More companies are recognising sustainability as a core business issue, but according to McKinsey and Company they are still failing to capture its full value, in particular struggling with incorporating it into organisational processes such as performance management.

A McKinsey global survey, garnering responses from 3,344 executives from the full range of regions, company size and industries, found that the leaders in sustainability have in place the key components of performance measurement.

In this year’s survey respondents were better at fostering an organisational culture around sustainability but struggle with execution including employee motivation and capability building.

Of the responses 58 per cent of executives say sustainability is fully or mostly integrated into their companies’ culture, but 38 per cent say that is true for performance measurement.

The good news is that this year McKinsey found that 43 per cent of executives say their companies seek to align sustainability with their overall business goals, missions or values, up from 30 per cent in 2012.

One of the reasons for the shift, according to McKinsey, is more involvement from leaders in the business with chief executives now twice as likely to say sustainability is their top priority.

But while sustainability is rising in significance there is still some way to integrate it into the core business, with challenges in execution including the absence of performance incentives and the presence of short-term earnings pressure that’s at odds with the long-term nature of the issues, as well as accountability.

According to McKinsey there are common organisational traits among those that stand out as leaders.

These are: setting aggressive external targets or goals for sustainability initiatives; a unified sustainability strategy with clearly articulated strategic priorities, aggressive internal targets or goals for sustainability initiatives, broad leadership coalition in shaping or co-creating the sustainability strategy, goals and milestones, the financial benefits of sustainability are clearly understood across the organisation.

McKinsey founds that the companies with a unified strategy and no more than five strategic priorities were almost three times as likely to be among the strongest performers, both financially and on measures of sustainability.

Lack of goals is a “sustainability killer”, the report said, and yet McKinsey’s analysis of S&P500 companies suggests that only one in five companies sets quantified, long-term sustainability goals, and half did not have any.

In order to shift McKinsey calls for companies to create accountability around sustainability including incentives, according to the United Nations Global Compact only one in 12 companies link executive remuneration to sustainability performance.

It also calls for companies to make a case that sustainability can pay for itself, and that this has to be done clearly with fully costed financial data and delivered in the language of business.

 

One of Australia’s largest superannuation funds, the $27 billion Sunsuper, is adamant that it gets value out of its large hedge fund program. This is against the grain in Australia, where many large funds (with the exception of the Future Fund) choosing not to invest in hedge funds. So why does Sunsuper favour hedge funds?

 

Sunsuper’s hedge fund program has comfortably beaten global equity returns after fees since 2007.

To Bruce Tomlinson, portfolio manager for Sunsuper’s $1.6 billion hedge fund program, this is all the justification he needs for a 16 manager hedge fund program, but who in the industry is paying attention?

Anecdotes of hedge funds that did not diversify portfolios in 2008 and made the same losses as equities are so common it has become very easy for investors to justify why they do not invest in them.

Tomlinson feels a lack of true understanding, not least the perception of poor value for money, is driving such attitudes.

“You see some very modest, even zero allocations for many large super funds, and that for me is a lost opportunity,” he says.

It is telling that Sunsuper’s experience of hedge funds in the global financial crisis was the opposite of the apocryphal tales of funds suddenly aligning with equity market valuations, tales of fund meltdowns and trapped investments.

“Our program not only acted as a hedge, which is what it should have done,” says Tomlinson, “but it did not have the big draw down that others did.”

In 2008/9 this meant that less than 4 per cent of the funds Sunsuper invested in were frozen or gated. This initial success has led the program to build up from its first hedge fund in 2006 to the use of 16 separate managers now (including names such as Bridgewater Associates, Brevan Howard, Nephila Capital, BlueCrest Capital and Manikay Partners).

The strategy is employed across Sunsuper’s four main funds. The Growth fund allocates 10 per cent of assets to hedge funds, the Balanced, Retirement and Conservative funds each hold 7 per cent strategic allocations.

A desire for defensive strategies rather than aggressive growth has been the approach.

“We are aiming for 10 per cent not 15 per cent return,” says Tomlinson. “We do not reach for a return that means too much leverage or directionality. We definitely do not want that. We have been strict on focusing on a market neutral approach.”

In this way the only long-short equity strategies followed are market neutral.

He explains the distinction: “Many people had or still have equity long short that is net long the market. It does not protect them when the market falls, so they are directionally long.”

