09:00 Health insurers are now moving on to the LAGIC framework 10:00 Many insurers look to allocate more to unlisted infrastructure 13:00 Life insurers were most concerned about a recession. Why is that? 15:00 On tail risk hedging 18:00 Marrying investment objectives with regulatory requirements 22:00 Liability conscious investing 24:00 Insurers sometimes have to be counter cyclical investors 26:00 The different types of insurers look differently at ESG issues 30:00 The survey found that 74 per cent of insurers were planning to implement artificial intelligence. That seems high?

In episode 88 of the [i3] Podcast we speak with Dr. Michael Kollo about artificial intelligence and large language models such as chatGPT. We talk about their application to the institutional investment industry and discuss why Australia is so distrustful of AI. Please enjoy the show! Overview of Podcast with Dr. Michael Kollo 01:00 Getting involved in artificial intelligence 03:30 Australia doesn’t trust AI, why is that? 06:30 AI in the investment industry; any edge is quickly adopted 08:30 If you are a super fund trying to communicate with a million members, then you have no choice but to use AI 13:00 Sometimes these large language models lie. Language models versus knowledge models. 15:00 Some of the upcoming new models are very powerful and potential chatGPT killers 18:00 The art of prompting; towards standardised interactions with AI 19:30 Generative AI is not forecasting any data points; it is forecasting language points 21:00 Gen Y has a 70 per cent use rate of chatGPT. Gen X and boomers; 60 per cent has never heard of it 23:00 What is to me the more interesting part is holding yourself to a higher level of questioning and reasoning 24:30 AI as the devil’s advocate 27:00 AI in scenario modelling and risk management 30:00 Looking ahead, the way we might engage with computers will be less about clicking boxes and more about expressing ourselves. This might break a lot of marketing models 35:00 The impact of quantum computing on AI 40:00 AI in tackling the large problems

David Di Pilla is Managing Director and Group Chief Executive Officer of HMC Capital, a diversified alternative investment firm. In this episode, we speak about the challenges of building a new investment firm during the COVID-19, the attraction of healthcare real estate and the taking a private equity approach to listed markets. Please enjoy the show! Overview of Podcast with David Di Pilla: 1:00 The founding of HMC Capital 4:00 Building a business in the pandemic 5:30 We are looking for businesses that we are prepared to own forever 6:50 COVID-19 has really changed how people go about their daily lives 9:50 Daily needs and the 15-minute city 14:00 Institutional investors give you a big tick for investing in healthcare real estate, but the challenging bit is finding them at the right price. But we are very close to closing an institutional fund 16:00 Playing into the energy transition 18:00 Taking a private equity approach to the listed markets 21:50 Valuating unlisted assets 25:00 Looking at future strategies, talking build-to-rent or manufactured housing 27:50 I see interest rates remaining at this level for the best part of 2024 28:30 Reaching net zero

In this episode, we speak with Thomas Haugaard, Portfolio Manager for Emerging Market Debt at Janus Henderson Investors. Haugaard, a former economist, talks passionately about why emerging markets form such an interesting investment universe, the influence of geopolitics on debt securities and the risks from climate change. Please enjoy the show! Overview of Podcast with Thomas Haugaard: 01:00 My investment journey started with an academic interest 03:00 I shared an apartment with one of the authors of the Goldman Sachs report ‘Dreaming with BRICs’ 04:30 Emerging markets is where as an economist you see many interesting things: new economic policy, diverse markets and a lot of growth potential 05:30 I actually don’t really appreciated the ‘EM’ term; all countries are developing 06:30 Where do the returns in emerging market debt come from? 09:30 What is the best environment for EMD hard currency? 13:30 Inflation is the wedge in between fundamentals and financial conditions; when inflation goes up the conditions for EM are not necessarily improving 18:00 Travelling in Venezuela seeing electric good being confiscated by the army because of the perception that prices were too high 19:30 We have been investing in Benin, Senegal and Ivory Coast for many years as policies are changing for the better 21:00 It is hard to mention an EM country where there isn’t a lot of very interesting things taking place 22:00 Dispersion between EM countries has gone up significantly. Remember that we’ve had three years of unprecedented shocks. 26:00 There is a systematic relationship between how a market is trading a country’s sovereign credit risk and its rating 32:00 High inequality means less space for policy change due to potential for social unrest 33:30 Climate change and extreme weather events are impacting a lot EM countries 36:00 Hard currency is the entry point for EM countries, because they might lack institutional credibility or even a central bank 39:30 In hard currency, there is a component of the risk premium that you can model and predict 41:30 Uzbekistan is a zero to hero story

Craig Roodt is Director of Investment Governance and Risk at Deloitte Touche Tohmatsu and is also known for his time with the Australian Prudential Regulation Authority (APRA). In this episode, we speak about the governance challenges of in-sourcing asset management functions by pension funds, the Your Future, Your Super performance test and some the worst governance failures he has seen during his time with the regulator. Overview of Podcast with Craig Roodt: 01:00 Governance pitfalls in internalisation 05:00 How to set a proper framework and determine what success looks like? 08:50 Does the leadership team have the latitude to actually deliver on the strategy? 09:30 When things go wrong you actually need to understand why, not just that it is below the index. That is just the outcome. 12:00 What are good reasons to in-source? 15:30 Boards always have to look at their level of skill as the environment changes 20:00 Independent directors are not a barrier to having the right skill level of boards, but it is also not a solution 23:00 Risk management is not about explaining what went wrong after the fact. It is about recognising warning signs. 25:30 YFYS has created a regulatory risk, a different objective that funds have to manage to 29:00 You can invest fully in cash and pass the test. That illustrates that there are problems with the framework 30:30 For most of the 2010s, we’ve had a risk-on environment. What that meant was that if you took less risk in any asset class, you were going to underperform. 31:30 The performance test doesn’t look into the why. 32:30 As a means to identify which funds have been lagging, the test works, but you need to ask why. Potential fixes to the test 35:30 Outperformance should also be investigated 36:30 What were some of the worst governance failures that you have seen when you were at APRA? 40:00 Some of the things I saw were, if it wasn’t actually people’s money, it would have been funny. 42:30 Governance is not akin to solving a mathematical problem. 45:00 What is your focus at Deloitte today? 50:00 Greenwashing and materiality tests

In episode 85 of the [i3] Podcast, we speak with Jakob Wilhelmus, who is Director of Thematic Research at PGIM about their new report into food security and the changing food system. We spoke about the impact on the global economy and investment opportunities for institutional investors. Please enjoy the show! Overview of Podcast with Jakob Wilhelmus, PGIM 01:00 PGIM published the report ‘Food for Thought: Investment Opportunities Across a Changing Food System' 02:00 The current food system is increasingly unfit for purpose 03:00 Food security and the broader economy 04:00 About 40 per cent of the global population’s employment is tied to the food system 06:30 The combination of increased temperature and more frequent extreme weather events will see crop yields decline by 12 - 15 per cent 07:30 Investment opportunities related to the food theme 11:00 Cultivated meat industry is at an ‘awkward’ stage of its life 15:30 Innovation in food supply and security 16:30 Automatic vehicles and farming 17:30 Investing in farmland 19:00 ESG, fertilisers and carbon emissions in food production 21:00 Food packaging, investment opportunities and plastic pollution 24:30 About 40 per cent of all food produced is wasted. Are there any companies tackling this problem? To read the full report, please visit: https://www.pgim.com/megatrends/food-for-thought

Peter Johnston is Managing Director of Lighthouse Infrastructure, a sustainable infrastructure and real asset fund management company that has more recently been investing in affordable housing for key workers. In this episode, we delve deep into the issue of affordable housing and how it presents an opportunity for institutional investors. Overview of Podcast with Peter Johnston, Managing Director, Lighthouse Infrastructure 01:00 I started out in a utilities business, where I got involved in supporting that business with the regulatory framework 03:00 Lighthouse started in 2007 04:00 Getting started in affordable housing 07:00 A report by Anglicare, showed that in Australia key workers pay away 50 per cent of their income on housing 08:30 Making the first investment, working with St George’s Housing 11:00 How do you structure the arrangement with the key worker tenants? 15:00 AustralianSuper has said these investments need to return between six and 11 per cent. Is that achievable? 16:00 We are using indirect subsidies, so we are not reliant on government 16:30 We need $110bn over the next 20 years for affordable housing and $180bn for social housing 18:00 Our model supports developers to build social housing, rather than to demand that of them 21:00 What is the role of Housing Australia in making this an institutional grade investment? 23:00 Is this a property or a sustainable investment? 24:00 Combining property assets with an infrastructure-like public private partnership structure 28:00 One of the challenges that we faced in making this sustainable is that it needed to be attractive to lenders as well as equity investors 29:00 What does the ideal investment look like in this space? 32:00 We have a pipeline of projects over the next two years that will see the fund grow to $1-2 bn comfortably

David Brown is the Chief Investment Officer of the Cook Islands National Superannuation Fund. David is also well known for his involvement in the private asset markets in his previous role as Head of Private Markets for Victorian Funds Management Corporation (VFMC). In this episode, we cover both the unlisted space, his time working with Leo de Bever and the unique set of circumstances when investing for a Pacific pension fund. Enjoy the Show! Overview of Podcast with David Brown: 02:00 Starting out in an intern role at ipac 03:00 Moving to London to work for Standard Life 04:00 Looking into private markets for QIC 05:00 Private market implementation has to be top notch or forget it 06:00 We had a wide variety of clients, including an order of nuns who had a very long investment horizon; until Kingdom come, literally 07:00 Moving to VFMC to build a private markets team with Leo de Bever. 08:00 The private markets program was eventually shut down, probably for political reasons, but I think I earned other people quite a few bonuses 10:00 Private equity has proven to be a powerfully positive part of portfolios but there was a time when we had to make the case for it and boards were very skeptical about it. 11:00 Private equity challenges people who come from an efficient market hypothesis background. It is not a perfect market and it is the alpha of change 15:00 If there is not much you can add to an investment, then it is a commodity and you shouldn’t pay much for it. 16:00 If you are brought up in an efficient market hypothesis framework, then it is very hard for them to think of a market where there are information asymmetries and where the investor is effective change by being present. 18:00 Cultural differences between listed and private market teams and the challenge it poses to total portfolio management. 21:30 The water cooler discussion between listed and private equity specialists breaks down because the experience is so different 22:30 Getting involved in the Pacific region 25:00 My role was really about governance. Even in Australia and New Zealand, the attitude that company directors are part of a special club existed not that long ago 28:00 Revisiting risk in the PNG economic context was difficult 32:30 Taking on the CIO role at the Cook Islands National Superannuation Fund 34:00 If you take the good thinkers on governance – The Thinking Ahead Institute, Keith Ambachtsheer – their thinking was something the Cook Island board very much had 36:00 We have many retirement conferences in Australia trying to figure out what our retirement solution is, whereas the Cook Islands figured this out 20 years ago 37:00 We’ve gone to a reference portfolio approach 40:00 Members demanded options. Have they actually exercised their choice? 41:00 Right now, about 85 per cent of members are in the original defaults, so people have moved 46:00 Getting involved in member education in the Cook Islands 48:00 Sharing insights between island funds 50:00 On the joint venture capital fund 55:00 Do you incorporate ESG? It is often seen as a rich country’s problem

In this episode of the [i3] Podcast, we look at machine learning and artificial intelligence. Our guests are Kaggle Founder Anthony Goldbloom and Stanford CS Professor Chris Manning, who are both involved in venture capital firm AIX Ventures, as investment directors. We speak about the state of play in machine learning and artificial intelligence, the most interesting applications, including ChatGPT, and opportunities for investors in this space, covering smart sensors, travel agents and personal assistants. Overview of the podcast: Anthony Goldbloom: 04:00 The idea for Kaggle came from a conference competition 06:00 Looking for the most accurate algorithms 07:30 Before Kaggle, every academic discipline had their own set of machine learning techniques 08:00 One technique won problem after problem 09:00 Rise of neural networks: 2012 is often called the annus mirabilis for machine learning 10:30 I’m mind blown by what you can do with ChatGPT 11:30 Using summarization through ChatGPT 12:30 We are in a world right now where the capabilities of these models run far ahead of the applications. People haven’t really build companies around these models yet 14:50 The rise of chat-powered travel agents? Adding databases to ChatGPT 17:00 Why was Google interested in Kaggle? 19:00 Tweaking the value estimation algorithm for US real estate website Zillow 21:00 Surpassing physicians on diagnosing lung cancer 22:30 Two Sigma and Optiver also used Kaggle to solve problems 23:00 Hedge funds who crowdsourced investment problems 24:00 Being a one person band is hard in investing: you need to not only find the alpha signal, but also implement the trade in a way that doesn’t move the market 27:00 Does machine learning work in time series? Yes, but it requires more babysitting if your algorithm works in an adversarial setting 32:00 What I bring to AIX Ventures is the understanding of where the gaps are in the tools for machine learning 33:00 Examples of companies we invested in 35:00 Embedding ultra light machine learning into appliances Chris Manning: 37:24 I was interested in how people learn languages, while I was always playing around with computers. Then I became interested in Ross Quinlan’s ID3 algorithm for natural language processing 40:00 I started to work with large digital language databases slightly before the world wide web really kicked off 43:00 The combination of neutral networks and predictive text led to the revolutionary breakthroughs we see now with ChatGPT 45:30 You can use ChatGPT for text analysis, such as sentiment analysis or summarization of specific information 46:00 These models are just wonderful, but of course there are still problems. On occasion these models tend to hallucinate. They are just as confident producing made up stuff. And at times they lack consistency in thinking. They will say things that contradicts what they said previously 47:00 Human learning is still far more efficient in getting signal from data than machine learning 50:00 The majority of businesses are conducted through human language, whether it is sales or support. These models can help people work fast and better. 52:00 The case of Google and zero shot translation 57:00 Facebook experimented with two systems talking to each other, but they found the systems would not stick to English, but developed a more efficient symbol system 1:00:00 Interesting businesses we’ve invested in: weather prediction 1:02 A lot of computing that was previously done in the cloud is now done on the device, which is much quicker 1:04 Can NPL read the sentiment of a market by consuming just a lot of text? Well, a lot of mob mentality is expressed in language rather than numbers 1:07 The start of AIX Ventures and the two Australians 1:11 What might be the next big thing in NPL? 1:13 Future applications of language models might potentially look at video and personal assistants

Tanya Branwhite is the Head of Portfolio Construction at the asset manager for the state of New South Wales, TCorp. In this episode, we speak about Tanya's early career, including ruffling some feathers at Macquarie Group, TCorp's interpretation of a Total Portfolio Approach and the lessons we should have learned from the GFC. Enjoy the show! Overview of Podcast with Tanya Branwhite, TCorp: 01:00 Starting out as a credit analyst with Elders Finance Group: “It was a fairly interesting baptism of fire…” 03:00 The Macquarie years. The ‘loose/tight’ culture of rules and entrepreneurship 05:30 During the GFC, I wrote research highlighting that a number of Macquarie vehicles had significant financial risk. That wasn’t well accepted within the organisation at the time. But I learned to stand by the rigour of my analysis. 07:30 Ultimately, it made my career at Macquarie, because I became sought after for client work 09:00 Leaving Macquarie for the Future Fund 11:30 The Future Fund didn’t feel like it was a restrictive environment from a government-owned perspective. It is a company that is owned by the government, not a department of the government 13:30 How has a Total Portfolio Approach changed the investment portfolio? 17:00 Risk is at the heart of what we do, because we can only control risks and outcomes are the result of that risk. 18:00 Equity risk is at the centre of this model. 21:00 Diversification away from equity risk in an environment where equity and bond correlations are positive 23:00 Not just unlisted assets, but illiquid assets can help diversification. For example, we own a number of hydroelectric dams in Canada. 26:00 Challenge in fixed income is even higher than before, because real returns are a challenge 26:00 Bonds almost had their own global financial crisis last year; it was a three standard deviation event 28:30 We prepare, but we can’t predict 34:00 On valuation frequency of unlisted assets: we do try to de-smooth valuations of unlisted assets. And sometimes these assets need additional capital from investors during periods of crisis; that is not often thought about 36:00 Managing liquidity 39:00 We are looking at natural capital and opportunistic liquidity 40:00 Reducing the number of managers, has this work finished? 42:00 On implementation and efficiency

Sean Anthonisz is the Head of Investment Strategy of Mine Super, a pension fund for the mining industry. In this episode, we talk to Sean about his background in academia and the intersection with investment implementation, the use of 'fairly loose graphs' in the industry, P-hacking and decarbonisation in a mining fund. Please enjoy the show. Overview of Podcast with Sean Anthonisz, Mine Super 01:00 Does your background in academia give you a different perspective on investing? 02:00 P-hacking in academia 05:00 Getting started in investing 07:00 How good are asset owners in picking managers? 09:00 New research coming up on costs of switching managers 11:00 Don’t fire a manager too early, because the costs involved are very large 15:00 On folklore in the investment industry 17:00 Sometimes conclusions are drawn from fairly loose graphs, even by regulators 19:00 Where quant analysis is most useful is in staying away from problems 24:00 The Black Scholes option pricing model 25:00 Is investing an art or science? 26:30 For me it is about using science to avoid problems, not using science to predict the future 29:00 Looking at tactical tilting 31:30 How do you address climate change and decarbonisation in a super fund for the mining industry? 36:00 Addressing ESG driven tilts in portfolio? 38:00 Are you planning more papers? 39:00 Machine learning: we actually can now see what some of these models are doing

