[i3] Institutional Investment Podcast

[i3] Institutional Investment Podcast

The Investment Innovation Institute [i3] is committed to better investment outcomes through education. This podcast focuses on institutional investors at pension funds and insurance companies. We cover topics such as asset allocation, portfolio construction and investment strategy. You can also subscribe to our complimentary newsletter at: https://i3-invest.com/subscribe/ read less
BusinessBusiness

Episodes

99: Global Equities with Janus Henderson
Apr 30 2024
99: Global Equities with Janus Henderson
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
98: Artificial Intelligence in Wealth Management
Apr 17 2024
98: Artificial Intelligence in Wealth Management
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
97: Talking Leadership with Felicity Walsh
Apr 2 2024
97: Talking Leadership with Felicity Walsh
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
96: T Rowe Price's Maria Elena Drew – Towards Net Zero Portfolios
Mar 5 2024
96: T Rowe Price's Maria Elena Drew – Towards Net Zero Portfolios
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
95: CAIA's John Bowman – Alternatives, ESG and TPA
Feb 28 2024
95: CAIA's John Bowman – Alternatives, ESG and TPA
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
94: ART's Andrew Fisher on Scale
Jan 30 2024
94: ART's Andrew Fisher on Scale
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
92: Benefit Street Partners' Mike Comparato
Dec 5 2023
92: Benefit Street Partners' Mike Comparato
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
91: Celebrating 20 Years of NZ Super
Nov 23 2023
91: Celebrating 20 Years of NZ Super
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
89: Michael Kollo on Artificial Intelligence
Oct 17 2023
89: Michael Kollo on Artificial Intelligence
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
87: Janus Hendersons' Thomas Haugaard – Emerging Market Debt
Aug 31 2023
87: Janus Hendersons' Thomas Haugaard – Emerging Market Debt
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
86: Deloitte's Craig Roodt – APRA, performance test and good governance
Aug 1 2023
86: Deloitte's Craig Roodt – APRA, performance test and good governance
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
84: Lighthouse Infrastructure's Peter Johnston
May 22 2023
84: Lighthouse Infrastructure's Peter Johnston
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
83: David Brown – Unlisted Assets and Cook Islands Super
May 2 2023
83: David Brown – Unlisted Assets and Cook Islands Super
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
82: ChatGPT_Machine Learning and Venture Capital
Apr 4 2023
82: ChatGPT_Machine Learning and Venture Capital
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
81: TCorp's Tanya Branwhite – Total Portfolio Approach and Diversification
Feb 28 2023
81: TCorp's Tanya Branwhite – Total Portfolio Approach and Diversification
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
80: Mine Super's Sean Anthonisz – academia, quants and loose graphs
Jan 31 2023
80: Mine Super's Sean Anthonisz – academia, quants and loose graphs
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