The hedge fund role in Sunsuper’s asset allocation is that of a defensive alternative.

The strategy is not only lowly correlated to equities, but less volatile, achieving returns of 5-6 per cent above cash net of fees with volatility of 3-5 per cent and an equity beta of 0.1-0.2.

A common perception Tomlinson is glad to dispel about hedge funds is that all agreements are based on standard fees of 2 per cent, plus a 20 per cent share of returns.

Six of the hedge fund managers used are only paid performance fees above return hurdles of between 4-8 per cent depending on the strategy and what can be negotiated.

There are also two managers with performance fees below 15 per cent. The discounts, says Tomlinson, are not so much due to Sunsuper’s relative stature and size, but due to negotiation.

“We do try and negotiate our own share class or preferential terms if we can, but many times we cannot, because managers do not need our capital. To an extent the best managers can set the price.”

One way fees can be negotiated is through locking into longer investment commitments.

“With only 7 per cent in hedge funds and a positive cash flow we do not need quarterly liquidity for every single investment,” says Tomlinson, “so we are happier to have a longer lock up and lower fees for a portion of the portfolio. This has the added advantage of opening up a greater set of opportunities.”

 

Hard work

If this account all sounds a little rosy, Tomlinson is quick to point out the hard work that goes into the program, not least in negotiating fees.

“It is not the sort of thing you can do part-time. It is a complex area like all alternatives. You either roll your sleeves up and do the hard yards or you don’t do it.”

Part of the work ensures a growing fund such as Sunsuper has enough capacity in its chosen hedge fund managers to maintain its strategic allocation.

Around 40 per cent of the funds it employs are closed to new allocations and clients and another 30 per cent only take limited increases for existing clients.

Tomlinson and his analyst Laurence Marshbaum, are in charge of researching and choosing new hedge funds but they are assisted by the New York headquartered hedge fund advisory specialist Aksia.

They in turn employ 40 analysts to run reports on hedge fund managers that include an assessment of investment strategies, but also operational due diligence.

“Our process for every asset class at Sunsuper is to have independent due diligence,” says Tomlinson. “For hedge funds I have taken that a step further, I will not do an investment without operational due diligence as well as investment due diligence.”

 

The PRI is investigating the experiences of asset owners that have engaged service providers in long-term mandates, and conducting a literature review on long-termism, in a bid to develop a reference guide on how to implement a long-term mandate and drive long-term behaviour.

 

Managing director of PRI, Fiona Reynolds, said the starting point, and initial question being asked was defining what long-term is. Signatories are also asked to report on their experiences with regard to governance and the important of investment beliefs, investment practice and long-term active ownership.

“We are starting with practical questions like what is long term, clear definitions and time frames are useful,” she says. “We will also be looking at the role of investment beliefs. We think they need to be part of the fund’s DNA, it grounds you in what you’re doing.”

Long-term is defined by some investors as the average life of liabilities, while others look at the style of investment, rather than the holding period.

The OECD defines long-term capital in terms of several characteristics – patient, engaged and productive.

PRI says that asset owners may find it helpful to establish a definition of long-term investment, and include it in the mandate with their investment managers.

“Our aim is to get feedback from signatories, and come up with good analysis into how to implement a long-term mandate as a reference guide, not a model mandate, but a reference. We want to drive long-term behaviour,” Reynolds says.

The discussion paper will look at long term mandate considerations including investment manager reporting and accountability, turnover and performance monitoring.

One suggestion is that managers’ performance monitoring reflects their long-term investment objectives including clarifying the broader criteria that managers will be judged against including such things as organisational stability, team development and succession.

It also asks questions about fees suggesting asset owners may find it useful to understand how investment manager compensation structures are aligned with the mandate objective, including the idea of discounted fees for longer mandates.

“Long term mandates could drive down fees,” Reynolds says. “If manager knows they have the mandate then fees should come down, it should follow.”

“From a manager point of view it’s not a threat. It could give more certainty about mandates. This could give more surety and security and certainty in business planning.”

Within equities, the PRI discussion paper also looks at fund structures, suggesting that investors may be able to learn from private equity investment vehicles.

New investment vehicles such as European Long-Term Investment Funds could be used to hold long-term investments in public equities, it says.

Part of the motivation comes from a policy and research work-stream the PRI established in September 2013 to address the barriers to the development of a sustainable financial system.

