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”.