Last month, scientists from the Lawrence Livermore National Laboratory, a defence facility that sits under the US Department of Energy, announced that they had achieved a nuclear fusion reaction that produced more energy than it took to ignite it, using high-powered lasers. The announcement was both celebrated as a milestone in science and criticised as an overhyped media spectacle. In this episode of the [i3] Podcast, we speak with Dr Warren McKenzie, founder and Managing Director of HB11 Energy, an Australian nuclear fusion company, about the importance of the experiment, the relevance to fighting climate change, the need for a domestic laser industry and investment opportunities relating to nuclear fusion energy generation. Overview of Warren McKenzie Podcast 01:00 About HB11 Energy 03:00 Scientists in the US have achieved a net gain in energy from nuclear fusion. How important is that result? 04:30 We were the first fusion company to demonstrate any fusion 05:50 The next results in the years to come are going to make massive increases on that net energy gain 06:00 Essentially they are creating a mini star 08:00 This is not the path to clean energy. It has proven the science that will lead to many advancements in technology that [ultimately] will see it happen. There are a lot of technologies around the edges that need to be improved. 10:00 The benefits of Boron: we have a much easier engineering pathway ahead of us 12:35 Lasers are the key to making nuclear fusion happening 17:00 There is a whole range of new applications that have recently been proven that have been enabled by these high-powered lasers 18:00 Rather than having a laser that pulses a few times a day and then needs to cool down, we need a laser that can pulse 10 or 100 times per second, 24/7 20:00 What key industries will grow around a nuclear fusion industry that might be interesting to investors? The main driver will be defense 21:45 It is not secret that Lawrence Livermore is a defense lab 22:30 For the infinite money that is available to these labs, I would like to see them put more into green energy than just into making sure that the world is a little scared of the US’ nuclear stockpile 23:00 From boron you can’t make a bomb 24:00 Will nuclear energy help with fighting climate change? 26:00 We will definitely see energy being generated by nuclear fusion by 2050 28:00 To accelerate the development of nuclear fusion, we need to lift the ban on nuclear research in Australia 30:00 Breaking the vacuum of space 32:00 Australia developed 90 per cent of the technology that is in solar cells today, but China has led the commercialisation. Let’s not have the same thing happening with nuclear fusion

In episode 78 of the [i3] Podcast, we speak with Ian Patrick, Chief Investment Officer at the Australian Retirement Trust. We delve into the latest developments of the merger between legacy funds Sunsuper and Qsuper, we discussed inhouse asset management and the impact of decarbonisation. Enjoy the show! Overview of Podcast with Ian Patrick, CIO of the Australian Retirement Trust 01:00 Coming to Australia 03:00 JANA, from consultant to CEO 04:00 Becoming CIO; focusing on a single investment challenge 06:00 What is left in the merger with QSuper? 08:00 We are working towards an ART culture, not two legacy cultures, but that takes time 10:00 Harmonising the portfolios and strategies 13:00 Aligning QSuper’s risk balanced strategy with Sunsuper’s peer aware strategy 16:00 Your Future, Your Super: failing the performance test is almost an existential question 17:30 Asking us all to be held accountable on some measure of performance is a no brainer 19:00 The impact of scale 20:30 The diseconomies of scale are significantly outweighed by the benefits 23:00 In a very large fund, the ability of a CIO to directly influence investment decisions other than through team governance is lost 24:00 The ability to take on illiquidity in Australia is constrained by the 30-day rule and so Australian funds will not be able to fully embrace the Canadian model 25:30 Internalisation: never say never 30:00 There are strategic functions that are critical to internalise 32:00 Pandemic: what stood out is that all strategies correlated poorly; there was no diversifying correlation from alpha in any asset class. It did cause us to reevaluate the role of sovereign bonds in the portfolio 35:00 The energy transition, decarbonisation and portfolio skews

Geoff Bazzan is Head of Asia-Pacific Equities at Maple-Brown Abbott. In this episode of the [i3] podcast, we speak about the Asian equity markets, whether value-style investing is suited to the Chinese market and the recent geopolitical upheaval. Please enjoy the show. Overview of podcast with Geoff Bazzan, Maple Brown Abbott 01:00 Starting at Maple Brown Abbott more than 35 years ago 03:30 Changes in investing over the years: more tech, more participants and more news flow 05:00 Starting as a graduate at NAB in banking 06:30 China and the recent volatility 08:30 Xi JinPing’s third term and the market impact 10:30 How do geopolitical events inform your investment decisions? 11:00 Regulatory crackdown in China 13:00 Buying into the selloff 13:30 Value investing and Chinese technology stocks 17:00 India 18:30 The Indian economy has proven very resilient to the oil price this time around 19:00 Demonetisation in India had an unnecessary negative impact on the economy 19:30 It is hard to find stocks that are good value in India now, but our biggest exposure is to financials 21:00 We’ve gone from an overweight to India a few years ago to a modest underweight. Demonetisation in 2016 was an opportunity to pick up some stocks 24:00 Vietnam is an interesting market from a demographic perspective, while Korea is interesting from a contrarian standpoint 26:30 China has committed to carbon neutrality by 2060. How important is that for the stock market? 29:00 In some respects, there is still a green bubble in the Chinese market 31:00 How do you see the interplay between the energy transition and value investing? Value companies tend to be more in the utility and energy space, rather than technology sector? 32:00 The whole Chinese market looks like deep value at the moment 34:00 In Australia, the commodity cycle continues to bail us out, as it has done in the last decade or so. 35:00 Favourite trades over the years?

Henrietta Pacquement is the Head of the Global Fixed Income Team at Allspring Global Investments (formerly known as Wells Fargo Asset Management). In this episode we look at the differences between the US and European fixed income markets, the likelihood of a recession and how to place portfolios and the impact of the energy transition on credit. Please enjoy the show. Overview of Podcast with Henrietta Pacquement, AllSpring Global Investments 01:30 From astrophysic to fixed income 03:00 On inflation 07:00 Dealing with behavioural aspects of inflation and wage growth 08:00 Difference between US and EU fixed income markets 09:00 Some cracks are starting to form in the US economy 09:30 Looking to close our underweight on interest rates 12:00 How does the energy transition play out in the credit market? 13:00 We see a lot of innovation, including green and transition bonds 14:00 Credit instruments can be quite precise in targeting sustainable outcomes 15:30 The war in Ukraine has given us a preview of what the world looks like when we have to quite fossil fuels cold turkey and it is not pretty 17:30 Does the long term nature of the energy transition affect duration of credit related to it? 19:00 Measuring outcomes in green and transition bonds 21:30 Greenwashing 24:00 There have been a number of green bonds that have been stripped of their green credentials 28:00 Do you see higher levels of defaults already? 30:00 Longer duration? We will go neutral first.

In this episode of the [i3] Podcast, we speak with Simon Russell, Founder and Director of Behavioural Finance Australia, about his new book: ‘Behavioural Finance: A Guide for Listed Equities Teams’. We talk about how institutional investors are not immune to biases, even if they are aware of them. The application of behavioural finance to selling discipline and the relationship between intelligence and these biases. Enjoy the Show! Overview of Podcast with Simon Russell: 01:00 How this the new book come about? 04:00 Biases are not just the domain of retail investors 04:50 Regression to the mean 07:00 Retail investors usually don’t have their own earnings forecast models and so are not susceptible to biases around regression to the mean in that context 08:00 Awareness of biases is rarely sufficient, but it is a good starting point 11:30 Issues around selling decisions 13:00 There is a bias towards seeing sell decisions as the result of an investment mistake 15:00 On overconfidence and uncertainty; we actually know much less than we think we do 19:00 Biases are not always the main culprit of poor decisions. Often it is just about noise. 20:00 Precommitment strategies in case of losses 25:00 Confirmation biases; they are hard to deal with because they are subconscious. 31:00 Often we are told to take the emotion out of investment decisions, but Antonio Damasio shows in his book ‘Descartes’ Error’ that without emotions people are completely indecisive 32:00 Can we ever rely on gut instinct? 35:00 Can fostering a certain corporate culture mitigate the worst effects of behavioural biases, for example Ray Dalio and his philosophy of radical transparency? Yes, culture is important. 40:00 IQ and behavioural biases: can we outsmart them? 42:00 Cognitive reflective test 44:00 Checklists can come in handy. They are not there to teach you how to do things, but to remind you of things you might forget. 45:00 Next book might be on unlisted asset investors Check out Simon Russell’s new book, ‘Behavioural Finance: A Guide for Listed Equities Teams, here: https://www.amazon.com.au/Behavioural-Finance-guide-listed-equities/dp/0994610254/

In Episode 74 of the [i3] Podcast, we speak with David Elms, Head of Diversified Alternatives and Portfolio Manager, Janus Henderson Investors. David, an Australian based in London, discusses the changing nature of bonds and their correlation to equities, trend-following versus option strategies and he tackles the idea that illiquidity stabilises portfolios. “You can paint illiquidity as a feature instead of a bug, but I don’t believe in that,” he says. Enjoy the show!. 2:50 I got into investing by trying to fend off Robert Holmes à Court’s attempt to take over BHP in the 1980s 5:00 Helping establish Portfolio Partners. “If you are thinking about starting your own firm, then do it.” 5:30 It is good to experience the energy and common purpose of a start-up, because it is great if you can bring some of that to the teams you are leading later in your career. 7:30 In the current environment of high inflation and changing monetary policy you have to be careful with backtests. 8:00 You have to be careful saying ‘this time is different’, but what has changed is the role of bonds in a portfolio 9:45 You can look back in history, but you need to be aware that the 1970s was a different place. The market participants was different, the role of retail was different and the scale of hedge funds was very much smaller 12:30 Trend-following strategies have paid off this year. Is this a vindication of Crisis Risk Offset strategies? Trend-following has a place in a crisis alpha portfolio, but there is no one silver bullet. 14:30 In the event of something like 9/11 or the Fukushima nuclear disaster, where markets react instantly, trend-following doesn’t work. There you need to rely on options for protection. 16:00 Two per cent inflation seems to be the point where the bond/equity correlation flips from negative to positive and becomes amplifying. 20:00 The way the pandemic played out is not the only way it could have played out. 21:00 During the pandemic, private market investors could pretty much close their eyes and stick their fingers in their ears and ride out the volatility. But I think that will be harder in the years to come. 21:30 You can paint illiquidity as a feature instead of a bug, but I don’t quite believe in that. I don’t think you stabilise a portfolio just by not marking to market. 26:00 The reason why correlations go to one in crises is often behavioural. 28:00 Protection strategies can be expensive at times and cause drag on the portfolio. How do you think about the implementation of such strategies? 33:00 CPI plus investment targets, where they stand today with high inflation, are heroic. 36:00 I think investing will get harder, not easier. 37:50 SPACs will go back to being one of those weird things that happened in the post-COVID era.

In this episode of the [i3] Podcast, we speak with Bob Maynard, Chief Investment Officer of the Public Employees Retirement System of Idaho (PERSI) at the eve of his retirement, after 30 years with the fund. We look back at how a job as the deputy attorney of Alaska saw him getting involved with investing and how he has stuck to his mantra of keeping it simple. “Whenever I get a bright idea, I go to a dark room and lay down until it has passed,” he quips. Bob addresses whether defined benefit systems are doomed, expels myths around US pension funds underfundedness and why he believes CalSTRS’ Chris Ailman is the best CIO on the planet. 1:00 Moving to Alaska at a time when it was still a frontier state; the state was only 19 years old 6:00 Working on some of the largest oil and gas litigation cases in US history, including the Trans Alaska Pipeline case 9:00 The Alaska Permanent Fund and the link with oil and gas litigation 11:00 Slowly the fund moved away from just bonds to include real estate. So I couldn’t afford my own house, but I knew how to buy an office block in New York. 12:00 Setting up the first currency program with the help of Fischer Black 13:30 Phone calls with Fischer Black locked you into a way of thinking about markets and I probably used that more than anything over the last 30 years. 15:00 [At PERSI] we only do eight to 10 things [in our investment strategy], but if I would be doing 25 things then currency would be in there. 16:00 The mean variance model is not that complicated 17:30 Joining PERSI you found a fund that was more than 60 per cent underfunded. Did you know that? 19:30 “The chair said: ‘Just get us in the middle of the pack’, and I thought: ‘I can do that; I can be mediocre” 22:00 There are a thousand ways to invest. You just have to find the right way for your particular set of circumstances. 26:00 The 90s were a great time to be a 70/30 fund. 27:00 The best place to be in the last 10 years was the S&P 500 [index] 28:30 [Institutional investors] are not long term investors; we use it as propaganda to get us through tough times. 31:00 There are times in history where there is a fundamental shift in equity markets, but whether that means you should move out of equity markets…There have been a number of those [approaches] since the 1990s that looked at that and none of them have proven to be able to move through troubled times. 32:00 When there is excess liquidity in the system, all sorts of things work 36:30 The idea of what an unfunded liability is is completely misunderstood. Under an entry age normal accounting system we assume that people are going to earn double of what they earn today at the end of their career. If we would shut off the system today and look at the actual liabilities then we would be 140 - 150 per cent funded. 38:00 There are funds that are in trouble, but that is because some of them cut their contribution rate to below cost 45:00 Investing is about attitude: whenever I get a bright idea, I go to a dark room and lay down until it has passed 47:00 Listening and learning from other state pension funds’ board meetings. I’ve learned more from listening to [Chris] Ailman than from my own fund; he is the best CIO in the world as far as I’m concerned. 50:00 You retire on 30 September 2022. Any plans? “I’m going to do what I do best: nothing”.

Why should institutional investors care about biodiversity in their investment strategy, when they are still embarking on the net zero journey? Because it is most likely to be the next area of focus for regulators and society more broadly, Caroline Cantor of Federated Hermes says. BTW, did you know the average person eats about a credit card worth of plastic a week through micro plastic pollution? The problem of micro plastics: there are statistics that say the average person now eats a credit card of plastic on a weekly basis Overview of Podcast with Caroline Cantor, Investment Director, Federated Hermes: 01:00 Starting out as an engineering student 03:00 Why is biodiversity important from an investment perspective? 04:00 As more environmental policies will come out, we think they will focus on protecting Biodiversity 05:00 If biodiversity deteriorates any further, how will that affect a company’s supply chain? We don’t think they factor that in. 08:00 How much does the theme of biodiversity overlap with potentially other ESG policies within an organisation? 10:00 The Six Themes of Biodiversity 10:30 Is biodiversity as an investment theme not too niche for an institutional investor? 11:00 More than 50 per cent of GDP activity is dependent on biodiversity 14:30 The problem of micro plastics: there are statistics that say the average person now eats a credit card of plastic on a weekly basis 15:30 Federated Hermes works together with the Natural History Museum in London on this? Where do they come into play? 17:30 The Biodiversity Intactness Index 22:00 The concept of natural capital 26:00 It is important to also engage with some of the biggest polluters out there. 27:00 How does this theme interact with the UN Sustainable Development Goals? 29:00 Plant-based diets, food producers and valuations 32:00 There are 17 countries that account for 70 per cent of biodiversity. Does this lead to concentration in the portfolio? 34:00 We’ve seen particular interest from investors who are based in countries that have been affected most by a reduction in biodiversity 35:00 COP 26 and the outcomes for biodiversity 37:00 Portfolio companies that address deforestation: Brambles

Nick Abrahams is the Global co-leader of Norton Rose Fulbright's Digital Transformation Practice and a futurist. In this episode, we talk about digital assets, the value drivers behind non-fungible tokens (NFTs), cybersecurity and negotiating with ransomware attackers. Overview of Podcast with Nick Abrahams, Norton Rose Fulbright 01:00 You are a lawyer by trade. How did you get involved in the digital disruption space? 05:00 The application of NFTs; bored monkeys and basketball collectors’ items 07:00 NFTs are bought by crypto-natives 09:00 Ticketing for sport and music events is a good application of NFTs 10:44 On digital twins 11:00 Token option plans for privately-held companies 13:00 Tokenomics 15:00 For an investor the question is: are you going to punt on the thesis that digital assets are not a thing? 17:00 Are sales of NFTs driven by people anticipating the coming of the metaverse? 18:00 NFTs are partly about off-platform ownership, about not owning an item only in one game 21:00 How do you determine value in NFTs? 22:30 Penfold’s loyalty NFT and the need for asset-backing 26:00 Are we still in the test phase to find out what is valuable and what is worthless? 27:30 Ownership of digital information, such has health or financial information 29:00 Cybersecurity and negotiating with ransomware attackers. 30:00 Are we winning the cyber war? 34:00 What is the development that you are most excited about? DeFi! 34:30 Nick’s podcast: Web3 From Mystery to Mainstreet

John Reade is the Chief Market Strategist for the World Gold Council. John is not only a former investor with a well-known US hedge fund and strategist with investment bank UBS, he actually started out in the mines of South Africa as an engineer. In this podcast, we talk about gold as a long term asset, the potential as an inflation hedge and discuss some of the common criticisms of gold voiced by institutional investors. Please enjoy the show. Overview of Podcast with John Reade, World Gold Council 02:00 My father was the second most important engineer on the Queens Elizabeth ocean liner, so I have been surrounded by bits or metal and projects around the house since young 03:00 My mother wanted me to become an accountant, which seemed rather boring to me, but mining and traveling around the country seemed really interesting. 03:30 I was told that I would struggle to work with all these Northern miners who were rough and tough and ended up working underground and in projects in South Africa 05:00 My mining background allowed me to ask questions of mining companies they were not expecting 07:00 I always had an interest in financial modeling, even when working in mining, and eventually went into stock broking, covering South African mines. 09:00 I had been frustrated as a gold analyst in the 1990s, because the gold price was basically flat to heading lower. 11:00 During the GFC gold went up again and I got to speak to lots of people and tell them my views 12:00 It is your job to love gold, but from an institutional investor perspective isn’t gold speculative? Is it possible to determine the intrinsic value of gold on a consistent basis? 13:30 I’m not one of these gold bucks that you see all over social media. We look at gold as a strategic, long term asset 16:00 Moving to an integrated model to determine the gold price 19:00 Is the role of gold in a multi-asset portfolio simply to be a disaster hedge? 21:00 Gold is not the only asset that hedges against inflation as was the case in the 1970s, you now have inflation-linked government bonds, but it has a lot of useful attributes to hedge against inflation as well 22:30 You often hear from commentators that gold isn’t a very good hedge of US CPI. That is true when there hasn’t been a lot of CPI 26:00 Correlation between gold and US monetary policy 28:00 The long term impact of geopolitical event, such as the invasion of Ukraine, on the gold price 30:00 If we end up with an environment of lower growth and higher inflation, then yes that will have an impact on gold returns 31:00 Are cryptocurrencies a form of digital gold? “That is nonsense. It is not behaving like a store of value; it is behaving like a risk on asset”. But there are some similarities 34:00 You can’t have a store of value when you have an implied volatility of 50 - 150 per cent 35:30 What is the best way to gain exposure to gold in your experience, gold companies, commodities, or ETFs?