More than 90 per cent of PRI signatories said “short-termism” was a major barrier.

PRI believes long-term investment perspective is a critical enabler of responsible investment as it encourages long-term stewardship of assets and value creation.

A call for submissions from signatories is open until September 12.

 

To access the paper click below

Long-term-mandates PRI

The French pension reforms in 2010 had a profound impact on the asset allocation of the Fonds de reserve pour les Retraites, the €35.8 billion French pension reserves fund. Instead of making payouts between 2020 and 2040, after the reform, the FRR has to pay €2.1 billon to Caisse d’Amortissement de la Dette Sociale (CADES) each year between 2011 and 2024. Amanda White spoke to Salwa Boussoukaya-Nasr, chief investment officer, about the impact this has had on the investment strategy and allocations.

 

Salwa Boussoukaya-Nasr started at the Fonds de réserve pour les Retraites (FRR) in 2006 and back then it was a very different institution to what it is today.

For one, the investment horizon was a lot longer with the mission, to balance the general pension system, requiring no cash out of the fund until 2020.

But in 2010, following pension reform to address the huge deficit in the public pension system, the mission of the FRR was changed.

Now it has an explicit nominal liability, and no more inflows. As a consequence the appropriate investment allocation has also changed dramatically.

“The law changed our mission and all our resources were directed to CADES. We had no more inflows and have to pay to them €2.1 billion a year from 2011 to 2024. We now have an explicit nominal liability and we need to hedge that liability,” Boussoukaya-Nasr says. “We also have no visibility to what 2024 looks like, so we keep open the possibility that all the surplus will be called by the state. If we have this assumption, that we will have to pay it all, then we don’t want to invest in illiquid assets with a horizon greater than 2024.”

This had an immediate impact on the investment allocations of the fund.

Before 2010 it had about €600 to 700 million in private equity which it kept but stopped all new allocations. At that time it was also just completing real estate manager selection but decided to stop investing in that asset class, and it also stopped all new commitments to infrastructure. This still stands, although the policy was changed slightly last year, allowing three private debt investments in the loan sector albeit with shorter time horizons.

As a result the fund changed its asset allocation, with the most obvious change of an increase in bonds.

The fund now has a hedging portfolio, which makes up about 55 to 58 per cent of the portfolio, and a performance or return seeking component.

The performance component includes equities, venture capital and diversifying assets including listed real estate, commodities, and emerging debt.

“Like many investors we are worried about yields, and we want to find diversification for investments that aren’t equities. We have started to invest in private debt and will do more this year and next,” she says.

There is a high domestic bias in equities and the fund launched five mandates in small and mid-cap French equities worth €300 million this year.

So far the fund has avoided investing in agricultural commodities, and doesn’t invest in hedge funds.

“We don’t’ short sell or leverage,” she says.

The hedging component is made up of fixed income products and cash holdings, mainly French government bonds, as well as investment grade bonds and government bonds from major developed countries. The French government bonds are invested in cash-flow matching mandates to honour the liability payments.

Boussoukaya-Nasr says a fraction of the fund’s hedging portfolio used to be composed of international government bonds, with a special customised benchmark developed through Barclays that is GDP-weighted not cap-weighted.

“Within bonds there was always a lot of thinking around the idea that the more debt you have the bigger you are in the index. GDP-weighting made sense to us. With cap-weighted you could have more than 25 per cent in some countries, so it has helped to reweight US and Japan, which was our main concern.”

For the time being, the fund doesn’t hold any international bonds as, on average, their return is lower than the French government bonds which are the fund’s risk-free asset.

Within equities Boussoukaya-Nasr also likes to look at the unconventional. About two years ago it constructed a special RFP for optimised indices – alternative beta, smart beta – to diversify the fund’s passive investments. The portfolio is split roughly half active and half passive.

“Where we think there is value in active management then we would rather allocate to an active manager but in some markets or sectors, like large caps, it is very difficult to find a manager than can outperform the benchmark so we just go for a beta exposure,” she says. “Now we are diversifying the benchmark through portfolio construction and diversifying beta.”

The fund has a tilt to minimum volatility, maximum diversification, equal risk contribution, and RAFI.

The next step being explored is combining several of those processes together to produce more stable alpha than investing in just one.

“We started to combine these internally to neutralise the bias, and are working closely with FTSE to create a benchmark for the combined indices, to rebalance and minimise turnover costs.”

