The interruptions to work and the revolution of technological tools in 2020 have changed the way investors assess products, fund managers and stocks. What technological tools are investors using in a remote environment including more innovative ways to do due diligence? What behaviours and processes have changed because of COVID and lockdown?
Rick Di Mascio joined the British Coal Pension Fund in 1979 and eventually held the joint roles of CIO and CEO. At that time the fund was one of the earliest adopters of a strategy that later became known as LDI. His career included spells at Goldman Sachs Asset Management, and an early European long / short hedge fund, Olympus Capital.
In 1998, di Mascio launched Inalytics to provide objective empirical measures of how fund managers generate alpha. Inalytics’ clients include some of the world’s largest and smallest fund managers, sovereign wealth funds, and pension funds. Di Mascio has co-authored a number of academic papers, including: ‘Selling Fast and Buying Slow: Heuristics and Trading Performance of Institutional Investors’ and ‘Alpha Decay’.
Dev Jadeja leads LPP Investments’ selection and monitoring of external fund managers, working closely with the broader investment team and reporting to chief investment officer, Richard J Tomlinson.
Jadeja works across all the asset classes in conjunction with LPPI’s specialist portfolio management teams and is the functional lead for all external manager investment due diligence.
Jadeja joined LPP Investments from Cardano Risk Management, where he was deputy lead for the manager research team. Prior to that, he held senior research and portfolio management roles at International Asset Management, Key Asset Management and Old Mutual Asset Managers.
Luba Nikulina is global head of research at Willis Towers Watson’s investment business providing investment advisory and fiduciary management services to institutional investors around the world.
Her primary responsibilities are: pure investment (ensuring the quality of research and investment decisions as well as responsibility for the ultimate performance of client portfolios), business management (new products and services, team management, efficiency, resourcing) and working with some of the largest asset owners globally advising them on their governance structures, strategy, portfolio construction and investment selection.
She started her career in 1996 in Russia and joined WTW in 2005 working both in the New York and London offices. Nikulina attended the Advanced Management Program at Harvard Business School and holds an MBA degree from London Business School, a MS in Finance from the Finance Academy in Russia and a BA in Linguistics from the Linguistic University in Belarus. She has also completed the Financial Times non-executive director program in the UK.
Tate has been an investment industry media publisher and conference producer since 1996. In his media career, Tate has launched and overseen dozens of print and electronic publications. He is the chief executive and major shareholder of Conexus Financial, which was formed in 2005, and is headquartered in Sydney, Australia. The company stages more than 20 conferences and events each year – in London, New York, San Francisco, Los Angeles, Amsterdam, Beijing, Sydney and Melbourne – and publishes five media brands, including the global website and strategy newsletter for global institutional investors www.top1000funds.com. One of the company’s signature events is the bi-annual Fiduciary Investors Symposium. Conexus Financial’s events aim to place the responsibilities of investors in wider societal, and political contexts, as well as promote the long-term stability of markets and sustainable retirement incomes. Tate served for seven years on the board of Australia’s most high profile homeless charity, The Wayside Chapel; and he has underwritten the welfare of 60,000 people in 28 villages throughout Uganda via The Hunger Project.
- A discussion on manager relationships via zoom finds positives and negatives in the new trend.
- All panellists agree that allocators have tended to stick with existing relationships through the pandemic making it difficult for managers approaching investors for the first time to form relationships and win mandates.
- Technology will play an increasingly important role in manager due diligence. Lockdown has made building manager relationships and trust more challenging.
- Pension funds struggling to carry out due diligence on managers without the ability to “look them in the eye” can use technology to provide a valuable new lens.
- Data plays a role by allowing investors to see from an evidence base where a mangers key strengths and weaknesses are.
- Human judgement calls have an equal weight in the investment process. A qualitative overlay is important, and most data is available in public markets making the use of quant analysis in private markets trickier.
- Asset managers availability has increased through the pandemic because travel has ended, increasing productivity. It is easier to set up meetings but remote meeting make it difficult to assess culture and other soft factors that shape investment decisions.
- Due diligence on hard assets like infrastructure or real estate has been much more challenging over the last year.
- • Data creates the environment to ask the right questions. For example, the insight it provides on emerging market managers’ performance ensures investors start with a strong cohort from which to base their selections, speeding up the process and avoiding any “hoodwinking” on track records.
- • Small, start-up managers have struggled to get over the line during the pandemic. Many investors have stuck with existing managers because it has been more difficult to get comfortable with new teams.
Do you use technology and quantitative tools to assist with manager due diligence?
- No but think it would be additive to the process