Pablo Berrutti is Senior Investment Specialist, Sustainable Funds Group at Stewart Investors. Starting as a risk specialist, Pablo became quickly aware of the dangers of climate change, even before he knew what ESG was. In this conversation, we discuss the likelihood of fossil fuel-based companies making the transition to low carbon business models and pose the question whether companies’ quick retreat from Russia during the invasion of Ukraine is a vindication for ESG. Overview of podcast with Pablo Berrutti, Stewart Investors: 2:00 Becoming aware of climate change as a risk manager 3:00 Missing out on a mandate due to lack of ESG policy 4:30 My questions on climate change led to a role at an SRI fund 7:00 Risk and reward are the two sides of the same sustainability coin 10:00 You have described ESG metrics as ‘colouring by numbers’. You don’t seem a fan of these types of metrics? 12:00 The sin of aggregation 13:00 Companies still have different boundaries in how they measure their carbon footprint, so it is not a generic measure 16:30 We look at fossil fuel companies and we just don’t see how they are able to transition profitably 18:00 We actually like the companies that we invest in and we want them to succeed, so there are not that many shareholder resolution filed at the companies in our portfolio 19:00 Discussing negative screens: ‘For us, they don’t make sense.’ 21:00 On macro events, such as the pandemic and Russia 25:00 It is another example of companies that lead the charge on sustainability can come out of these situations stronger 26:30 Several large, multinational companies pulled out of Russia relatively quickly. Do you see this as a sign that ESG has finally become mainstream? 28:00 Did any of your portfolio companies react unexpectedly during the pandemic? 29:00 Belarusian company EPAM did the right thing and focused on their staff 31:00 Are you worried about the dominance of large technology companies? 32:00 TSMC is one large tech company we can get behind 33:00 Between 2010 – 2019, large tech acquired 819 small companies that were below threshold reporting requirements, see report. 36:00 Are you excited about any particular technologies? ‘Yes, steam’. 40:00 Diversity study with the University of Technology Sydney (UTS) 41:00 Inclusion has to come before diversity 43:00 Sometimes change really has to come from the CEO 47:00 Talking SDGs, three things to look out for whether companies are overstating their contribution to the goals

Sue Brake is the Chief Investment Officer of the Future Fund. In this episode, we talk about the fund's 15 year celebration, looking at the early days of how the fund started to invest just as the global financial crisis began to impact markets. We also discuss the recent investment strategy review and look at the years ahead. Please enjoy the show! To access the book 'Celebrating 15 Years of the Future Fund', which includes interviews with Raphael Arndt, Peter Costello, David Murray, David Neal and David Gonski, please see here: https://15years.futurefund.gov.au/ Overview of Podcast with Sue Brake, CIO of the Future Fund 1:00 Celebrating 15 Years of the Future Fund 3:00 On the bravery not to invest in the early days, when the pressure was there to chase the market 4:00 You can’t time the markets, but you can pause and try to understand what is going on in the market 5:30 The fund is required to achieve its investment target without taking excessive risk. What is ‘excessive risk’? 6:30 What the founders did extremely well is to put the mandate at the centre of decision making. 8:00 During the pandemic drawdown, we made over 30 decisions of $1 billion or more. 10:30 Leading up to the pandemic, we had discussion whether the Australian dollar wasn’t as pro-cyclical anymore as it had been in the past. 13:00 I thought I had the total portfolio approach nailed and understood the Future Fund way 15:30 Building a future fund academy: “We are no longer small enough that you can get by on word of mouth; it needs a bit more formality and structure”. 18:00 There is an ownership of the portfolio by everyone, rather than a culture of defending your patch 20:00 I used to think being mandated to use external managers was a terrible idea, but I’ve flipped on that [opinion] completely. 21:30 We take fees incredibly seriously, but we are not silly about that. 23:30 The way we think about partnerships is specialisation 24:30 The good managers get to choose who they partner with, because capital is just more plentiful 26:00 Looking back at the beginning, the Future Fund deployed most of its capital during the financial crisis. Was it a lucky break that the fund got to enter the market in a downturn? “It could have been a disaster.” 28:00 The Future Fund has stuck with an equity allocation of 30 - 40 per cent during its 15 years of investing. What is the philosophy behind that? 29:30 Apart from a large allocation to private markets, we’ve had more currency exposure [than a typical super fund] 32:00 Strategic review – it is always hard to say: ‘we are going to take structurally more risk’, when there has been a ramp up in risky assets. 33:30 Where are you looking for more risk exposure? 35:00 When we looked at how big the fund had become, it became clear that this much liquidity wasn’t the best use of capital 37:30 The strategic review concludes that bonds have lost some of their defensive qualities. Are government bonds toast? 40:00 The defensiveness of the portfolio comes from our hedge funds, currency positions, some aspects of emerging markets that are less correlated [not so much government bonds]. 41:00 What changes do you expect when the fund goes into withdrawal mode?

Hamish Chamberlayne is Head of Global Sustainable Equities at Janus Henderson Investors. In this podcast, we talk about Hamish' background in analysing energy companies, the sense and nonsense of ESG ratings, reliance on technology and opportunities in Australian listed companies. Please enjoy the show. Overview of Podcast with Hamish Chamberlayne 2:30 I’ve always been interested in how the natural world interacts with the financial world 3:25 Ironically, I started my career analysing natural resources companies 4:30 Energy is something that explains everything when you go deep down in the fundamentals 5:00 Ultimately, all energy comes from the sun and there is no rule that we have to use depleting fossil resources 7:30 What is the difference between a sustainable investor and an investor with a decent ESG policy? 8:00 We have always been very firm in our idea that it doesn’t make any sense to talk about ESG scoring 8:20 The idea that you can take all of these different issues and collapse them into a single score doesn’t stand up to intellectual scrutiny. 10:00 There should be no performance penalty if you are going to follow the sustainability route. Quite the opposite. 10:30 The natural world and the financial world don’t live in isolation. Recognising that is what sustainability is at its core. 14:00 The definition of sustainability is essentially the ability to generate wealth without jeopardising the ability of the future generations to generate wealth. This idea that we are not depleting. Yet, the economic model of today is one of depletion. 17:00 Are we relying too much on technology to invent our way out of the climate crisis? 18:00 Net zero, can we do it? Yes, but can we do it in time? That is the big question. 19:30 We need to move away from a fossil fuel, analogue economy to a digital, electrified economy 20:30 We took a very positive view towards COP 26 22:00 Don’t get distracted by the minutiae of COP 26; the general direction is very positive 22:30 China net zero by 2060: I’m very confident that they will beat that. 25:00 The pandemic and Atlassian. 26:30 We have never been an investor in Meta, or Facebook, but we do see a lot of applications of the metaverse in other industries 28:00 Inflation bears the seeds of its own destruction 30:00 Efficiency is one of our big investment themes. 31:00 Growth will always outperform Value when it comes to investing 33:00 Value stocks were cheap companies that still had growth. They were cheap growth stocks. But now we are in an environment where there isn’t universal, broad-based growth 35:30 I’m a value investor, investing in growth stocks. Because ultimately I want to invest where I see value 38:30 Looking at Texas Instruments gives you a snapshot of what is going on in the world today; this proliferation of technology in all parts of the economy 39:00 We see the electrification of transportation as one of the most bankable trends this decade. We find it too difficult to predict which companies are going to win, but ultimately they are all going to need all the widgets that go into an electric car. 40:45 Is the Internet of Things a sustainable theme with all the additional energy it needs?

Adam Gilmour is the co-founder and Chief Executive Officer of Australian rocket company Gilmour Space. His business is backed by some of the largest institutional investors in Australia, including Hostplus, HESTA and NGS Super, as well as several venture capital firms. In this interview, we talk about the business of rocket launches, space cargo, interest from institutional investors and Chinese spies. Enjoy the show and don't forget to subscribe through your favourite platform. Overview of podcast with Adam Gilmour, CEO of Gilmour Space 1:00 Starting as a derivative trader 3:30 Where do you start launching rockets? ‘You start small” 6:00 We are the Fedex of space 7:30 We started the company to take people into space 8:00 I fully intent to go to space in one of my vehicles 8:45 Pension funds backing Gilmour Space 10:00 There is an element of nation building in Australian super funds 11:30 Challenges of being an Australian-based space company 13:00 We estimate that the industry for launching small satellites into space will grow to $5bn by 2025 14:30 Impact of the pandemic: supply chain issues 16:30 How do you build a rocket. 17:30 How Gilmour Space become the object of Chinese spies 19:30 Putting people on Mars is unrealistic in the short term and inevitable in the long term. 22:00 If you are going to shoot things into space, the moon is a good place to do it 23:00 Favourite science fiction book: Orson Scott Card’s Ender’s Game 25:00 Getting to space in the next 12 months

John Pearce is the Chief Investment Officer of Unisuper, one of the best performing funds in Australia. We talk about in-house management, sense and nonsense of asset buckets, APRA's performance test and China. Please enjoy the show. Overview of Podcast with John Pearce, Chief Investment Officer of UniSuper 1:00 Starting in the back office of Westpac Investment Management 3:00 There is no way you can believe in market efficiency when looking at emotions take over in the dealing room 4:30 You need board support if you are going to run assets in-house 5:30 We didn’t really have a vision going into in-house management. Visions can be scary things. 6:00 Michael Chaney’s ‘Logical incrementalism’ 8:00 Moving to in-house is a business transition, not a project. It can’t be done in a day. 10:00 Best and worst trades 12:00 We had a $9.6 billion option position on during COVID, which gave us the confidence to buy more risky assets at the bottom of the market. 12:30 But our position in China is not looking good at all. 14:00 We should have loaded up on green tech two years ago when we decided carbon neutrality was going to play a big factor 14:30 If you had to put a label on Unisuper’s investment style, then it would be growth at a reasonable price 15:30 Has in-house management changed the way you structure external mandates? 16:30 Yes, the questions are better and there is some bluff-calling 20:00 If there is a good investment, then we will find a home for it. Hybrides are a good example. 22:00 On China: “More than the average person, I know what I don’t know.” 22:30 The last three months has really been testing our conviction [in China] and it is not Evergrande 25:30 If China invades Taiwan then all bets are off. You can’t structure a portfolio based on that. 27:30 How do you solve the asset allocation problem of low yielding bonds? 28:00 We are looking at gradually increasing our unlisted assets 30:30 Views on the APRA performance test: “When you get results like that, you know there is something fundamentally wrong with the test.” 36:00 Since becoming a public offer fund, Unisuper has raised $6 million just through word of mouth. 36:30 Yes, we would be open to a merger, but it has to make sense for our members. 39:00 You don’t build real culture over virtual meetings, so we decided as a team to come back to the office the same three days a week. 41:00 But there are also benefits of virtual meetings: our whole team gets to sit in our investment committee meetings

In episode 64 of the [i3] Podcast, we speak with Matt Benkendorf, CIO of Vontobel Quality Growth, a global equity strategy of Vontobel Asset Management. We spoke about the firm's unusual deployment of investigative journalists, how to create thoughtful portfolios when divesting tobacco and, of course, learnings from the global pandemic. Please enjoy the show. Overview of Podcast with Matt Benkendorf, Vontobel 1:00 How did you get started in investing? 2:00 Working in my parents landscaping business taught me how to work hard 5:00 I initially enjoyed fixed income more at university 6:50 Just had my 22 year anniversary at Vontobel 7:30 Bringing investigative journalists into the investment team 11:30 Intelligence, whether it is book intelligence or SAT scores, doesn’t naturally correlate with investment success 13:00 That devil’s advocate view is important to remain balanced. 14:50 Everything has hair; you don’t want to be too negative 17:30 How do you prevent too much negativism? 20:30 Dealing with divestments 23:30 Engagement is the most powerful force to change 27:00 Ironically, you can substitute tobacco companies with defensive growth companies in health care 28:45 What is quality and what is it not? 33:00 How has the pandemic affected your investment philosophy? 35:30 The pandemic was a real wildcard 36:50 Coming out of the pandemic, who would have thought you would have record car purchases; big ticket items? 39:50 Nobody, in their modelling, predicted a period of zero revenue 40:30 It came down to accessible lines of credit, terms of lines of credit and how could they get cash burn rates down 41:30 The coiled spring of returns; returns are made in down markets, not up markets. 43:50 COVID was terrible and came at a big health toll, but for investors it gave them the opportunity to reshuffle the deck. 45:00 The more things change, the more they stay the same 49:00 Not everything has recovered yet and this provides low hanging fruit 52:00 It is now later cycle with a lot of warning signs flashing

Daniel Graña is a portfolio manager for emerging market equity with Janus Henderson Investors. In this episode of the [i3] Podcast, we spoke about the importance of top down analysis in emerging markets, regulatory change in China, the influence of the pandemic on the region and on his investment process, and nationalising local hardware shops in Cuba. Please enjoy the show. Overview of podcast with Daniel Graña, Janus Henderson Investors 1:30 My family’s past in Cuba shaped my interest in emerging markets 2:30 Starting as an investment banker 3:30 Does your background give you a different view on geopolitical events? 4:00 What my developed market counterparts have realised since the global financial crisis is that the top down matters. 6:30 State or regulatory interference 7:30 What has happened in China in the last several months is a stark reminder of if you don’t place these sort of political governance and top down considerations front and centre, then you are going to be surprised. 8:00 If you want to invest purely bottom up, then I think you shouldn’t be invested in emerging markets 9:00 Why invest in emerging markets now? US equities seem to do better. 11:00 China and electric vehicles. 12:00 Innovation is key to escaping the middle income trap 13:00 Emerging markets with lower income disparity weathered the pandemic better 14:00 Future mutations of the coronavirus will come from emerging markets 15:30 COVID-19 didn’t change my process, but it did evolved the questions we were asking 16:30 We had to make some hard decisions on companies with business models that do well in a pandemic 17:30 The pandemic caused consumer to try home delivery, where they might have still taken years to adopt this practice without COVID-19 20:00 I think more of people’s behaviour is going to change as a result of COVID-19 than people appreciate 21:00 The internet could provide opportunities to SMEs to increase B2B sales 24:30 Since WWII there have only been five countries that have successfully transitioned from low to high income countries. 25:30 China has entered a period of regulatory bombardment; lots of micro reforms 26:00 We have failed to regulate big tech in the West 28:00 Three key themes in China: technology enabled businesses, decarbonisation and health care 29:00 The biggest story to come out of 2020 is COVID-19, but the second biggest story is China’s commitment to carbon neutral by 2060 33:00 The scorecard has changed to now include decarbonisation measures 34:30 I was wrong on the business impact of social media 36:00 Some of my best investments have been figuring out where there would be a change in governance for the better

This episode of the [i3] Podcast is different from our normal focus on institutional investments issues. Here, we talk about the importance of mental health with Joel Clapham, who is the founder and Chief Mental Health Champ at Hearten Up, a company that provides mental health first aid advice and training. In this interview, we talk about how Joel was a successful marketing and communications executive within the superannuation industry, but gradually lost his way as he struggled with mental health problems. After taking a much needed break and working on his mental health, Joel is now helping others to deal with their struggles. As the coronavirus pandemic has forced many people in isolation, while often the stresses and demands from work and home life have increased, we thought it is a good moment to pause and take stock of our mental health. In this interview, Joel shared some of his experiences and lessons learned. We spoke about success, depression, comedy, masculinity and smelling flowers. For more information on Hearten Up, please visit: https://heartenup.com.au/ If this podcast leaves you distressed, please contact Beyond Blue at 1300 22 4636 or Lifeline on 13 11 14. Overview of Podcast with Joel Clapham, Hearten Up 1:00 You’ve had several marketing and communication executive roles with superannuation funds. How did you get started in the industry? 5:00 Joining Telstra Super 6:50 Then in 2016 a ‘perfect storm’ hit you? 7:50 “I started to measure my worth by professional success” 11:00 Giving up alcohol 13:30 Getting back up 14:30 Dealing with grief: my father’s suicide 16:00 Allowing myself to feel what I felt 18:00 Talking publicly about my mental health issues 20:00 Asking questions on depression and suicide 21:30 Hearten Up instead of harden up 23:00 Views on masculinity 26:30 Countering feelings of isolation during the pandemic 27:30 The value of small talk 28:00 Joining The Men’s Table 30:00 Smelling the roses 32:00 Comedy as therapy 36:30 What is Hearten Up? 37:30 Being constructively compassionate

Alistair Barker is the Head of Total Portfolio Management, Investments for AustralianSuper, one of the largest pension funds in the country at $200 billion. In this episode, we spoke about dynamic asset allocation, the impact of the Your Future, Your Super reforms on active management and technological disruption. Please enjoy the show. 1:00 Starting out as a intern without pay 3:00 Working at Hastings and learnings from the early days 4:30 In funds management it is not about the quantity of decisions; it is about the quality of decision making 5:00 Investing with Raphael Arndt in a series of gas pipeline assets 6:25 “If you are not paying for things that might potentially provide future upside, then those are usually the best deals.” 7:30 Starting at AustralianSuper in a hybrid role of private market investments and portfolio strategy 10:00 “Early on in my career, AustralianSuper decided to bulk up with internal investment teams” 13:00 Does internalisation of asset management change the culture or create a clash of cultures? 16:00 “A number agency issues disappear with internal management.” 17:00 “My title change reflected more that there was now a term in the industry that reflected what I’ve been doing for a number of years [rather than a new focus on total portfolio management].” 19:00 “The challenge of a multi-strategy setup is that too often you have great ideas that just don’t have any impact on the total portfolio.” 21:00 A risk budget implies a number that needs to be spent. For us it is more about a range of risk taking depending on where we are in the cycle. 25:00 DAA is important at all times, not just in periods of distress such as a pandemic, because you never know when it is going to pay off. 30:30 The role of bonds is to diversify from equities. So what sort of risks are we worried about that we need to diversify against? 33:00 Losing your control over the portfolios liquidity leads you to a path-dependent outcome where you might be a forced seller of a particular asset class 34:00 Our portfolio liquidity is set at a level that we can buy the most attractive assets at the bottom of the market. 34:30 Liquidity is the key enabler by which to affect the asset allocation and you don’t want to lose control of that 36:00 We had a university student do a thesis on member switching and they found that over 60 per cent of switching detracted value 37:00 We want every member to be engaged with their super, but not so engaged that they log on every day to see what their unit price is doing 38:40 If you are not selling your equity portfolio tomorrow, then why are you worried about what it is worth today? Intrinsic value manifests over time. 40:00 Your Future, Your Super reforms: are you concerned about how it affects your ability to invest in active management? 41:30 I testified in front of the productivity committee and said that benchmarking helps 43:30 What benchmarking has taught us is that you get rid of active management that is redundant. Not necessarily, poor active managers, but those who are diversified away at a total portfolio level. 46:00 Working at Stanford with Ashby Monk on technological disruption 47:00 Technological disruption is not new, but it is often not captured by risk models 48:00 Often people think that to protect against technological disruption you just buy a bunch of venture funds. Well, venture is never going to be big enough to make a difference. 50:30 If you see what you have to pay for renewable energy assets today, it not only prices in carbon risk, but it also presumes there won’t be any new technology. 51:00 Are there similarities between the early days of the internet and what is happening now in crypto? 53:00 Getting involved in venture capital 54:30 Using big data to make Indian corner shops more profitable