About 15-20 per cent of the return portfolio is in smart beta, which is as much as half of the passive exposure of the fund.

 

Across the whole portfolio the fund is allocated roughly one third in Euro zone, one third in emerging markets and one third in international.

Emerging markets is also defined as stocks that have a share of revenue or profit that benefit from the emerging markets, with the investment objective to have a better performance than developed markets.

“We have a strong conviction that we have to be invested in areas where there is earnings growth,” she says.

All of the investment management is outsourced, with an RFP process required by law.

“The RFP process is a very complex and complicated one especially for small managers. There is a requirement for how operations are to be run, the reporting and conformity. There is a lot and it might be too much for some managers. We are aware this might mean we may miss some good managers, so we try to have a good idea of who might do an RFP beforehand and we may let the managers know about the RFP.”

The fund has around 52 managers, including transition management, with another peculiarity prescribed by law that they have to be European.

“The law requires managers be European but they can delegate financial management to another company, this happens in US equities or Japanese equities, they contract with a subsidiary or external manager.”

FFR used to use consultants but now conducts manager selection and the RFP process inhouse, and has a manager selection committee.

The inhouse team is divided into three groups – strategic asset allocation, tactical asset allocation and manager selection and monitoring.

The fund has an extremely low cost structure, with total costs including manager fees of only 20 basis points.

“We have lower fixed fees and performance fees across most asset classes in active management. On bonds we have tried an original approach where we pay performance fees above the objective,” she says. “When we do an RFP we ask for the expected performance above the benchmark and then align fees with that objective – it makes the objective more effective. It is more fair for us and them to discriminate about funds management on ex ante basis.”

 

The RFP requirement means that there is regular activity around mandates. Even if the team is happy with the manager the fund is required to do an RFP every four to five years which is seen as an opportunity to change things.

“If a mandate terminates we always ask ourselves do we want to be exposed to that asset classes, style, region,” she says.

As part of its selection process, the fund also asks whether fund managers have signed to the PRI.

“If you don’t sign it’s not very good for your ranking. It’s not a reason to exclude a manager, but it is taken into account when ranking them.”

FFR is focused on its responsible investment strategy and has an SRI policy which is reviewed every five years, with Boussoukaya-Nasr explaining it is in the fund’s make-up.

“It is in our DNA as a public body, we are a tool to balance the pension system in the future, a tool for the future. So we have a fiduciary responsibility for the investments we make, we take a sustainable finance, long term view as much as we can. I wish we had ability to have an even longer-term view,” she says.

The team also asks managers for carbon exposure reporting, how it considers SRI as part of the investment process, and an obligation of a mandate with the FFR is to vote in every country, every holding no matter what the size.

 

 

PFZW, the €150 billion ($205 billion) Dutch pension fund for the health care industry, has created a new investment framework which is the result of an 18-month soul-searching journey under a project called “The White Sheet of Paper”. The framework will translate into policy and implementation steps starting from 2015. Jaap van Dam, PGGM´s chief strategist, explains.

After the Global Financial Crisis, PFZW´s board wanted to think afresh about its investment principles: “What if we could start investing from scratch?”.

This question led to an 18-month  process in which the board took the helm to redesign the PFZW Investment Framework from the outside in. I acted as their tour guide, helping them to find literature and people in order to find answers to their questions.

Questions that had arisen from the GFC ranged from: “is the efficient market paradigm still relevant to us” to “what should be our role as a large fiduciary capital owner in society” and “do we really need all the complex investments we have and can we be in control of them?”

The key question of the project was formulated as follows: “How can we invest in a way (1) suited to the financial ambition of the plan (2) in which sustainability is fully integrated, and (3) that is intelligible and controllable?”

The process to answer these questions was almost literally a journey. The board interviewed more than 30 external experts, peers and consultants on sub-topics of the three major questions, including people like Roger Urwin, Keith Ambachtsheer and Antti Ilmanen.

Also, “contrarian thinkers” were asked on stage to reflect very explicitly on what PFZW should keep doing, change, or stop doing altogether. In a number of stages all the outcomes of this process were reduced to a 12 page document, The Investment Framework, in which 16 high level investment principles are formulated.

