Capital Decanted – Details, episodes & analysis

Private Credit has risen from obscurity within the private equity financing world to a greater than $2T asset class in just over a decade.  In this episode, we examine the conditions (M&A, debankification, regulation, staying private longer) that accelerated post the GFC that created a torrent of issuance and demand for private credit across direct lending, asset backed credit, structured credit, and innovative special situations.  And more importantly, we debate whether we’ve come a little too far, too fast, and if some rationalization and refining is needed before this exciting space continues its upward trajectory.

Guests:

Katie Koch, CEO, TCW

Kipp DeVeer, Partner and Head of Credit, Ares Management

⁠Episode Sources

Private Markets Valuations…do these quarterly marks properly represent fair value or are they make believe…contrived from the fictional world of GP machinations?  Do these interim valuations, as one commentator put it, “not matter;” or as another proclaimed provocatively, are they simply a case of “volatility laundering.”  Is the gap or “lag” with public market equivalents relevant…are we anchoring to the right bogey…or arbitrarily comparing objective value to an emotionally manic patient, to paraphrase Warren Buffett?  In today’s episode, our inaugural episode of Capital Decanted, we are going to lean in to this divisive and complex topic with some help from Scott and Andrea.

Guests:

Scott Kupor, Managing Partner, A16z

Andrea Auerbach, Global Head of Private Capital, Cambridge Associates

⁠Episode Sources

Since the arrival of Modern Portfolio Theory (MPT) in the early 1950’s by the legendary Harry Markowitz, the industry has been sturdily anchored to this philosophy and all of it’s artifacts when constructing portfolios. In recent years, however, an enterprising handful of large institutional asset owners have begun challenging the common wisdom of a strategic asset allocation approach given it tends to breed silo behavior, unhealthy competition for resources and attention, unrecognized duplication or disjointed risk exposure across the portfolio, and difficulty in managing the capital pool holistically around a view of the future. This is the story of how CAIA convened some of the most reputable and largest asset owners in the world to amplify the benefits of TPA and perhaps, the beginning of a new era.

Introduction (0:48)

Halftime (51:40)

Guests (57:21)

Guests:

• Ben Samild, Chief Investment Officer, Future Fund

• Jayne Bok, CFA, CAIA, Head of Investments, Asia, Willis Towers Watson

Episode Sources

The Outsourced Chief Investment Officer—once a last resort option for sub-scale capital pools looking to avoid the hassle and cost of building their own investment office to today, a multi-trillion dollar subset of the asset management profession and arguably the hottest structural trend in the industry. Take a listen while we examine:

• What insights and opportunities led to the creation of this segment of organizations and why has that exploded in the ensuing four decades? 
• What defines a successful OCIO? And why has that trajectory and evolution seemingly reached an inflection point—hyperdrive really-- in the last five years that has redefined the space and encouraged newer, larger entrants?

Introduction (0:48)

Halftime (37:44)

Guests (41:37)

Guests:

• Mark Anson, CAIA, CFA;  CEO, President and CIO, Commonfund

• Sarah Samuels, CAIA, CFA: Partner, NEPC

Episode Sources

After a four decade relative period of global stability, the world order has fractured and grown more unpredictable. The new multi-polar reality poses a major problem for leaders and investors as our traditional guardrails, narratives, and structures seem less useful. How should an investor integrate geopolitical trends into their investment thesis and what pitfalls and common mistakes should we watch out for?

Introduction (0:48)

Halftime (46:00)

Guests (49:50)

Guests:

Anastasia Titarchuk, CIO, New York State Common Retirement Fund

Marko Papic, Partner, Clocktower Group

In order for the capital markets system to continually grow in its transparency, efficiency and fairness, it needs a combination of free market ingenuity and regulatory protection. With the meteoric rise and importance of alternative investments in the past decade, did the SEC strike that balance correctly with the new Private Advisors Rule? Directionally, probably yes but certainly the details are far from perfect and unintended consequences are inevitable. With an aim to provide a practical guide for the layman practitioner, we explore the history of light touch regulation of private funds, highlight the important elements and implications of the rule, and explain why CAIA joined ILPA and many asset owners in submitting an Amicus Brief to the 5th Circuit Court of Appeals defending the spirit of the rule.

Introduction (0:47)

Halftime (52:41)

Guests (58:35) Guests: Jen Choi, CEO, ILPA Jon Grabel, CIO, Lacera

⁠Episode Sources

This episode had to happen.  The origin story of this show necessitated it.  And what better timing then to release it as our holiday special when many of you around the world will be sitting around the table with family and friends, breaking bread and sharing a bottle of fine fermented grape juice.  But beyond our passion for drinking and socializing around wine, is there an investable asset class here yet?  We examine the history of wine investing, the lifecycle of the grape, and the very unique investment characteristics of each stage of the lifecycle.  Then we invite two experts, both of which have brought the category to mainstream acceptance in different ways, on either end of that production spectrum to help us think through this burgeoning opportunity set.

Introduction (0:48)

Halftime (49:00)

Guests (54:54)

Guests:

Matthew Parker, Head of Viticulture, Nuveen Natural Capital

Anthony Zhang, CEO, Vinovest

Episode Sources

A healthy culture is the oxygen by which you accomplish the work of the organization. It breathes life and vitality into the collective work of the enterprise. It gives meaning and connection to a shared purpose or goal. And it is predictive of sustainable outsized investment performance. And yet, cultivating healthy organizations have rarely been a defining characteristic of the investment industry. Why? And how can we accelerate the profession’s social license with a renewed focus on culture?

Introduction (0:48)

Halftime (45:23)

Guests (51:25)

Guests:

Kim Lew: CEO of Columbia Investment Management Company

Jim Dunn: CEO of Verger Capital Management

Episode Sources

Most agree that healthy investment committee governance is table stakes for meeting investment outcomes over the long term and yet, it is probably the least discussed element of the investment management value chain. Why is the pursuit of governance excellence often ignored? Are there models of separation of duties between board and staff that we should be aiming for? Can strong governance actually improve or juice investment returns? Is it a source of alpha that is largely unharvested?

Introduction (0:47)

Halftime (41:47)

Guests (47:47)

Guests:

Ashby Monk, SLTI Executive & Research Director, Stanford University

Chris Ailman, Chief Investment Officer, CalSTRS

Episode Sources

Democratization is a word loaded with independence, equal access and even Americana, it’s a concept that conjures up a binary and heated debate about fairness and liberty of choice but is democratization always good? Is it the government’s role to restrict individual citizens from what they deem risky assets or should we simply demand standards of transparency and reporting and trust adults with their own money?  Listen in to find out more!

Introduction (0:47)

Halftime (53:30)

Guests (59:23)

Guests:

Joan Solotar, Global Head of Private Wealth Solutions, Blackstone

Fran Kinniry, Principal, Head of Vanguard Investment Advisory Research Center, Vanguard

Episode Sources