Ward Brown is a fixed income portfolio manager for MFS Investment Management and runs an emerging market debt strategy. Brown started focusing on emerging markets, while he worked at the International Monetary Fund. We talked about his time at the IMF, geopolitical tensions and the global pandemic. Enjoy the show! Overview of podcast with Ward Brown, Fixed Income Portfolio Manager, MFS 2:00 Studying economics and looking at how credit conditions affect business cycles 3:00 Working for the IMF 4:30 “I really learned applied economics at the IMF and part of applied economics is thinking about the political implications” 6:30 Providing help and advice to emerging markets is the most applied form of economics. 7:00 “Quantitative easing seems to have been around for a long time, but it is really new territory” 9:30 Is an investment in EM debt just a currency play? 9:45 “The long run benefits come from the often higher carry that is offered in emerging market debt.” 11:00 Hard, local, combined or blended approaches to currency in EM debt 14:00 Chinese bonds will enter the FTSE World Government Bond Index. Will this cause issues? 15:20 “The Chinese bond market is mainly institutional and mainly local investors” 17:00 How do geopolitical trends influence your investment decisions? 17:30 “You have to be careful where to take risk in China” 19:30 On EM corporate bonds 20:30 “Some of the interesting opportunities that we are looking at is ones that have suffered from the pandemic” 21:30 Political intervention, gaming in China 22:00 “Do companies have the balance sheet strength to get through perhaps not the best exit of the pandemic?” 23:08 “When investing in emerging markets, expect the unexpected” 24:00 “The market has priced in quite a bit of (rate) hikes” 25:00 On duration. “Right now, it is the 5-year part of the curve” 27:30 How does the current pandemic stack up against other periods of fluctuation, such as the Asian Financial Crisis?

Steve Wreford is a portfolio manager in the Global Thematic Equity team with Lazard Asset Management. In this episode, we talked about the difference between an investment theme and a good story, sell discipline, monetary policy ("It is hubris!") and non-linear structural changes. Please enjoy the show! Overview of podcast with Steve Wreford, Lazard Asset Management: 3:00 My father gave me a book about the stock markets 3:30 Having a basis in computer science. Are you still using it? 5:40 Thematic investing; it needs to be more than a story 7:00 The distinction between value and growth styles of investing is arbitrary. 8:30 What is wrong with a good story? 9:30 Genuine structural themes are rare and belong in your portfolio, stories belong in the pub 12:30 India is going to be bigger than China in population in three years’ time. The rise of India is a big theme. 13:00 We are seeing a sea change in the relationship between central banks and governments 16:00 The influence of the pandemic 18:50 How to deal with tracking error 20:00 Bits of chips. 22:00 With such big themes, when is the right time to sell? 24:50 There is a big difference between knowing a company well and it being a good investment 26:20 Is there ever a danger that one theme dominates the portfolio? 30:00 Sustainability problems are by definition non-linear 30:30 We are in a new world of monetary policies and it is hubris 31:30 What books are you reading at the moment? 33:00 One way to reduce volatility in your portfolio is to turn your screen off for a while. END

Dr. Sushil Wadhwani is the Chief Investment Officer of PGIM-owned systematic macro manager QMA Wadhwani. Dr. Wadhwani has an impressive resume, including as member of the Monetary Policy Committee of the Bank of England and economist at the London School of Economics. In this episode, we talked about the sense and nonsense of monetary policy, Keynes and the notion of animal spirits as applied to last year’s pandemic fueled panic, as well as the use of supervised machine learning in systematic macro investing. Please enjoy the show. 3:00 At the age of 13, you were already interested in the unfolding financial crisis at the time. What peaked your interest? 5:00 On working for Goldman Sachs, while at the London School of Economics 6:00 As a former member of the Monetary Policy Committee of the Bank of England, how do you look back on the last 10 years of unprecedented quantitative easing? 6:30 “In 2008/09, I believe that the central banks saved the world from a much worse outcome. I’m a great fan of QE 1.” 7:30 “But my worry is that, after the last one (March 2021), they overstayed their welcome. We’ve acquired this obsession that inflation has to be just right” 9:00 “I think central banks pay too little attention to their role in asset price misalignments.” 9:50 Are we in a bubble today? 11:50 Bernanke’s paper on central banks focusing on inflation and not asset price misalignments 13:30 In the next crisis, there is a risk that they [central banks] stay behind the curve and let inflation stay high for too long. 15:00 Your particular investment style is systematic macro and it has been described as a combination of quantitative modelling and Keynesian economics. What makes John Maynard Keynes such a big inspiration for you? 17:00 Keynes’ animal spirits. “They played a huge role in the overreaction of markets in March 2020.” 21:00 Integrating the macro picture, using big data. “There is a lot of big data that is completely useless that people are talking about using” 23:00 Using natural language recognition in leading indicators. 25:00 Measuring scientist forecasts on vaccine development and the interplay with GDP 27:30 “We like supervised machine learning, but I’m not a fan of unsupervised machine learning. It is very easy to overfit.” 28:30 What is your take on Modern Monetary Theory?

In this podcast, we speak with Daniela Jaramillo, Senior Responsible Investment Adviser with pension fund HESTA about the risk of the transition to renewable energy and a low carbon economy, whether to divest or to continue engagement and socially stranded assets. This podcast is brought to you in partnership with Trillium Asset Management. Please enjoy the show. Overview of Podcast with Daniela Jaramillo: 1:00 Founding a non-profit and moving to London 4:35 What practical steps are you taking to reduce carbon emissions? 5:00 We don’t want to just do carbon accounting. We want to make a real difference in the real world 8:30 Most Australian businesses have the ability to transition (to a low carbon economy), but they need the will and sometimes encouragement of public policy 9:30 Thermal coal divestments and stranded assets 11:40 Do ESG policies introduce unintended skews? Value companies are more asset heavy than growth stocks. 12:30 It is possible to have value in portfolios without deviating too much from benchmarks. 14:00 We are interested in reducing emissions in the real world, not just in our portfolio. So if we simply divested, then that risk is still out there. 17:30 The use of shareholder resolutions is changing in Australia and they are sometimes seen as a way of formally communicating a view to a company. 20:00 Social issues have become real risks for boards. They really need to be ahead of the next movement. Do I have a social stranded asset risk within my organisation? 22:50 Juukan Gorge and financial risk 26:20 Lack of standardisation in ESG ratings 29:00 Big data and ESG research 30:00 SDGs as a framework for solving big problems. 33:00 SDGs from an investment perspective. 34:00 Looking ahead: HEMA, climate transition plan and measurements 36:00 The pandemic and systemic risk

Nicole Bradford is Global Head of Responsible Investment for superannuation fund Cbus. In this podcast, we speak about Cbus' commitment to achieve net zero carbon by 2050, the UN-backed sustainable development goals and green washing. This podcast is brought to you in partnership with Trillium Asset Management. Overview of Podcast with Nicole Bradford, Global Head of Responsible Investment, Cbus 3:00 Working for CSIRO in satellite imaging and remote sensing 5:00 General Electric 7:20 ESG then and now 8:30 Corporate scandals 10:00 Are members a driving force behind ESG? 12:00 CBus members are very aware of the issues in workers’ safety 13:00 Achieving net-zero emissions by 2050, what can you do in the portfolio? 16:00 Challenge in reducing carbon emissions in government bonds. 18:00 Data challenges 19:00 Should we start tackling climate change in real assets? 24:00 How do you decide which ESG organisations are worth your time? 26:40 Shareholder resolutions are just one tool in the toolbox and their usage differs per region 31:00 SDGs are absolutely important to investors 32:00 We need to start thinking about the impact of our investments on the world around us 33:00 Cbus has identified seven SDGs that are relevant to our portfolio 35:00 On SDGs and rainbow washing 37:00 Are we adding value to the SDGs? 38:00 If you could solve one ESG issue, what would it be? 40:20 Stranded asset framework, using forward-looking metrics. END

Matt Patsky is Chief Executive Officer and Portfolio Manager at sustainable investment firm Trillium, which was recently acquired by Perpetual. In this interview, we talk about the power of Facebook, truth and fiction in media, excessive remuneration and rainbow washing. We also discuss the impact the Trump presidency has had on the ESG industry. “A shift has occurred [in attitudes towards sustainable investing] that has been fairly dramatic ... and in some strange way that was partially because of Trump. He was anti everything and suddenly people are waking up an saying: ‘What? No, that doesn’t make sense,” Patsky says. Overview of Matt Patsky Podcast: 2:45 I remember thinking: ‘Why aren’t more people going after this information?’ 4:20 Nobody wanted to meet the Head of HR, but we did 6:30 Is sustainable investing about alpha or risk management? 7:15 I realised I found a method to assess what a good management team is 9:30 Should you talk to company management? 10:00 Why are shareholder resolutions important? “For us, the objective is to generate positive societal and environmental change.” 11:15 Bank of America engagement on arctic drilling 12:30 Is achieving a target the only real measure of success? 16:00 Facebook and shareholder resolutions 16:30 “63% of the non-Mark Zuckerberg shares voted in favour of the separation of chair and CEO. That said it all. But that board decided they didn’t care.” 18:10 “Using the stick of a shareholder resolution is not taken lightly and ... we are making sure that it is increasing awareness.” 20:30 Regulatory differences between traditional and internet media. 21:30 “I’m amazed that you can call yourself ‘news’, [but] that there is no rule that says you actually have to present some news”. 25:30 Fox News, voting machines and engagement in the absence of a regulator. 27:00 Pay inequality. We need the EEO-1 data, but it is not released by companies. It is material information and it should be disclosed 30:30 How have sustainability issues changed since you started? 32:00 “A shift has occurred [in attitudes towards sustainable investing] that has been fairly dramatic, particularly in the last couple of years, and in some strange way that was partially because of Trump. He was anti everything and suddenly people are waking up an saying: ‘What? No, that doesn’t make sense.’” 34:00 “Given that ESG has investing has demonstrated to reduce risk and increase alpha, you are violating your fiduciary duty if you are not incorporating [it].” 36:00 Sustainable Development Goals; are they helpful? 37:30 Rainbow washing. Do you see a lot of it? We have seen greenwashing and it has been bad. 41:00 “If your objective is to truly have a positive impact on the world, you are not going to accomplish that by simply investing in a portfolio of better companies, because you are buying in secondary markets, you are not really influencing capital flows. If you are really, truly trying to have a positive impact in the world, then you are going to be an active owner. You have to act like you care about what the companies are doing” 42:00 Compensation problems of C-suite in the US. 43:30 That is the problem: you can’t find a director who is going to tell you that their CEO is not in the top quartile.

Professor Deep Kapur is Director at the Monash Centre for Financial Studies in Melbourne, Australia. He is also a member of the investment committee of pension fund REST. Professor Kapur has had a varied career, spanning asset consulting, investment banking and academia. In this podcast, we speak about the lessons learned from the various crises since the 1980s, his experience running a machine learning-based FX strategy in the 90s and the current application of these techniques in pension funds. He also explains why Lehman Brother should never have been allowed to fail. Please enjoy the show! Overview of Podcast with Deep Kapur: 01:00 Starting out as a finance journalist in Bombay 04:00 Interviewing Ratan Tata. 05:30 Working across the Bombay Stock Exchange 07:30 Moving to Salomon Brothers 09:30 Every response to a [new] crisis is different 10:30 “When a systemically important bank goes down, then capitalism can’t function” 12:00 Letting Lehman Brothers fail was a complete mistake 14:00 In academia, the pendulum has swung too far away from the real world 15:00 Impact of pandemic on the university 17:42 Impact of the pandemic on markets 20:00 Last year has brought to the fore that risk management can not be a second class citizen. 20:30 You have been involved in machine learning for a long time. What is different today compared to when you started out in this field? 23:00 If machine learning deals with a lot of short term data, does a long term investor have any business applying these techniques? 25:00 “You might not want to run machine learning strategies, but you could use it as a research assistant”. 27:00 How to build safeguards around systems that recognise patterns that humans can’t see. 30:30 “You can’t back test the future” (good for preview) 30:50 “The use of AI to assist decision making will explode, [but] machine learning where the computer makes the decisions and implements everything… I don’t think it will take over the world.” 32:00 What areas does the Monash Centre for Financial Studies focus on? 33:30 Blockchain and its applications. 36:00 Why would an institution be interested in a crypto? You would have to buy the story. 37:40 I think [Bitcoin] is a good hedge against the risk of paper money debasement. 39:45 I’m overseeing the launch of a venture capital accelerator and our faculty and students would be available to provide assistance to these early stage companies.

Andrew Fisher is Head of Asset Allocation at Australian pension fund Sunsuper. We discussed the impact of how the markets have changed since the 2008 financial crisis on asset allocation and whether these changes are structural or part of a very long cycle. We also discuss the fund's partnership program, whether value is truly a risk premium and retirement products. Enjoy! Overview of podcast with Andrew Fisher 1:00 On ultra marathon running 2:00 Getting started in investing 4:50 Everybody is good at the pure maths side of things, where people differ is how they apply that knowledge 6:00 Markets are more driven by emotion today 7:30 Changing how we think about foreign currency 9:15 Talking distressed opportunities 10:00 NZ Super’s strategic tilting program 12:00 I’m not convinced that strategic asset allocation has stopped working 13:00 As the markets were falling, we definitely increased equity allocations 14:30 You shouldn’t base your defensive assets on the most recent crisis 18:00 Value versus growth: structural or cyclical 18:45 I have a healthy scepticism about whether there is a risk premium in Value 19:40 There is definitely a cyclical dislocation in certain sectors of the market 20:30 Technology is overvalued against almost every other sector. 24:00 On machine learning 25:30 Partnership program and strategic review 28:20 We are going to wait and see; we don’t really want to sell anything, but we also don’t really want to buy anything 30:30 Retirement, I’m not sure that anyone has been able to deliver anything better than the allocated pension

Michael Hunstad is Head of Quantitative Research for Northern Trust Asset Management. Michael and his team have produced a report which analyses risk in more than 200 portfolios and over a 1,000 equity strategies over a period of four years. They found that there are six drivers of unintended outcomes in portfolios, including uncompensated risk and unintended style biases. We speak with Michael about the report, how to avoid these traps and how the pandemic would affect the results. Enjoy! Overview of podcast with Michael Hunstad: 1:30 Starting out in investing 2:30 Changes in the hedge fund industry 4:00 Unrewarded risks in institutional portfolios are as high as 50pc of the portfolio 6:30 Unrewarded doesn’t mean unknown. To what degree do investors know about these risks? 8:20 Is it possible to get rid of unrewarded risk? 11:00 The Cancellation Effect, capacity and diversification. 13:00 Active share cancellation 16:30 It is not about how concentrated or diffuse a manager is, but what remains after the portfolio is put together 17:30 Unintended style biases. 18:30 We still have a high conviction in the value factor. We feel we are in a cycle and it is always darkest before dawn 20:45 I get concerned when I see the multiple dislocations that we see today 22:30 Chasing returns and manager selection 24:30 On return cycles of manager outperformance 27:00 Is manager blending an underestimated art? 28:45 Does this mean we should all just go passive and factors? 30:00 How would the pandemic affect the findings of the report? 30:40 When a risk is not properly priced, it is usually uncompensated 32:00 Pandemic and structural changes for the investment climate 33:00 We can see an increase in volatility spikes and it is accelerating 35:00 As a former algorithmic trader, I’m also concerned about the amount of algorithmic trading that is occurring at the moment 36:00 The future of equities is very much about how you manage these tail risk events.

Professor Bill Mitchell is one of the key figures behind the Modern Monetary Theory, a term he coined himself. We talk to Professor about the impact of the pandemic on economies, what can be done about the sky-high unemployment rates and why ultimately unemployment is a political choice. Overview of Podcast with Bill Mitchell, University of Newcastle 1:00 You coined the term ‘Modern Monetary Theory’? 3:00 Starting tto blog: http://bilbo.economicoutlook.net/blog/ 5:00 More interest from the investment industry 6:00 The Australian economy has collapsed 7:00 Most of the collapse could have been prevented 9:00 We are about $100 bn short of government spending 10:00 Not against the lockdowns 12:00 Much attention goes to MMT’s comments on deficits, but what it says about budget surpluses is much more interesting: it detracts from economic activity. 15:00 What is the role of fiscal policy? It is to ensure that spending in the economy is sufficient to maintain production at levels which will provide jobs for everybody. 16:30 To run a deficit is to undermine economic activity. That is okay in the case of Norway (where the economy runs hot). 17:00 A surplus not only undermines economic activity but it also destroys private sector wealth 22:30 Can we solve unemployment? A very pertinent problem at the moment. 23:30 Mass unemployment like we have today is a political choice 27:00 The Green New Deal or Green Transition. 28:00 If I was the government I would be embarking on large scale investments in renewables, transition technologies, in speeding up the process of carbon elimination. 28:30 Why not use the Hunter Valley culture of high productivity manufacturing to build a renewable energy hub for Australia and create jobs in manufacturing, R&D, et centera. 31:00 What do you want people to take away from MMT? 34:00 Does working from home distort the measuring of worked hours? 35:30 There is a massive distortion in economic data. This is not to blame the statistic agencies, but it is just very hard to measure right now.