Key changes

There are a number of key elements in the framework on which I will expand here:

1. Think in a limited number of sources of return and thus reduce the complexity of the investment solution;

2. Recognise the time variance of risk premia and be prepared to change the policy if they change in a significant way

3. Assume responsibility for both the economic and the sustainable footprint the fund makes and use the steering power of money to reduce it.

Think in a limited number of sources of return.

One of the central challenges of the board is being able to be in control of the investment solution.

The framework recognizes that there is only a limited number of fundamentally different sources of return. PFZW has identified four of them.

Therefore, the investment solution can be comprised of a limited number of building blocks.

Within a return source, let´s say equities, we will distinguish between a simple, liquid form; a liquid alternative or “smart” form and a private form.

As the simple, liquid form is typically cheap to implement and easy to control, there should be strong arguments to move from the simple form to the other forms, because typically they will be more complex and much more expensive.

Therefore, there should be significant gains in terms of adding to the ambition (return, diversification) or the sustainability of the fund.

Moreover, the allocation to each of the building blocks should be material in order to move the meter. Both the limitation of the number of building blocks and the explicit role that each of the building blocks has, will help the board to be in control.

Recognise the time variance of risk premia

A second new element in the framework is the recognition of the need for a potentially dynamic allocation as a function of major economic imbalances or extreme valuations.

This principle was absent in PFZW’s former thinking, and therefore no mechanisms or processes existed to change the policy when relevant circumstances changed.

Such mechanisms are part of policy determination rather than policy implementation, so, no TAA but rather dynamic policy.

The expectation is that extreme valuations or imbalances will lead to a change in policy something like two times per decade, so this is really a “management by exception” mechanism.

Take responsibility for footprint

The PFZW investment beliefs and principles on sustainability are based on the idea that PFZW assumes a responsibility for contributing tangibly to a sustainable world and that, at the same time, a sustainable world is a necessary condition for generating adequate returns over long investment horizons.

In other words, taking the long view, PFZW cannot afford to see a sustainable world as an externality.

This idea goes beyond the typical ESG framework: the health of the entire financial system is at stake.

The large amount of capital entrusted to PFZW makes it a responsible party.

Moreover, given its size, PFZW can make a serious impact – we call the “the steering power of money.”

The consequence of this is that PFZW will deviate from available market indexes in order to diminish its negative footprint or to invest in companies or sectors it considers to be the front runners on positive change, eg on climate change or water scarcity.

Next steps

Going forward all investment-related activity, both related to policy making and implementation, will be referenced against the framework. In the coming years, both policy and implementation will move in the direction of  the dot on the horizon painted by the framework. In 2015, the first steps in terms of policy setting and implementation will be taken.

A more comprehensive description of both the White sheet of Paper process and the resulting Investment Framework  can be found in  the Rotman International Journal of Pension Management (Spring 2014 issue): “Rethinking Investing from the Ground Up: How PFZW and PGGM are Meeting this Challenge” by Jaap van Dam


Mercer’s chief investment officer, Russell Clarke, explains how manager research helps create the 200 building blocks of an investment operation that has grown from $20 million a few years ago to $124 billion today and which covers – uniquely – all elements along the fixed income curve.

 

Starting from scratch in 1996, Melbourne was the first global office of Mercer to set up a master trust and now its operations oversee money – mostly corporate sponsored retirement funds – in North America ($50 billion), Europe ($49 billion) and Australia and New Zealand ($25 billion).

Russell Clarke, Mercer’s global chief investment officer for listed asset sectors, works in Melbourne, in a posting that was broken by a recent two-year spell in London.

Clarke tells of how the first clients to outsource, due to concern over a lack of sufficient scale and governance, were of the order of $20 million. But for institutional investors, what constitutes lack of scale has grown exponentially.

“You know as much as night follows day that the larger clients will do it,” Clarke says.

Mercer outsources all funds management to about 100 external providers, offers a mixture of tailored and pooled solutions, and has 200 funds which are the building blocks of portfolios.

“We offer customised manager line-ups and governance structures,” Clarke says.

“We take on fiduciary responsibility.”

Mercer does have some large clients, with assets around $25 billion, where it does customised asset allocation. But most clients are smaller than that, and view the running of a pension fund as outside their core business, and in some cases even as a distraction.

“They outsource to someone with scale, making it meaningfully cheaper than doing it in-house,” Clarke says.

Many larger clients outsource the operational aspect of investing, maintaining involvement at the strategy level, but give Mercer full discretion for manager selection and monitoring.

