In episode 106 of the [i3] Institutional Investment Podcast, I speak with Craig Dandurand, Chief Investment Officer of the Tuckwell Family Office. Craig has an impressive career in the investment industry that spans time with US pension fund CalPERS and Australia's the Future Fund. We talked about his background in credit investing, setting up a hedge fund program and the world of private wealth. Enjoy the show! Overview of Podcast with Craig Dandurand 01:00 You initially worked in the legal profession. How did you get into investing? 02:00 Starting at CalPERS 03:00 The hedge fund team was the least bureaucratic part of a very bureaucratic organisation 06:30 What has changed in hedge funds compared to 20 years ago? They got more boring 10:00 During the GFC, I remember sitting in a coffee house writing something with a headline that said: ‘Capitalist Manifesto’, which is the kind of overblown thing you write in a coffee house. But it resulted in three key aspects we wanted hedge funds to focus on: alignment, control and transparency 15:00 CalPERS was at a scale that led some hedge fund managers not wanting to engage with us 16:00 The optimal size of an asset owner is probably between $5 - 30 bn. 20:00 What was most disorientating coming to Australia was my currency exposure 26:30 Learnings from the COVID-19 crisis 29:30 To do a total portfolio approach well at a large asset owner is an incredible labour intensive exercise 32:00 The Future Fund had a clear investment target, but when you join a family office you need to find out what their needs, values and desires are (pardon the thunder in the background). Before you can invest the money, you need to know why you are doing it 34:00 Graham Tuckwell invented the gold ETF and, therefore, has a good understanding of how markets work 35:30 The concept of ‘ten ETFs and a 9 iron’. Often people confuse complexity for quality 42:00 Catering to different needs and life stages within family offices 48:00 I’m a credit junkie and that probably comes from being a bankruptcy lawyer 49:00 I find the growth of private credit over the last few years fascinating and slightly unnerving 53:00 Best and worst investment: investing in Worldcom bonds

In episode 105 of the [i3] Institutional Investment Podcast, we speak with Jessica Sclafani, a Global Retirement Strategist with US fund manager T. Rowe Price, which manages $1.6 trillion in total assets on behalf of clients. Retirement is a more complex phase than wealth accumulation and it needs a more sophisticated approach to deliver good outcomes. Sclafani discusses a 5 dimensional approach to retirement and the tradeoffs that come with choosing a suitable approach Overview of Podcast with Jessica Sclafani, Global Retirement Strategist, T. Rowe Price 01:00 How does one become a global retirement strategist? 04:30 The 5 dimensional retirement strategy is based on the research of Berg Cui a senior quantitative investment analyst in the Multi-Asset Division of T. Rowe Price 05:30 The 5 dimensions of retirement 07:30 To benefit from any of these attributes, you are going to have to compromise on at least one of the other four. So tradeoffs is something that we are going to talk about a lot 10:30 Traditional risk/return tradeoffs don’t work well in retirement. Here is an example. 13:00 Our research showed that out of 2500 respondents, maintaining quality of life was their top ranking concern 14:00 Longevity risk and the risk of sudden portfolio depletion are not the same thing 15:30 When investing for retirement, people are not just focusing on returns 18:00 People in the survey ranked volatility as the least important. Is that a financial literacy issue? 23:00 Guaranteed income streams are not very popular. What is your take on these products in retirement? 24:30 We tend to talk a lot about guarantees, but we don’t talk a lot about what people have to give up for that guarantee 25:00 Our research found that people are willing to give up 6 per cent of their income to go from knowing that their savings would last them until age 100 to having a guarantee for life 28:00 Does A.I. offer a solution for mass-customisation of retirement products? To read the T. Rowe Price paper, 'A five‑dimensional framework for retirement income needs and solutions', please see here: https://www.troweprice.com/content/dam/gdx/pdfs/2024-q3/a-five-dimensional-framework-for-retirement-income-needs-and-solutions-apac.pdf

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