Nathan Fabian is Chief Responsible Investment Officer with the Principles for Responsible Investment (PRI). The PRI believes that financial markets today have not adequately priced-in the likely near-term policy response to climate change. In this podcast, we talk about the release of the Inevitable Policy Response, a project that aims to prepare investors for the associated portfolio risks. Overview of Nathan Fabian, PRI, podcast: 1:30 You were an advisor to Senator Penny Wong. What was that about? 2:00 What does a Chief Responsible Investment Officer do? 4:30 The PRI recently launched its Inevitable Policy Response. What is inevitable about it? 6:00 It can be hard, sitting in Australia, to see how political neutral climate is as an issue in most countries in the world. 9:00 Coal: “Institutional Investors broadly have already made a judgement on coal.” 11:00 Coal: “We are really just exiting a legacy industry at this point.” 13:00 Stranded assets: “A fire sale of assets is not going to be in the interest of institutional investors.” 14:30 How do you translate the uncertainties of climate risk into a valuation model? Is it possible? 16:00 Give your best estimate and adjust your valuation along the way. You can’t just ignore it. 17:00 We did some asset level modeling to get estimates. 18:45 Australia is still considered in the policy paper as a country that will phase out coal in an early stage. Why? 20:00 Is there a danger that the message will get lost in the turmoil of the pandemic? 20:30 “Will the support packages under the pandemic prolong the life of companies that were already struggling? That certainly is a risk” 22:30 “Are we accelerating the energy transition, or are we propping up companies that we are going to have to unwind anyway in the future? We are at important crossroads.” 24:30 “There is this myth around the green transition that you have to come up with unproven technologies that are going to radically transition our economies. But most of the opportunities are there and they exist in all sectors of the economy.” 26:00 “We think land use has been overlooked. But we expect a lot of change in this sector.” 27:30 So what are the next steps with the policy paper?

In Episode 49 of the [i3] Podcast, we speak with Stephen Laipply, US Head of iShares Fixed Income ETFs for BlackRock. We discuss how fixed income exchange traded funds (ETFs) fared during March and April of this year, when many bond markets froze due the global pandemic. We talk about price discovery in listed and OTC markets and the question whether we will ever see an institutional grade portfolio comprising solely ETFs. 1:00 My father bought me my first stock when I was a child and it happened to be Apple, but... 3:00 First encounter with ETFs 5:30 The changing use of ETFs by institutional investors. 6:30 ETFs in Tactical Asset Allocation 8:00 Have fixed income ETFs remained liquid when credit markets froze? 8:44 We saw half of last year’s volume trade in a single quarter 9:30 How accurate do fixed income ETFs reflect the prices in the OTC market? 10:30 March 12 was one of the most challenging days in the risk off market. 11:00 If you compare 90,000 trades to a dozen of trades, then we have more confidence in the price discovery of those 90,000 13:00 You wrote a paper on fixed income ETFs as leading indicators? 15:00 Can you develop strategies based on the slight lag in information? 18:30 Sometime regulations can be a benefit to the sector. After the GFC, tighter regulations increased the demand for fixed income ETFs. 21:00 What type of institutional investors use these ETFs? 23:30 Relative trades with ETFs 26:00 Do fixed income ETFs trade like equities in the short term? 27:00 Just become an asset trades on an exchange, that doesn’t change the character of the asset class 29:00 What type of innovation do you expect to see in ETFs in the coming years? 31:00 Will we ever see an institutional-grade portfolio build completely out of ETFs?

Rob Arnott is the founder and Chairman of Research Affiliates. In January, he published a paper that looked into the question of why the value premium hasn't worked for the last decade, called 'Reports of Value's Death May Be Greatly Exaggerated'. In this interview, we talk about the paper, how the current downturn due to the coronavirus might impact factors and why Arnott would never take Research Affiliates public. Overview of Rob Arnott Podcast: 1:00 Is this time different? 2:00 Will things be different three years from now? 4:35 The idea that tech stocks won’t be hit is naive. 7:30 The narratives for why value fails, don’t work, with one exception 7:50 Book/value is a terrible measure of value 8:50 By capitalising intangible assets, you boost the value of companies and some might not look like growth companies anymore. 9:00 By taking into account intangible assets, value works better 10:00 Even Benjamin Graham, in 1937, wrote about the mediocrity of book-to-price 10:30 Today, over half of the assets of a typical business are intangibles that don’t show up in the book value 11:30 Are private equity investors arbitraging the value factor away? 12:00 I cannot imagine Research Affiliates going public. I would instantly resign! 15:30 You will never hear a momentum manager tell you the simple fact that momentum hasn’t worked since 1999 17:20 We wrote a paper for a journal on machine learning in which we went through a laundry list of things that could go wrong 18:00 What would you do in the current environment? 18:30 You want to buy at peak fear. 19:25 Value stocks as a segment will come back; they are trading at the cheapest level since the tech bubble 21:00 In Emerging markets you have a crisis every two years, so this is just another, nasty crisis. 22:30 Will the new announced fiscal stimulus and QE distort factors?

Multi-manager firm Pinebridge Investments is a partner of Australian pension fund SunSuper and was given the task to write a research paper on how it decided to go active or passive in a particular market. Michael Kelly is Global Head of Multi-Asset at Pinebridge and takes us through the research paper. He also talks about his entry into the investment industry, including playing softball with Alan Greenspan. * Please note that this podcast was recorded before the coronavirus became a pandemic. Overview of Michael Kelly podcast 1:30 Alan Greenspan’s firm 3:25 Greenspan in his early days and his love for baseball 7:00 DAA or market timing? A medium term play. 8:00 We look at markets as if they are individual securities 9:00 Can you name some investments that worked out well and some that didn’t? 12:00 You asked me very politely to share some of my bloopers 14:00 Isn’t interesting that in 2020 we still have crisis orientated monetary policy 16:00 Sunsuper’s research task into when to you passive and active 18:00 When to go active and when passive 28:00 Don’t fund managers claim they can outperform all of the time? 29:00 You can look forward and see which markets become less efficient 31:00 Increased regulations have made it too expensive for small companies to list 32:00 Do portfolios need to include a bit of private assets to compensate for companies not listing as early? 34:00 Do ESG policies make passive less passive? 36:00 Is divestment really going to change practices at the majority of companies? 38:00 How do you engage with companies? 39:00 When passive investing is no longer a passive experience. 42:00 We are in a ‘Hotel California’ type of glut: you can check in, but never leave.

Stewart Brentnall is the Chief Investment Officer of Tcorp, the asset management arm of state of NSW. In this interview we discuss the fund's move towards a total portfolio approach, how TCorp views partnerships with fund managers and his thoughts on the Canadian Model. Overview of podcast with Stewart Brentnall: 2:00 Getting started in investing. 2:40 My first boss, while I was on secondment to Clayton Utz, was Julie Bishop 5:30 Building a multi-manager platform at ANZ 6:00 TCorp mergers 6:45 Internalisation of asset management functions 7:30 Moving towards a total portfolio approach 8:30 Asset classes don’t describe very well how much risk they bring to a portfolio 11:00 Streamlining the portfolio and reducing the number of managers in it 12:00 Equities are at the centre of the investment process and every other asset is measured against the risk/return profile of equities 13:00 How were the changes received by the existing staff? Did you get any pushback? 15:00 Addressing agency risk 15:30 How do you look at strategic partnerships? 17:30 Thoughts on passive versus active as TCorp continues to grow. 19:00 Teaming up with Canadian pension funds 20:00 What are your thoughts on the Canadian Model? Will it still be successful in an environment where returns are lower and so cost will need to be managed more? 22:00 The governance around internalising is tricky 23:00 How is TCorp positioned in this crisis environment? 27:00 Role of technology

Bob Michele is Chief Investment Officer and Head of the Global Fixed Income, Currency & Commodities Group at JP Morgan. At the end of every year, Bob writes a tongue-in-cheek blog post, handing out awards to various fixed income asset classes and events. We discuss yield inversion, gold, cryptocurrencies, MMT and more. * Please note that this recording was made before the coronavirus became a pandemic. Overview of Bob Michele Podcast: 1:30 How did you get into fixed income investing? 2:30 Annual bond awards blog post; heroes and villains 3:30 Last year’s yield curve inversion; what does it mean? 6:00 Should we tier the official deposit rate to combat inversion? 8:30 How creative do you want your central banker to be? 10:00 Inflation, disinflation, how concerned should we be? 13:30 Emerging market bonds, China bonds and fixed income indices 16:30 Will China bonds remain niche in the foreseeable future? 22:30 Covenant light bonds; are lending standards dropping? 27:30 You named gold the currency of the year. Isn’t gold just speculation? 30:00 “No yield is a pick up from negative yields” 32:30 Talking cryptocurrencies 35:00 View on MMT

Adrian Banner is Chief Executive Officer and Chief Investment Officer at Intech Investment Management, a Janus Henderson business. Adrian is also a former maths lecturer at Princeton University, author of the book “The Calculus Lifesaver and last but not least a recorded musician, playing piano. In this podcast, we talk about the importance of rebalancing, which might explain a large part of the size premium, and look at volatility – two topics that lie at the heart of the Stochastic Portfolio Theory. We also find out what Klezmer music is. Enjoy! Overview of Adrian Banner podcast: 3:00 Studying Klezmer Music 5:00 Why both CEO and CIO? 7:00 Stochastic Portfolio Theory and Robert Fernholz 9:48 Does is solve all the problems of Modern Portfolio Theory? 12:42 The Curse of Compounding 14:30 Rebalancing and the size premium. 17:30 Small caps don’t outperform large caps. It is the rebalancing to maintain a small cap portfolio that makes sense. 20:00 High or low volatility? 22:30 How will factor strategies hold up when we move away from an environment dominated by quantitative easing? 27:00 The reason why some research finds that randomly chosen portfolios do better than the market index is because they have more small caps in them. But do they have better Sharpe ratios? 29:00 Should we time factors? 31:30 Picking the top and bottoms of markets is very hard to do, but risk timing is probably more achievable 34:00 Bridging the gap between academia and practitioners. Any views as a former lecturer? 35:00 We have every month graduates in mathematical finance from Princeton come to our office, but not so many economics or business school participants 36:00 I reject all models that say: ‘The market is wrong and the model is right’. The market is always right. 37:30 Why is it that the top 5 per cent of the S&P 500 represents about 50 per cent of capital. It has pretty stable over multiple decades…, and it is things like this that drive the size premia. 40:30 Machine learning is a nice research tool, but not as useful as part of an investment process. 44:00 Machine learning and fiduciary duty, do they mix? 47:30 As a scientist, I find it hard to say: ‘This is behavioural’. What does that really mean?

Note: This podcast was recorded before Blackrock announced to divest from thermal coal in its active strategies. Climate change has been a divisive issue in the investment world, as many investors struggle to articulate the impact of this development on their portfolios. But Tim Buckley brings clarity to this discussion with a sharp analytical framework of how climate change and the ongoing transition to a low carbon economy will impact corporations and, ultimately, institutional investors. After all, you don't want to be left holding the 'canals of the 21st century' in your portfolio. Tim is a Director of Energy Finance Studies, Australasia at IEEFA, the Institute for Energy Economics and Financial Analysis. He spent most of his career in the asset management industry, including 16 years at Citigroup, where he was Head of Equity Research. Overview of Tim Buckley podcast: 1:00 You were involved in equity research. How did you get into the climate change sector? 1:35 Chinese companies were involved in clean technologies that we were conceiving off in the West 4:30 Focusing on the energy sector 7:00 What was an example of an interesting Chinese energy technology disruptor when you were investing? 9:00 Next Era Energy CEO predicts renewable deflation of 50 per cent in the next 5 - 10 years 9:30 Clean energy in Japan after Fukushima 13:00 Nuclear energy is low emission, but is it really sustainable? 14:30 What are the major risk from climate change for investors? Let’s take a look at what Mark Carney, Bank of England, estimates. 16:00 The train wreck is coming, but the sooner the better because financial markets will adapt 17:00 Do you look at climate change risks as unaccounted-for costs? 19:00 Stranded assets and why they matter. 21:00 Coal will have a market share of zero per cent by 2030 23:00 Are funds already holding stranded assets? Oh yes! 25:00 Let’s just put a price on carbon and let investors make an informed decision. 26:00 Infrastructure investors will be a core part of the solution 28:00 Talking about divestments: how far can you go before running into fiduciary issues? 30:00 You have a fiduciary duty to factor in a known risk. 36:00 Some of the developing economies are further ahead on transitioning to low carbon than the developed world. 39:00 The disruptive technologies are truly disruptive; it is not just positive. It will destroy more shareholder value than it creates. It is a risk that needs to be addressed. 42:00 Who will be the winners of this disruption? 45:30 Tail risks, an example of General Electric

Greg Cooper was for many years the Chief Executive Officer for Schroder Investment Management in Australia. More recently, he joined TCorp, the AU$ 93 billion government asset manager for the state of NSW, as chair of the investment committee and non-executive director. We speak with Greg about whether public markets are broken, the state of active management and his interest in the venture capital space. Greg Cooper podcast overview: 1:00 Starting out in actuarial studies 3:00 Focussing on Japanese equities 4:00 Compared to 1986, Japanese equities are still at the same level 5:00 What were some of the highlights of your career at Schroders? 6:50 We’ve moved on from strategic asset allocation 7:55 As a CEO, don’t be afraid of what others think and try to draw out ideas 9:35 Are public markets broken? 11:00 Not having a well-developed VC industry means that a lot of good ideas get starved of capital and eventually go offshore 11:30 Will that change when the effect of QE goes away? 15:00 No investor is entirely passive. 16:30 Passive rose, because active had too large a share, but you can’t have a 100 per cent passive investment market 17:30 Will value-style investing come back? 21:30 You have an interest in fintech and hold a board position at OpenInvest? 25:00 Joining the TCorp board and chairing the investment committee

Vijoy Chattergy is the founder and president of VMLH, a consulting firm for global institutional investors. Previously, Vijoy was Chief Investment Officer of the US$17.5 billion State of Hawai‘i Employees Retirement System. He is well known for implementing an investment philosophy that focuses on functional risk classes instead of asset classes, which led him to create a Crisis Risk Offset sleeve to the portfolio. This podcast was recorded at the [i3] Asset Allocation Forum 2019 in Bowral, Australia. We spoke about the function of complexity in portfolios and how to set effective governance frameworks around this. Overview of Vijoy Chattergy podcast: 2:30 How did you get started in the investment industry? 5:00 What are some of the differences and similarities between Australian and US pension funds, you find? 10:45 As CIO you want to make key decisions, not all the decisions. 14:00 Does the size of the organisation come into play when designing a governance policy? 16:45 Governance is different from culture building 18:10 Does governance add to returns? 21:00 Where does the member come into the governance process? 22:00 Can we address the issue of peer risk through governance? 24:44 Should complexity be embraced and how would you communicate it? 27:45 Complexity should have a function in the portfolio. 29:30 Using functional risk classes 32:00 Should board directors be experts in asset management? 35:00 Implementing a crisis risk offset class

Fiona Trafford-Walker is one of the world’s most respected asset consultants. Trafford-Walker is a founding member of Frontier Advisors and has advised many of Australia’s largest pension funds on their investment strategy. Currently, she is a Director and member of the Investment Committee at Frontier, but has announced to leave the company on 6 December 2019 to focus on her directorships. She is a Non-Executive Director at the Link Group, Prospa Group and the Victorian Funds Management Corporation and a member of the Investment Committee at the Walter and Eliza Hall Institute. Trafford-Walker was named as one of the Top 10 global asset consultants by CIO Magazine from 2013 to 2016 inclusive. She was also announced as a winner in The AFR and Westpac 100 Women of Influence Awards for 2016 in the Board/management category. In this podcast, we look back on her 25 years with Frontier, her career as an asset consultant and discuss a variety of topics, including manager selection, asset allocation and the changing landscape pension funds face today. Overview Fiona Trafford-Walker podcast: 2:30 I’m an accidental asset consultant 4:30 You’re named as one of the most influential asset consultants in the industry. What makes a good asset consultant? 5:35 You have to be willing to collaborate 7:00 Technical skills are very important, but equally important is time in the markets 7:30 The changing role of asset consultants over the years 9:30 As asset consultants have increased their senior staff, have conversations become more focused on strategy? 10:30 There is still the need to have a blend of specialist and generalist skills 11:50 Are we already heading to having a panel of asset consultants? 13:00 Is there a good balance between the time spend on manager research and that on asset allocation? 14:30 What type of data should inform changes in asset allocation? 16:00 There is not much you can do about geopolitical risk; predicting what politicians are going to do next is pretty hard. 16:30 But trade wars are a real thing that have an effect on markets 18:00 Are the struggles of active managers, particularly value managers, structural or cyclical? 19:00 There seems to be a need to tweak the value process to allow for the new capital-light business models. But at what stage do you get style drift? 21:30 Frontier Advisors took the decision to build a platform with all their research on it, quite a brave step in an era where softcopies get distributed easily. 26:00 You spent some time arguing for lower fees in the industry. Are we at the right level? 27:30 The real change has been the internalisation of asset management by some funds. 29:00 Can internalisation refocus asset management on the long term? 30:00 Bottom draw mandates 31:00 To what extent should asset owners engage with the companies they invest in? You are on a number of boards and see both sides? 33:00 Governance certainly has changed as asset owners realise they are the beneficial owners 35:00 To what degree can you divest from companies as a fiduciary? 38:00 The challenge of developing retirement products 41:00 At the moment, the willingness to do things together [as funds] isn’t there. 42:00 What is next in store for you? 44:00 What issues come up in mentoring new asset consultants?