Clarke says a lot of its large defined benefit fund clients, in Europe particularly, are de-risking, and Mercer has a dynamic de-risking solution to match the defined benefit liabilities.

“This requires all parts of the fixed-income curve to be mapped,” he says.

“We have funds as building blocks and can quickly build a tailored solution. This is a unique feature for us.”

The fixed income funds vary from swap-based funds to 50-year duration, demonstrating the degree of granularity in the fixed income suite.

The fixed income funds are mostly passive, and Mercer usually has just one provider. In the US it uses State Street Global Advisors, but there are different providers in different regions.

Despite the passive view for fixed income, however, Mercer does believe in active management, with Clarke adding that the view is not systematically all active versus passive.

“We generally say you can add value and it is possible to pick managers to do that but we look at it on a market by market basis,” he says.

He says Mercer’s clients “buy us because they like our research, and that having 120 people that conduct fund manager research globally is a competitive advantage.

“They all follow a consistent framework in the research and this adds a lot of rigour and richness to our discussion around managers,” he says.

The research covers over 26,800 investment strategies and of these, more than 9100 are rated by Mercer, with about 2600 getting an “A” rating. These latter strategies are the starting point for Mercer when considering what to use for its master trust clients.

Clarke says that the fund manager research program has added value, claiming that at March 31, 2014, the value added since inception has been positive for 93 per cent (62 out of 67) of the product categories covered in its research.

The rolling average value added figures for one, three, five and 10 years are 2.3 per cent, 1.6 per cent, 1.6 per cent and 1.0 per cent per annum, respectively, ahead of the benchmark. Since inception it is 1.4 per cent per annum ahead of benchmark.

In the US the portfolio team is centred in Boston with most of the manager research team in Chicago and St. Louis. European research is based in London, where Bill Muysken, global CIO for alternatives, is based; and European portfolio management based in Dublin. The Pacific region portfolio management is based in Melbourne.

While there are separate pools of money for the three continents, much of the research and manager line-ups are deliberately the same.

“Over the last five to seven years we have become a truly international business in the way we interact from an investment standpoint,” Clarke says.

“We have always talked to each other, but it has become much more integrated and holistic.”

Another theoretical advantage from this scope is local knowledge in several markets. The economist sitting in an office in America or Europe who makes pronouncements on the relative health of the Chinese economy is a staple of the investment news output, but some prognosis can get lost without nuanced local knowledge. Clarke recognises this issue.

“People write things about the Australian resource sector from overseas, but when you live here you realise how shallow a lot of that analysis is,” he says.

“There might be an element of truth in what they are saying, but they may have missed the other third of the story that is really important.”

The large business clients dotted around the globe provide another less expected source of data.

“From a macro standpoint our clients are a great source of information,” Clarke says.

“They are often in the front line industries where if you want to know if the economy is slowing down, we’ll go and talk to the person in that industry to see if it is.”

In each region clients will have a bias towards their local assets, but their global allocations will look very similar. Across clients, roughly 10 per cent is allocated to alternatives and property, with the rest split approximately equally between equities and fixed income assets.

The Q3 outlook to clients from Clarke’s office says low inflation and low interest rates will support solid growth in equity markets in the developed world where the fund is overweight.

It says conditions for emerging markets are more challenging because of the “build-up of imbalances over the last few years”, but notes that favourable valuations and a modestly improved economic performance will lead investors back into the market.

Mercer’s underweight position on bonds is due to very low yield levels, which suggest returns over the medium term are likely to be lower than normal.

All of these positions are subject to rapid change.

“Most of our clients are fully discretionary and allow us to move the asset allocation of the portfolio… we put a lot of time into the dynamic asset allocation,” Clarke says.

Since April, Mercer has been positive on growth versus defensive assets, with global developed market equities and emerging market equities in particular looking attractive to it.

It views global government nominal bonds and inflation-linked bonds as unattractive, and has a similar view on US-dollar cash.

As much as Clarke is willing to talk up the strengths of the operation, he also readily concedes the relative lack of status of his role in an organisation that runs based on existing, in-depth research.

Much of his role involves organisation and talking to the teams around the world, rather than being an inspirational, investment guru.

“It is not reliant on one or two key individuals”, he says.

Although anyone who looks at his job and thinks it easy should think again.

“You can find real visionary people, but often they are not very good at making things happen,” he says.