MarketFox columnist Daniel Grioli speaks with Tim Hayes, Chief Global Investment Strategist, Joe Kalish, Chief Global Macro Strategist and Ed Clissold, Chief US Strategist of Ned Davis Research about multi-asset portfolios, asset allocation, the rules of research and the inevitability of making mistakes. Ned Davis Research is one of the largest independent institutional investment research providers in the US market. It combines both fundamental and technical research disciplines, and adheres to the adage: 'making money is more important than being right'. Overview Ned Davis Research 2:00 What are some of the lessons you’ve learned the hard way? 3:30 Joe: Ned always said: ‘Everyone makes mistakes. But the difference between the winners and the losers is that the winners make small mistakes’. 9:30 Ned’s nine rules for interpreting markets 15:00 The importance of being open to new techniques and datasets. 17:00 Joe adds on a 10th rule 20:50 A lot of people said they called the housing market in 2007, but I’m actually quite proud that we called when it was time to get back in 2009. 27:00 Pay attention to correlations. Sometimes things are changing. 28:30 How do you use base rates? 30:00 Sometimes we are known as myth busters, because we blow up some common [held believes]. One of them is about the yield-curve inversion. 34:00 Really good earnings growth is usually priced in when it gets announced and so is not good for price levels. 36:40 We looked at 25 different value indicators to see which ones have done better over the years 41:00 This has probably been the biggest divergence in the last 10 years of what happens in the US and what happens in the global markets. 45:30 Ed: If you look at the US right now, it actually doesn’t look that bad. 45:49 Joe: I start with a top down view 47:37 You can’t just look at change anymore, you have to look at the second derivative: the change of change 51:20 This is not the most exciting time in the bond market 52:00 What is the difference between trend and market timing? 54:45 You need to pay attention to the trend 58:00 The value of asset allocation 1:06:00 Make sure you’ve got that disciplined process in place to make trend decisions 1:08:00 We only forecast for fun, but we pay attention to the indicators 1:12:00 What is a mistake? It can be different things to different people 1:15:00 Has your analysis been impacted by current market conditions of central bank policy and algorithmic trading? 1:22:00 What are you working on at the moment? 1:28:00 Tips to make better investment decisions

Tobias Carlisle is a deep value investor and founder of Acquirers Funds. He is author of the best-selling books 'The Acquirer’s Multiple', 'Deep Value', 'Concentrated Investing' and 'Quantitative Value'. Tobias has extensive experience in activist investment, company valuation, public company corporate governance, and mergers and acquisitions law. He has also worked as an analyst at an activist hedge fund, general counsel of a company listed on the Australian Stock Exchange, and a corporate advisory lawyer. More recently, Tobias launched a deep value ETF, The Acquirers Fund (ticker: ZIG), which holds long positions in deeply undervalued, fundamentally strong targets for activists and buyout firms, and short positions in overvalued, financially weak companies. It started trading on the NYSE Arca in May this year. Overview of Tobias Carlisle podcast 3:00 I was working as a lawyer in M&A when the tech crash happened 8:00 There is this phenomenon in deep value where the worse the quality, the better the performance tend to be. 12:00 Developing a quantitative value metric without the quality metric gives you better raw performance. 13:00 Daniel: if you test Joel Greenblatt’s magic formula on Australian stocks it pushes you into all these mining companies. 16:00 The spread between the most undervalued and overvalued stocks are at historic widths. 19:00 There are secular issues with price to book measures. 20:00 Factors give this nice impression that it is scientific and filters out human emotion, but the rules change all the time. 30:00 It is hard to short a cult 32:00 Shorting on valuation is not the way to short; you want financial distress 33:00 Keep shorting positions small 36:00 Why launch the fund as an ETF and not as a mutual fund? 40:00 Do you have sector constraints? 43:00 Shannon's Demon 45:00 The Kelly Criterion 53:00 Criticism of using EBITDA metrics 57:00 There is a machine learning component to the analysis 1:00:00 Most investors are better off to hold a low cost index fund, but I believe that over the long term a value strategy will outperform the market 1:01:00 There is a paper that says value investors win at the expense of other value investors. 1:04:00 Blending managers is a difficult puzzle to solve. 1:09:00 The rise of the fourth Buffett 1:10:30 Which lessons have you learned the hard way? …. All of them 1:13:00 We are all cognitively impaired.

Lucas White is the lead portfolio manager for the GMO Climate Change Strategy and a member of GMO’s Focused Equity team. Together with the firm's co-founder Jeremy Grantham, Lucas has developed a strategy to invest in companies that are likely to profit from climate change mitigation and the transition to a low-carbon economy. In this episode, MarketFox columnist Daniel Grioli asks Lucas some pretty pointed questions around the viability of ESG-focused investment strategies. GMO Lucas White podcast overview: 1:00 How did you get started in climate change strategies? 5:00 Jeremy Grantham’s research into resources and climate change 8:00 The issue with apply climate change risk models on portfolios 11:00 What is the right way to look at the carbon footprint of your portfolio? 15:00 If you are going to get rid of fossil fuels than you are putting a lot of burden on other materials: copper, cobalt, lithium. 20:00 Looking at the quality of data on climate change 21:30 Figuring out what business models fit the universe. 22:30 Although we believe that electric vehicles are going to take over our motorways, that doesn’t necessarily make us excited about Tesla or BYD. These companies are very expensive. 24:00 A better way to gain exposure to electric vehicles 32:00 Do GMO’s multi-asset funds allocate to the climate change fund? 35:00 Stranded assets: doesn’t it depend on when we stop using these assets? 38:00 Nuclear energy, is it more viable than renewable?

Michael Recce is Chief Data Scientist with Neuberger Berman and is leading the firm’s effort into incorporating data signals into the investment process. When working on predictive algorithms for the advertising industry, he realised that these applications would work just as well in finance. After all, if you know which products customers are interested in then you know which companies are winning, he says. Michael Recce Podcast overview: 0:30 What is a data scientist? 2:00 Has your study of neuroscience given you new insights into how computers think? 3:00 Predicting what ads people are interested in shows you which companies are winning; that is not priced into stocks. 4:20 Data-science driven investing will be bigger than the quant revolution was 5:00 Bootstrapping problems in data science; you don’t know what you don’t know 5:30 Most of the data that people want to sell is not useful 7:30 Asking questions around time series are not the right questions 10:00 We start with a fundamental model and the fact that it is quantitative means we are using computers. 13:20 What are some of the datasets that you are most excited about today? 15:00 Signal decay, how do you deal with it? 17:00 Data-driven investing is very different from the way most people think about investing 18:30 I pay 1/20th of what a hedge fund pays for the data 20:00 Are we solving the right problems in investing? 21:00 The different time domains of data. 25:00 How to deal with bias in data. 29:00 To what degree is creativity a part of data science? 33:00 Can you build the values that an organisation might have into the algorithms? 34:00 Partnership with the UN on sustainability data 36:00 Is this just added complexity for boards? 40:00 I just finished the first course in teacher portfolio manager how to code. 45:00 My bet is on fundamental manager that learn to code.

Ivka Kalus is a veteran of the investment management industry, having worked as a senior international equity portfolio manager for the likes of Boston Advisors, Pax World Management and State Street. She has been named among the top three female investors in the US by Citywire. In April 2019, Kalus launched Promethos Capital, a majority female-owned asset management shop that focuses on responsible investing. Why? ‘Because the market needs a firm like ours’, she says. In this no-holds-barred interview, Kalus, who is Chief Investment Officer of Promethos, questions why people ask whether there is enough female talent to reach 30 per cent board quotas but don’t question whether there is enough male talent to fill 90 per cent of board roles, as currently is the case. She is proud to admit that while she is not a Millennial many of her opinions could be classified along those lines. And she sees ESG investing as a work in progress. Please enjoy the show. Podcast overview of Ivka Kalus: 2:20 I was trained as a biologist, but didn’t like the lab 3:40 As I went back to school to study environmental economics, the iron curtain fell 6:00 I ended up being the mining analyst at Putnam Investments 6:30 The number of women in asset management has shrunk, as has the diversity of thought 8:30 In finance a lot of people don’t understand the difference between correlation and causation 9:30 More investors are getting involved in ‘intentional capitalism’ 10:00 About 1 per cent of assets is managed by women. The market needs a majority women-owned firm 12:00 How can we get more female participation in the asset management industry? 15:30 On millennials 17:00 Millennials are very serious, maybe because their experience is shaped by the Great Recession and climate change. 20:00 Using values to make unbiased decisions 23:00 Using ESG data as alpha predictors 28:00 Is progress in diversity held back because men feel threatened by women? 32:00 Diversity is one aspect of better decision making, but it needs to come with skin in the game and a mechanism for aggregating opinions rather than having one dominant opinion. 35:00 Often people ask: Are there enough experienced women to get every board to 30 per cent female? Well, are there enough experienced men to fill 90 per cent of boards? 38:00 Will Vanguard’s plan to vote again directors with more than four board positions affect female directors more than male directors? 39:00 SRI was started by religious organisations in response to the Vietnam war. 45:00 If you only exclude 10 per cent of the investment universe you can still build well-diversified investment portfolios. 47:00 How do clients determine what their values should be? 48:40 In general, we haven’t figured out the language yet for what it means to do no harm. But that is also the exciting part; we are still figuring out how alpha is generated in ESG 52:00 Building concentrated portfolios gives us the freedom not to own everything 58:00 Diversity ETFs; do they capture it? 1:01:00 What are some lessons that you had to learn the hard way?

Daniel Grioli is the voice behind many of our podcasts, but he is also a professional investor and adviser himself. Having worked within Australian pension funds, in his last capacity as deputy CIO, Daniel understands the issues institutional investors are facing. In this podcast, [i3] Insights editor Wouter Klijn delves into these issues, not only from an investment point of view, but we also address organisational challenges and behavioural ones. Overview Daniel Grioli podcast: 2:00 Who is the MarketFox? 7:20 Do you still find psychology applicable in finance? 11:00 Is swearing off emotions entirely a good idea? 13:00 Emotions and decision making 15:00 Institutional investors are far too focused on optimising 17:00 Attributes of good investors. 18:00 Self-awareness and group awareness 21:00 Starting a business out of frustration 25:00 Technology allowed me to start a business in a way I couldn’t 10 years ago 26:00 Optimisers are very sensitive to the assumptions you put in, so you get the answer that you want. 27:00 Too many marginal positions. 31:00 Finding a clients edge. An example in the property market 34:00 Risk appetite is context dependent 37:00 Managing expectations 40:00 Tips for investors in institutions and for entrepreneurs wanting to start their own advisory business 47:00 Asset management progresses one funeral at a time.

Gus Sauter is the former Chief Investment Officer of Vanguard for 10 years and was instrumental in the company's venture into exchange traded funds. He talks to [i3] Insights editor Wouter Klijn about his early career, Jack Bogle's questioning of ETFs and his current role as adviser to Australian pension fund Sunsuper. Podcast overview Gus Sauter: 1:00 You started a bank at age 8, is that true? 3:00 Then a goldmine in your 20s? 4:20 Gold is an Armageddon type of investment; if the world collapses, gold is probably going to be fine 5:50 My first stock 6:30 I’ve had the active vs passive debate literally thousands of times and ‘no’ I’m not tired of it. 7:00 Passive is a good investment strategy, but it is never going to be top performing in any given year 9:00 I’m not totally on board with the efficient market hypothesis 10:00 Why indexing works 12:00 But does the market capitalisation method work in fixed income, where you skew to the most in debt entity? 14:00 Over time, markets have become more efficient, compared to the 1980s. 15:00 Did Jack Bogle cut his holiday short to find out why you were adopting ETFs? 16:00 Jack disagreed on ETFs 17:00 The crisis of 1987, and the subsequent redemptions from mutual funds, shaped my thinking on ETFs 19:30 Is there more institutional takeup of ETFs in the US, than there is in Australia? 20:00 ETFs are not a product; they are a way to distribute index funds. 21:00 Not a fan of smart beta 27:00 You don’t think there is necessarily a correlation between GDP growth and stock market returns? 28:30 You can take a great firm and make it a lousy investment by overpaying for it and visa versa 31:30 Working with Sunsuper 33:00 Do you see a lot of similarities or differences between the issues that investors in the US and Australia grapple with? 35:00 Should pension funds in Australia be more dynamic in their asset allocation? 37:30 What have you learned from past crises? 42:00 Jack said: “One day indexing is going to be really big and we’ll have US$ 10bn in assets” We now have US$ 4 trillion.

Simon Russell is a specialist in the area of behavioural finance and decision making processes in asset management. He is the author of the book: 'Cyborg – How to Optimally Integrate Human and Machine Investment Decision-Making'. In this podcast, he speaks with Daniel Grioli about psychology, how to deal with noise and gaps in our understanding of behavioural finance. Overview Simon Russell podcast: 1:00 min: How did you get started? 4:30 min: I decided to try to bring together what we are doing in finance and what we should be doing [according to academic research] 7:30 min: How did your background in psychology help you interpret what went on around you in investing? 9:00 min: Most managers don’t outperform the market, but our ability as asset consultants to pick them was pretty poor as well. 14:00 What did people most wanted your help with in terms of behavioural finance? 16:30 Nudge 10 per cent of a large super fund with a million members, that is a lot of members that you can influence. 18:30 Behavioural finance is the study of how people make financial decisions. 21:00 An approach to behavioural finance can be split out in three elements: Normative, descriptive and prescriptive. Normative is what you should be doing, descriptive is what you are doing and prescriptive is when you are restricted in what you can do. 24:00 How do you help people move through these stages? 26:00 How to deal with noise 30:00 You are what you eat, so if you consume daily financial news you might become a short term investor 31:00 Group decision making 33:00 Anchoring is not mitigated by group interaction, if all of the group is exposed to this anchor. 35:00 Decision making and board environments 38:00 On using decision journals 44:00 Cyborg, the book 49:00 Humans are predisposed to see changes; quantitative methods do not 52:00 Negotiation research says that we just don’t take enough of other people’s perspectives into account 56:00 Banking Royal Commission and Psychology 1:00:46 How decision making works in large organisations 1:03:00 There are not just financial incentives that people are sensitive to. 1:05:00 Gaps in how people use behavioural finance 1:18:00 Discussion behavioural psychologist Gary Klein 1:20:00 James Montier 1:22:30 Three things investors can do to improve decision making

Paul Castran is a Senior Consultant with Australian real estate firm Castran Gilbert. He is a veteran of the industry, having conducted over 2,000 auctions. In this frank interview, Paul looks back on his career, the Australian real estate market with its ups but also its downs and answers some tricky questions about the business, including about underquoting, starting auctions below the reserve price and tips on how to deal with banks and whether to renovate before selling. Paul Castran podcast overview: 3:30 What was real estate like pre-internet? 5:30 Getting my first crack at real estate from Jeffrey Sutherland 8:00 Buying my first shareholding in a real estate business 10:00 The most expensive property you ever sold? 12:00 Considering the horrible set of economic circumstances, what was it like to sell property in the 1990s? 13:00 The 1987 crash 16:00 Only people with real money saw very strong capital growth 16:30 Was there ever a moment that you thought this the end of my career in real estate? Many! 17:30 Every tenant I had went broke, bar one. 19:30 What have you learned from that period? 20:00 Don’t deal with just one bank 22:00 Play the game as hard as the banks play it. 25:00 Is there such a thing as THE property market? 26:00 How do you value properties? 35:00 When do you not use comparable sales? 45:00 Are council site valuations any guide on what your property is worth? 48:55 How do you make money flipping houses in Australia? 52:00 Busting property myths: foreign buyers 55:00 Auction tactics. 1:01:00 In the current market, wait for the auctioneer to say: ‘It is on the market’. 1:04:00 How much below the vendor’s reserve do you start? 1:07:00 You can’t trust the numbers. 1:09:00 Can you tell which suburb is the next up and coming one? 1:15:00 Underquoting, does that still happen? 1:18:00 Does staging a property make a difference? 1:21:30 Does a renovation add value or just over-capitalises the property. 1:26:00 Lessons learned the hard way.

Richard 'Rich' Pzena is the founder and Chief Investment Officer of Pzena Investment Management, a value-style investment firm. Unlike what some investors believe, technological disruption is not destroying value-style investing, but is creating opportunities for them, Rich says. This because history tells us that ultimately it is the incumbent that benefits from innovation, not 'the next guy on the block'. Rich Pzena podcast overview: 2:11 My father was a value investor until, 25 years ago, he became convinced electric cars would take over the world 3:30 Trying to recreate Benjamin Graham’s work from ‘The Intelligent Investor’ 4:30 But we didn’t have unlimited resources, so we limited our research to stock starting with the letter ‘A’ or ‘B’ 5:00 There is never a reason to buy things full price 6:30 Is the fact that the value premium is easy to measure today has affected its effect? 8:00 The issue with value is not measurement; it is human nature. 11:00 Taking a detour in the oil industry 13:00 Crazy valuations in the oil industry in the 1980s. 16:30 As a sell-side oil analyst I learned the difference between having the data and guessing the data. 19:00 Switching to establishing a small cap portfolio 21:00 I saw what happened when you went from a boutique manager to a multi-billion dollar manager. 25:00 Did you ever made stuff up as a sell side analyst? 28:30 Highly engineered statistical (quant) models can’t possibly work 29:50 Value is not a factor; price to book is a factor. 32:30 Value is behavioural. 36:00 Comparing our process to a simple, low price-to-book model 37:00 Leaving Sanford C. Bernstein 42:00 Joel Greenblatt told me to exclude the bottom third worst return on equity businesses and I was shocked at the result. 45:00 Regression to the mean is just human behaviour: people don’t want to believe that management can fix the problems. 46:00 Value is created when you don’t know what is going to happen. 48:30 Value cycles happen because everyone adopts the same opinion on the market. 52:00 Disruptive technologies have always been around and most of the time it is the incumbents that benefit. It is not always the new guy on the block. 55:00 Tesla’s decision to make cars was a dumb idea. 57:00 The next opportunity is the market’s obsession with the next financial downturn. 1:00:00 Which lessons did you learn the hard way?

Geoff Warren is Associate Professor at the Australian National University and a former asset manager. He has done extensive research on equity fund capacity, insourcing asset management functions and investing for the long term. [i3] Insights editor Wouter Klijn speaks with Geoff about is past and upcoming research. Overview Geoff Warren podcast: 2:00 Why switch from a well-paid investment job to a career in academia 2:30 Students managing real money 4:00 Research into long term investing 5:30 As a long term investor, should you sell an asset that you have held for a short time, but that has gone up massively in value? 7:00 Agency problems are a big issue in long term investing 8:50 The problem with the long term is that it is the long term and so it won’t arrive for a long time 10:30 You can’t judge purely on performance numbers; you’ve got to go deeper. 13:30 Momentum can be a long term strategy 14:30 Moving asset management in-house 16:30 Most funds started doing in-house management in small part of their portfolio 17:00 When boards get too comfortable with in-house management that is the time we should start worrying 23:00 How style affects capacity 24:00 Looking at Investors Mutual data 26:00 Are there hard limits on capacity? 27:17 Capacity is lower than the headline alpha number suggests 29:00 New research looks at retirement strategies, using a utility-based approach 31:00 Mean-variance optimisation doesn’t work when you look at retirement solutions 35:00 You need to understand the individual investor first before you can apply a utility function 40:00 Upcoming research

In this podcast, MarketFox columnist Daniel Grioli speaks to John Coombe, executive director with asset consultant JANA. John is one of Australia’s most respected asset consultants, advising some of the largest pension funds in the country. He is known for his outspoken, but always insightful comments and this time is no different. He speaks about the impact of Choice regulation on the end beneficiary: "Choice by its very nature takes the asset allocation decision away from trustees and puts it back onto the individual investor". On UK consultants, who face intense regulatory scrutiny, he says: “Throw them in the Thames and let them all drown”. And on assessing fund manager returns: “90% of returns are driven by a manager’s investment philosophy”. He also gives tips to fund manager startups on how to engage with consultants and funds. Strap yourself in for a roller coaster ride! Overview John Coombe's podcast 3:20 Got a job in superannuation, because I was the only one who knew how to use a PC 4:30 Spent most of my early days selling equities, because the market was so rampant. 6:30 Meeting some of the great investors two days after the '87 crash 9:00 Backing start-up fund managers 10:30 What went wrong with those managers that didn't make it? 17:00 The biggest asset allocation call in the firm's history 18:40 Shifting 15% out of equities into property 21:23 Allocating nothing to US equities 29:00 If 95% of risk is due to asset allocation, then why do we spend so much time on manager selection? 32:00 Never bet against the central banks 36:00 Do consultants add value? 40:00 Regulatory scrutiny of consultants; “throw them in the Thames and let them all drown” 45:00 Consulting is about making educated guesses. 49:00 Consulting is relationship management; don’t kill it with being dogmatic 53:30 90% of returns are driven by a manager’s investment philosophy 58:30 There was a ton of money in hedge fund land being run on quant 1:01:00 Do performance fee ever make sense? 1:03:45 Tips for fund managers in dealing with consultants 1:08:00 Discussing the different consultant models. 1:12:00 Is consultancy getting too concentrated in Australia? 1:13:00 John’s tips for institutional investors 1:14:00 Are CPI targets set today achievable? 1:17:00 The biggest challenges for instos today 1:18:00 A word of warning

Tim Hodgson is Head of the Thinking Ahead Group, a pension and asset management think tank originally established by Willis Towers Watson with the aim to tackle some of the systemic problems within the industry. As it works towards creating better outcomes, not just for its clients but also for society as a whole, the group has tackled some big questions, including what the asset owner of tomorrow would look like, the future of the asset management industry and and how a long-term view can add to performance. In 2015, the group became a non-profit institute, led by Hodgson and Global Head of Investment Content Roger Urwin. The institute now has over 40 members, both asset owners and services providers. We talk to Tim about practical obstacles to long-term investing, cognitive diversity and the impact of automation, and how data is shifting the war for talent from portfolio managers to data scientists. Overview Tim Hodgson podcast 2:00 Why was the Thinking Ahead Institute established? 3:00 Do capital markets still work properly for pension funds to invest efficiently? 5:00 Today. markets are more of an exit strategy than a capital raising vehicle 7:30 Pension funds are not investing; they are collecting rents 9:00 If blockchain gets implemented in trading, do we need a distinction between public and private? 11:30 Is putting zero weight on impact (that companies might have) compatible with fiduciary duty? 13:50 Is this simply a way to bring a long term perspective into the discussion? 15:00 Value has a non-monetary component 16:20 Harvesting the long-term premium 18:40 Working with multiple time horizons 23:30 Most people are under-diversified in contingencies; it all depends on economic growth 24:30 How do manager strategies fit in with the total portfolio? 28:30 Cognitive diversity, any headway being made? “I would love to give you a positive answer” 29:00 We are hiring people from the same universities who have done the same degrees. What do we expect? 31:00 How long will we still have hand-build portfolios? 34:50 Big Data, will it have a significant impact on investing? 35:00 I know of one institutional investor who has existed long-only, active management completely. 37:00 The talent war has moved on to data scientists and coders.

MarketFox columnist Daniel Grioli sits down with Mike Cantara, Senior Managing Director, Global Client Group, at MFS Investment Management to talk about Environmental, Social and Corporate Governance (ESG) issues. Mike emphasises the importance of striking the right balance: "Companies that pay attention to material issues add value over time, but companies that pay attention to immaterial issues detract." Daniel asks a few of his trademark devil's advocate questions too. Mike Cantara podcast overview: 2:25 30 years ago non-US investing was quite novel in America. 3:30 I thought about becoming a priest first 7:30 When did sustainability become more explicit in your investment process? 10:00 Observations on clients’ journey in ESG 12:00 There are too many powerful trends to deny benefits of ESG 13:30 What changes have you seen in companies in sustainability? Lots of glossy brochures. 15:00 There is a lot of great data, but we need a framework to compare apple to apple. 17:30 Companies that pay attention to material issues add value over time, but companies that pay attention to immaterial issues detract. Companies should not be all things to all people. 18:30 Millenials and women will be driving force behind ESG investing. 20:30 Can technology play a role in people opting in or out of sustainable strategies? 22:00 ESG integration allows us to start off with an unrestricted universe. 24:00 The trend towards intangible assets is consistent with focus on ESG; they are long term, they are meaningful, but you can’t necessarily point to it on an income statement. 27:40 How does ESG translate into a stock call? 29:00 Negative ESG assessment can lead to higher discount rate and hence a lower valuation. 32:30 You can call it ESG, or you can call it something else; just don’t ignore it. 33:45 Playing devil’s advocate: asking the sceptics questions 36:30 ESG is not just about screening; there are opportunities here as well 40:00 What about sin stocks? They perform well. 47:00 Where do you draw the line? 48:00 The case of Boeing 51:30 The ESG of Tesla: E? Tick, S? Not so much. 54:00 Can you put a number on the impact of ESG on portfolios? 56:45 What were some of the harder lessons you learned as an investor? 58:55 Tip for good investing: write down why you own a stock and revisit this from time to time

Alva Devoy is Managing Director Australia for Fidelity International. Alva started out her career as a molecular engineer, developing vaccines, but the Iraq War made her change her mind about her path and she switched to asset management. She talks to MarketFox columnist Daniel Grioli about the business of asset management, robo advice and the quest for the retirement holy grail. Overview of podcast with Alva Devoy: 4:00 As a market strategist you are standing on quicksand. It is the most uncontrolled environment. 4:40 How does research in finance differ from that in science? 5:45 Started out as a pharma analyst. 9:00 As an analyst your models are your safety blanket 10:00 The real art is in finding the why behind the data points 11:30 Coming to grips with the perversity of markets 14:00 Mentors 15:30 Self-actualising; make sure you don’t neglect all the other aspects that make up you 17:00 Pulling information towards you is harder in Australia because of distance 19:00 The advantage of using the ebb and flow of labour in Australia to our advantage is incredible 20:30 When I got to Australia I thought I was going to be a hotshot, but the investment expertise in Australia is phenomenal. 22:42 What advice would you give for people in a leadership role? 24:30 Don’t transfer your view of success unto other people 26:45 You don’t become a leader because you are a subject matter expert anymore. It is about finding experts 34:00 What does a high-performance culture look like? 37:45 Pension funds should really approach investments from a total portfolio level 40:00 This bull run has felt miserable; no one felt confident 43:30 At what size does stock picking become irrelevant? 46:00 What is the problem with favouring boutique fund managers? 48:00 Within Fidelity we have different factories 48:45 Are fund managers just asset gathers? 50:00 Passive + active; but all ecosystems need to be in balance 52:00 The mix of active and passive is like cordial: the water is free and you add concentrate to taste 55:00 Will big tech companies enter asset management? 58:00 Selling today is a mix of product placement and client servicing. Product flogging is dead. 1:00:00 How many true partnerships could we have in Australia? Five. 1:01:00 Retirement; why don’t we see more innovation? 1:03:00 The relatively low impact from the GFC on Australia has kept risk appetites high 1:05:00 Fidelity hires former State Plus Head of Research Richard Dinham to design what retirement looks like for Fidelity 1:07:00 Risk profiling is dangerous. 1:09:00 Robo advice is great, but you do need outside expertise to make sure your investments point in the right direction 1:12:30 Three tips for better investment decision-making 1:16:00 You can’t legislate against human behaviour 1:17:00 If you don’t understand something, even if it is the next best thing, stay away from it.

Tadas Viskanta is among the first wave of successful investment bloggers, starting the Abnormal Returns blog in 2005. Rather than providing its readers with forecasts and other crystal ball-gazing exercises, Tadas focuses on education, writing about best practice in both investing and personal finance. MarketFox columnist Daniel Grioli speaks with Tadas about the early days of blogging, what it takes to write interesting material and how blogging keeps wealth management clients engaged. They also talk about how this blog ultimately led Tadas to join Ritholtz Wealth Management as Director of Education. Podcast overview: 5:00 starting out in the industry 7:00 How did studying at the University of Chicago, the bastion of the efficient market hypothesis, influence your thinking? 11:30 The early days of blogging 14:30 How long did it take for people to engage with your content? 17:00 Taking an educational slant 19:00 Doing this on a daily basis allows me to see the flow of information and how topics evolve over time 20:30 The idea that investors can bring their values to the markets is going to be increasingly a topic for investment 22:00 The debate about whether an ESG strategy will deliver the same or somewhat more than the market is besides the point. The behavioural aspect is much more interesting than the performance. 24:30 There has been much talk about the FANGs, but the way in how these technology companies change and shape our society is something that is important to stay on top off. 29:40 My position at Ritzholtz wealth management is really a function of the blogosphere. 30:30 What does Director of Education mean? 32:30 Treating social media as a monthly performance report. 33:00 Authenticity is the key to writing online. 35:00 Howard Marks of Oaktree was one of the first investors to write in this style, before blogs even existed. 40:30 The great financial crisis was what brought the financial blogosphere to the fore. We were all in the dark and the media started to look at bloggers that had first hand experience in mortgage backed securities. 43:00 We use the blog to update our clients daily on what is going on. They don’t have to wait for the quarterly performance report. 46:00 There is no one way to communicate with a client. 47:30 What things in your career did you have to learn the hard way? 48:30 What blogs do you recommend?

In this podcast, MarketFox columnist Daniel Grioli speaks with Research Affiliates founder and chairman Rob Arnott about his research into factors and addresses the criticism that AQR founder Cliff Asness had on his factor timing paper. He makes the case you certainly can time factors and that to sell out of value now, while it is the only factor that is cheap, seems not the best thing to do. He also believes that the industry will undergo significant change, but that machine learning is largely useless for long horizon investing. The three papers discussed in the podcast are: * How Can 'Smart Beta' Go Horribly Wrong? * Timing 'Smart Beta' Strategies? Of Course! Buy Low, Sell High! * Is Your Alpha Big Enough to Cover its Taxes? 3:00 Considering Astrophysics 4:30 Was a quantitative approach unusual in the early days? 5:45 A lot of quant go wherever the numbers lead them 8:15 Shockingly often conventional wisdom turns out not to be true when you test it 11:55 Higher dividend is higher earnings growth 17:15 Buybacks are smoke and mirrors to disguise management remuneration 18:05 What risk premium is normal? 24:15 You will never buy a bargain if you never buy what is out of favour, what is unloved. 24:45 Get people of their fixation with past returns 26:43 The spread between growth and value is wider than historic average. This means either a new normal or that value is a bargain. 31:00 The small cap effect is driven by the 2 or 3 per cent superstar winners. 31:45 Discussing the war of words with Cliff Asness 34:00 People are pouring money into multi-factor strategies, because they are tired of waiting for value to work. 36:00 Low volatility is trading at a premium, whereas historically it has traded at a discount. And people think they have less risk…? 37:45 Four of the five factors are pushing you into an anti-value direction 39:55 When momentum is chasing these bubble stocks you are slightly more likely to have a crash in momentum 42:00 If you must invest in the US, have a defensive stance 48:00 Those who say that factor timing doesn’t work, just have not done their homework 50:00 The big failing of the quant communitie is that we view everything as a signal, instead of viewing it as an asset 56:30 Talking ETFs 58:45 My next paper with Cam Harvey and Harry Markowitz looks at how you can screw yourself up with quantitative methods 59:55 Any research is data mining, but not all data mining is research 1:01:15 The quant community is engaged in performance chasing without realising it, for the most part 1:01:30 Start with a principal, start with a hypothesis, then test the hypothesis. Don’t go back to the same data again and again and tweak the process. 1:02:30 Machine learning is going to be useless for long horizon investing 1:08:10 The Future of the Financial Industry and discussing zero fees

In this [i3] podcast, we take a look at India. [i3] Insights editor Wouter Klijn spoke with Mugunthan Siva, founder and managing director of India Avenue Investment Management, about the Indian economy, what Modi’s reforms mean for institutional investors and changing attitudes towards ESG issues. Siva spent a large part of his career as an asset allocator with the investment arm of Dutch bank ING and later at ANZ. He has a unique view on the opportunities but also challenges that India presents. Podcast overview: 3:30: Why set up a single country fund? 5:00: With India it is a bit more difficult to determine the direct relation with Australia, as we can with China 6:30 Modi reforms, what do they mean for investors? 8:00 What mobile technology means for financial services in India 10:30 What does the introduction of GST mean for interstate trade in India? 12:00 Foreign investments and work for the young population of India 13:00 Urbanisation will see a shift to a more organised economy 14:00 Made in India 15:30 Infrastructure projects in India and land and labour reforms. 16:30 Spending US$ 1 trillion on infrastructure 17:30 Indian stock market consists of US$3trillion and 6000 companies, yet only 200 stocks are covered by brokers 20:00 What is your favourite stock in India? 22:30 Indian banking sector. 24:00 The new bankruptcy code will address bad debt problems among the banks 25:00 India’s IT sector 26:30 Buying Indian IT stocks is not an India play; 90 per cent of their revenues come from overseas 27:30 Large distances has caused a speedy take-up of e-commerce 28:30 ESG and governance in India 31:00 Attitudes towards environmental issues: plastic

Former Future Fund Chief Investment Strategist Stephen Gilmore has had a career that is both impressive and dramatic, dealing with warlords in Tajikistan, working at AIG during its bail out and finally at Australia's sovereign wealth fund, the Future Fund. MarketFox columnist Daniel Grioli asks for his insights. Overview of Stephen Gilmore Podcast: 2:20 You started your career in academia, why did you leave? 4:00 A one way ticket out of New Zealand 5:00 Working for the IMF after the Soviet Union broke up 8:00 On to Tajikistan 11:30 Surrounded by warlords 14:00 Inflation at 2000% 15:00 Moving to Morgan Stanley, dealing with the Russian bonds defaulting 19:00 The investment process needs to be collaborative. You don’t know who has got the right information. 20:00 Working at AIG when it needed to be bailed out 27:00 The bailout ended up making a lot of money for the US Fed 30:30 Some of my colleagues received death threats and had to go into hiding 31:50 Did reliance on quantitative techniques add to troubles for AIG? 34:30 Joining the Future Fund. After the AIG experience it was important to have a role with some meaning 38:30 Keith Ambachtsheer said the Future Fund is missing out on not internalising asset management. What do you think? 40:00 What is important is that you don’t pay fees for things that are easy to do. 42:00 Should the Future Fund manage all of Australians’ superannuation money? 44:00 Future Fund’s cash holdings 46:45 The benefits of a total portfolio approach 48:00 The challenges of this approach: everyone thinks differently 57:00 Bottom-up in addition to top down approach 1:02:25 The flipside of scale; sometimes you are just too large to take advantage 1:06:00 Where to now for Stephen Gilmore? 1:07:00 Lessons learned and tips

After successfully founding several businesses of which comparison website Finder.com is probably the most well-known, Fred Schebesta immersed himself in cryptocurrencies to see what all the fuss was about. He realised that the crypto space had many similarities to the early days of ecommerce and now runs a crypto exchange called HiveEx and is planning to launch an Australian crypto bank. Overview of podcast 1:30 Are cryptocurrency a store of value or an investment? 3:41 Cryptocurrencies are not correlated to anything 5:10 How do you determine the value of a cryptocurrency? 5:30 You have to look at the tech as well 6:00 Equities are just as much removed from their intrinsic values 8:00 How great is the danger that many of these cryptocurrencies become obsolete? 10:30 The RBA says we already have digital money. Why do we need cryptocurrencies? 11:35 A bank run is not possible with cryptocurrencies, because you own your own money 15:00 You look at technology that is 9 years’ old and you expect it to do what a bank has done for hundreds of years. That is short-sighted. 18:43 You have Ethereum miners in your office. Why? 20:00 Do Millennials understand cryptocurrencies better? 23:00 People that have made money with cryptocurrencies, to what degree were they just lucky? 23:50 Bitcoin is illogical. 24:00 Smart contracts will put pressure on law firms. 28:00 Is the move away from cash the logical extension of cryptocurrencies? 31:30 You are launching an Australian crypto bank? 35:00 People think this is the great bubble in crypto, but there have been six bubbles already.

Alex Waislitz is the founder and Chairman of Thorney Investment Group, one of Australia’s most successful private investment groups. After being lent $1.15 million, he went on to invest in micro and small caps and ultimately gathered a fortune of $1.39 billion. In this interview, Daniel Grioli takes Waislitz back to the start and dissects how he went about creating his wealth. Waislitz discusses the trappings faced by investors and also has some advice for startups looking for capital. Overview: 3:00 Receiving my first dividend cheque 6:00 Keep your alternative options alive 9:00 Lessons learned from Richard Pratt 14:00 I like the business of business 16:00 If you dream big, you achieve big. 18:00 Turning $1 million into $4 million 21:45 Constructivism; being activist in a non-hostile way 26:30 What is your investment philosophy? 34:30 Determining position sizes. 37:30 Many fund managers cut their profits too early 46:00 Not all small cap companies are inherently risky 48:00 Capacity in a micro cap strategy 50:30 Fairfax and activist investing 54:15 Future of traditional media 57:00 Tailor-made newspapers 1:00:30 Investing in the future is not for everyone 1:02:00 Disruption has never been easier 1:06:00 Facebook and privacy on the internet 1:07:30 What advice would you give startups looking for capital? 1:10:00 Best and worst investments 1:16:30 The luck factor

Rob Prugue is probably known best for his 15 years at the helm of the Asia-Pacific business of fund manager Lazard Asset Management. A role he left at the beginning of this year to ‘hang up his boots’, as he called it. Before Rob joined Lazard, he spent time at pension fund SAS Trustees amongst other roles and at this pension fund he was part of the internal investment team. He witnessed first hand how the pension fund decided to outsource its asset management functions as it felt it was doubling up on risk. Considering that many Australian pension funds are now moving towards inhouse management Rob has a unique view on this trend. We will also speak about Rob’s efforts in reducing the stigma around mental health. He is the founder of People Reaching out to People, or PROP, which has set up a short educational program that gives free guidance on how to interact with people who have potentially suicidal thoughts. For more information, please visit www.prop.org.au 4:00 Taking a sabbatical trip and volunteering in an elephant sanctuary 5:00 Starting in the investment industry 8:00 A government job will through you in the deep end much quicker than Wall Street 9:00 Joining 3 months before the ‘87 crash was a great entry 11:00 Crisis times is when only the big boys play 13:30 The reality of investment is that information is asymmetrical 15:00 I’m the poster child of internalisation 16:00 SAS Trustee’s decision to get out of in-house asset management 18:00 The cost savings from internalisation, while valid, is also an agency risk 21:00 Internalisation might solve some capacity problems, but introduces a range of other risks 21:45 There is no such thing as passive; you’ve made an active decision 24:00 How do you deal with the people aspect of internalisation? Firing teams can be tougher than terminating a mandate 25:00 Not once have I come across a statue of a fund manager 26:00 You want a manager that has been bloodied three times 27:00 Buying into Flight Centre 29:00 Building the Asian business of Lazard 31:00 Should you never internalise? 31:00 Industry fund no longer exist; they are mutuals 36:00 Longevity insurance 38:00 Suicide awareness and People Reaching out to People (PROP) https://prop.org.au/ 45:50 Be aware of the difference between empathy and sympathy 48:00 Emotional intelligence and mental health 50:00 Is the hyper-masculinity of the investment industry exacerbating mental health issue? 53:00 The PROP educational series

In this podcast, MarketFox columnist Daniel Grioli speaks with Sue Brake, Senior Investment Consultant for Willis Towers Watson, about the importance of governance in asset management and the real cost associated with bad governance. Daniel also manages to get Sue to play a game in which he asks her to respond to quotes by David Swensen, CIO of Yale, about asset consultants. Overview of podcast with Sue Brake 2:00 Changing careers, from banking to investing 3:30 Banking is about implementing smart mathematical solutions, while investing is about effective decision making 5:00 Executive retreat told me that there is no winning 8:00 Embrace the mess; there is no straight line to becoming a president or CEO 9:30 The longer you are in the market, the more you realise that humility is good. 10:10 Failure is result of process not people 11:30 Being smart doesn’t get you the whole way, you have to be curious and humble 12:00 Founding my own gourmet food company 14:00 Fortuitously I sold the company in 2007 16:00 Working at New Zealand Super 22:00 The reference portfolio is a governance tool 25:00 Simple reference portfolio beats most Australian pension funds 26:00 The reference portfolio can show you the difference between good governance and poor governance 27:30 Why does currency matters? 29:00 You have periods where currency fluctuations really can make or break you. 31:00 Is being far away from financial centres a positive or a negative? 34:30 Working at the IMF 38:00 What aspect of investing are universal? 39:00 Boards are like the Little River Band: there are no original members 40:00 Organisational efficiency 42:00 Investment cultures that have a competitive edge 44:00 Putting a price on governance 45:30 Less than 2 per cent of pension funds get the AAA rating for governance 46:00 The 12 factors of good governance 47:00 ADD LINK OF CLARK AND URWIN PAPER ON 12 FACTORS 50:00 Changing nature of asset consultancy 53:00 Are asset consultants gatekeeper? 54:00 Does the ownership of a consultant matter? 56:00 Do consultants need more skin in the game? 58:00 David Swenson says, Sue Brake answers

Investment consultant and MarketFox columnist Daniel Grioli speaks with Mike Aked who has just established the first Australian office for Research Affiliates in Melbourne. Mike speaks about the reasons behind coming downunder, asset allocation issues and responds to criticism from quant investors on the CAPE ratio. He also discusses the importance of simplicity over complexity. 5:00 Cultural differences in investing 8:00 Working with Gary Brinson 14:00 Create a resolve during good times as a buffer for bad times 18:30 Why copy the endowment model? 20:00 Avoid the bankruptcy of the decision-making process 23:00 Is a strategic asset allocation a useful tool? 30:00 Whatever you do it won't be perfect. 35:00 Research Affiliates to release more short term views 38:30 In positive climate, more momentum; in negative more value 41:00 On sizing positions 46:00 CAPE ratio and its criticism 53:00 Are factors getting more expensive? 58:00 Simple is not easy; it is a step beyond complexity 59:00 Much of complexity does not add any value 1:05:00 Managers give protection against uncomfortable investing

Corey Hoffstein is the co-founder and Chief Investment Officer at Newfound Research, as well as an ETF Strategist. Hoffstein and his colleagues have produced some of the more innovative research papers in recent years, venturing into debates such as using style factors at a sector level, combining leverage and trend-following to reduce the scope of drawdowns and admitting that investing will often be frustrating and always risky. Hoffstein's motto therefore is: 'Risk cannot be destroyed, it can only be transformed' Corey Hoffstein podcast overview: 1:45 Mount Rushmore of Quants: Would you put Asness and Arnott together? 5:30 I thought that I would make a living programming computer games. 7:30 Father’s financial planner introduced Corey to financial data. 9:00 First journey into quant data methods: rediscovering value and quality 12:30 Pointing fingers at each other for who is responsible for risk 14:00 But it is not simply about passing the risk buck. 16:30 Catastrophe is the result of tiny mistakes compounding 19:30 For us risk management is the mitigation of drawdown 20:00 Most financial plans don’t assume to outperform the market. Alpha is the gravy on top 22:00 Style-factors can be used at the sector level as well to manage risk 23:00 Is momentum market timing? 25:30 Risk cannot be destroyed, it can only be transformed 26:00 Trend-following can really help you cut out those really nasty left tails 30:00 When the market whipsaws, you pay a very high premium for trend-following 34:00 Application of trend-following in retirement portfolios 36:00 Review of the 4% rule in retirement planning 37:30 But at today’s yields, if you use the 4% rule your risk suddenly skyrockets 38:00 Retirees today will have to allocate to asset with which they feel uncomfortable 40:00 Weaknesses of a quant approach: where are you embedding your biases? 49:00 To proof that a risk premium has disappeared might take longer than the lifetime of a typical investor. 50:00 Similarly, if a factor doesn’t work for 10 years that doesn’t mean it has disappeared 57:00 Looking in a rearview mirror, diversification is always going to disappoint. But without a crystal ball, we don’t know which approach is going to outperform. 58:00 Dealing with concentrated markets. 1:03:00 Investing is like cooking; ingredients are important, but so is the recipe. In asset management we focus too much on the ingredients. 1:04:30 Are smart beta strategies becoming too crowded and get arbitraged away? 1:09:00 A real anomaly must by definition be hard to follow. If it was easy, everyone would do it. 1:10:30 It also means that an active strategy that works, must have its days of underperformance 1:11:00 If you are going to have an active approach, you should be prepared for a frustrating experience 1:13:00 Can we time factors? Well maybe, but it is just going to compound frustration. It is better to take a few approach that you understand and belief in and then diversify 1:16:00 A mandate to a manager should be an allocation, not a trade 1:17:00 We spend a lot of time talking about alpha, but for most people alpha is not part of their retirement plan 1:19:00 There are certain strategies that benefit from a human touch, because there are too many degrees of freedom for a computer to deal with. 1:21:00 Taking a ‘quantamental’ approach

Australia is unique in the sense that pension funds pay tax on their investment earnings. Yet few funds look at how they can maximise after-tax outcomes. MarketFox columnist Daniel Grioli speaks with Raewyn Williams, Managing Director of Research at Parametric, why it is important to give this area the attention it deserves and also addresses a few taxation myths, including the tax efficiency of passive investing and the role of it in the take-up of exchange traded funds. Overview: 6:00 Funds find after tax outcomes interesting but are slow to put money behind it. 7:20 Capital gains tax 8:00 Australian equities managers sometimes sell a stock a week before the 12 month holding period where capital gains tax outcomes are much better 12:00 How Parametric realised Australian funds pay tax 18:00 Factor investing: investors feel they have to put their neck on the line, because there is no manager to fire. Blame Culture. 20:00 The biggest problem with innovation is not ideas, but resourcing. 22:00 Disadvantages of scale is it is harder to take up new ideas, to be agile 23:00 Smaller funds should take on board the gift of being more able to take on new ideas 31:00 Passive investing is tax efficient: true or false? 37:00 Should super funds be segregating assets in the pension phase? 44:00 The only innovation in retirement has been flexibility, nothing about income streams. 45:30 ETFs, is there more institutional uptake in US because of tax? 47:30 Loss harvesting in the US through ETFs. 50:00 Centralised portfolio management, does it make sense? 52:30 CGT can’t be managed effectively at the individual manager level. 58:30 Adverse selection risk when looking for managers that share their intellectual property 1:09:00 How do you address concerns that you might use manager IP in centralised portfolio management? Centralised portfolio management is not emulation. 1:14:30 Don’t be obsessed by lowering fees. New expertise comes at a cost.

In this podcast, MarketFox columnist Daniel Grioli speaks with Global Macro investor Brian Singer about his time working for Gary Brinson, his views on mean reversion, the essence of dynamic asset allocation and the attributes of a good investor.  Brian is the Head of the Dynamic Allocation Strategies Team at William Blair. Singer was the former head of Global Investment Solutions and Americas Chief Investment Officer for UBS Global Asset Management. In 1991, Brian co-wrote a landmark update to one of the pioneering studies on asset allocation, ‘Determinants of Portfolio Performance II: An Update,’ with Gary Brinson and Gilbert Beebower. Overview: 4 min: No one wants diversification when markets are going up. 7:30 min: Joined Brinson Partners 8:30 min: What was it like working with Gary Brinson? 10:30 The importance of collegiate arguments and the ability to express dissenting views without ramification 12:30 Arguing as a form of passionate debate 13:30 Brinson’s study is one of the most misquoted papers of all time. It is about the variation of return, not return itself. 17:30 Most portfolios have only 2, 3 or 4 bets in it and you can find them with principal component analysis 24:00 Factor-based portfolios are active, but they are compulsory. I rather not be compulsory 26:30 Asset allocation is something that is meant to meet long-term objectives, not to achieve something this week. 32:30 The person with the shortest investment horizon in the value chain is the weakest link 33:00 When are dynamic decisions market timing? 34:30 The pendulum is swinging back to a macro focus, where asset allocation is thought of as important. 38:30 Is mean-reversion broken? 39:00 I’m not a fan of mean reversion investing, because it is investing based on the past. 39:30 The mean today is more like the period between 1900 and 1932. That is a more representative period in terms of a central banking and political environment 43:30 Dynamic Asset Allocation; is a 5 per cent shift enough to make a difference? 49:45 Dynamic risk capital allocation is about path, not about end result 56:30 The first thing of importance in an investment team is culture. You can’t dictate culture, it is something that emerges over time. 1:02:30 Boredom is a much bigger risk than compensation. While people will move for higher compensation, boredom is on the top of the list for people leaving. 1:03:30 Where does the role of an investment board or committee start and end? 1:06:30 Good investors have a voracious appetite for reading, not just newspapers, but more widely 1:09:00 Singer talks about a moment in his career when he had to change his mind, where at first he wasn’t convinced it was the right move.

MarketFox columnist Daniel Grioli speaks with Allison Fisch, a Portfolio Manager and Senior Analyst at Pzena Investment Management, about how you can apply a value strategy in emerging markets. Is it possible in the first place? Fisch believes so, but some adjustments are necessary to make it successful. Overview: 4:00 – Value investing is really all about psychology, the psychology of markets. 8:00 – Can you use value strategies in emerging markets? Yes, but with some differences. 11:00 – Country selection hasn’t mattered buch in developed markets, but in emerging markets it does 13:00 – Using quant tools to screen the universe. 15:30 – You are looking for companies that are sick and you want to know whether they are having a cold or whether they are terminal 16:00 The sweet spot is where there is something bad going on in a company, but they have the ability to recover from it. 17:00 – We look at the 20 per cent cheapest companies. 21:00 – We are in the worst cycle for value strategies. Is there something broken? 22:00 – The bigger the high, the worse the hangover. 25:00 – How do you deal with technology stocks in a value strategy? 29:30 – The biggest change in emerging markets in the last 10 years is the make-up of the market 32:00 – State-owned enterprises are trading at a discount. How do you get comfortable with these companies? 34:30 – Disruption and value strategies, do they mix? And the ‘Death by Amazon’ index. 35:30 – In emerging markets you don’t have incumbents, so it is just the disruptors getting more expensive. 38:00 – Today’s environment is like a bathtub; which company gets flushed down the drain? 41:30 – The moat of brand is not what it used to be.

Dr Jack Gray is an renowned academic, investment practitioner, teacher and investment philosopher. He was previously Co-Head of Asset Allocation at GMO Boston, having worked with GMO between 2005 and 2008, and prior to that between 1998 and 2003. He was also previously Chief Investment Officer at SunSuper, one of Australia’s largest Superannuation funds, and an Executive Director at AMP Asset Management. He speaks with MarketFox columnist Daniel Grioli about the difficulty of explaining probabilities and the limitations of mathematics, his days at GMO and working with Jeremy Grantham; and finally, Artificial Intelligence and robo-advice. As usual, Jack speaks his mind, but always thoughtfully and knowledgeably. Jack Gray Podcast overview: 4 min: ‘You don’t need a lot of maths to be comfortable in investing’ 11 min: Discussing Gerd Gigerenzer on heuristics 12:30 min: Most people can’t handle probability thinking. In Latin there is no word for probability. 18 min: What would you have done differently? 19:30 min: The efficient market hypothesis was beautiful, but it didn’t make me a better investor 26 min: Days at GMO: ‘I was Jeremy Grantham’s handbag and that is okay’. 37 min: Neuroscience and biases: ‘We can’t control fear; you need to have brain damage to do that’. 39:50 min ‘Be patiently impatient.’ 40 min: ‘Investing is a bit like marriage; we get it about 50 per cent of the times right. 50 min: Increasing specialisation; how do you deal with it? 52:30 min: Factors: this is an industry driven by fashion, but not all fashions are bad. 53:50 min: Scale: on the administrative side there are some efficiencies, but on the investment side there are inefficiencies. 1:02 min: AI and advice: most parts of advice is routine. People are 80 per cent the same. 1:04 min: Building AI in the 1980s; I failed and learned the limitations of mathematics

Acclaimed business journalist and writer of the Wall Street Journal’s ‘Intelligent Investor’ column Jason Zweig speaks with MarketFox columnist Daniel Grioli about value investing in today’s world and tries his hand at answering the question: How would Benjamin Graham invest today? Short overview of content of podcast: 2:00 How did you get started in industry? 5:20 It is only when you talk to people about money when you really learn what they are about. 8:00 Jason's 2015 book, The Devil's Financial Dictionary’. It defines the entry 'day trader', as 'idiot'. He also lists 'data' as 'the raw material that Wall Street uses to build its fabrications on'. 13:30 Having more information is probably a social good, but makes the job of a long-term investor more challenging. 19:40 Facebook. Any successful organisation is somewhat indistinguishable from a religious cult. 28:30 ‘Your Money and Your Brain’, How did you come to write that? 35:00 The Intelligent Investor. Jason says his involvement was due to luck. 40:00 How would Benjamin Graham invest today? 46:00 Regression of the mean is still there, but we don’t see much sign of it. 50:55 Smart Beta might just work, at least as long as investors are too dumb to notice that it is working. 55:00 Robo advice. Will it help overcame human biases?

In this [i3] Podcast, MarketFox Editor Daniel Grioli speaks with quantitative investor James P. O’Shaughnessy, Chief Investment Officer of O'Shaughnessy Asset Management, about the moment he realised a rules-based approach was the only route for him and the subsequent journey into factors that resulted in the best-selling book: ‘What Works on Wall Street’

MarketFox columnist Daniel Grioli speaks with Bob Maynard, Chief Investment Officer of the Public Employee Retirement System of Idaho, about different approaches to asset allocation, factor strategies and the magic of New Zealand Super.

Copper Rock Senior Portfolio Manager Denise Selden has been in the investment game for nearly 60 years, starting as a teenager for her uncle on Wall Street. Having just announced her retirement, she speaks to MarketFox columnist Daniel Grioli about her career and her passion: growth equities. But she also reflects on what it was like to work as one of the few women on Wall Street, at a time when women weren't even allowed to eat in the Wall Street lunchroom.

Fred Schebesta, internet entrepreneur and co-founder of Finder.com.au, talks about the future of online advertising, the impact of blockchain on businesses and the sense and nonsense of cryptocurrencies. Fred spoke at the Investment Innovation Institute's Equities & Equity Alternatives Forum 2018 in Sydney, Australia.