ALO21: How to Run a Multi-Billion Dollar Sovereign Fund ft. Peter Madsen
Top Traders Unplugged
Niels Kaastrup-Larsen
4.8 • 670 Ratings
🗓️ 28 February 2024
⏱️ 65 minutes
🧾️ Download transcript
Summary
Peter Madsen, CIO of SITFO, joins Alan Dunne in this episode to discuss how the $3.5bn State of Utah Sovereign Fund runs its investment portfolio. They discuss the rationale for Peter’s investment philosophy of having a diversified portfolio of growth assets, real assets, income generating assets and defensive strategies in contrast to the equity-centred portfolios of many endowments. Peter discusses the key risk considerations in managing the portfolio and how the team think about formulating return expectations. They discuss the opportunities in private markets and the potential risks in private credit in particular. A key element of the portfolio is the allocation to Systematic Convexity which includes Trend Following and Global Macro strategies and Peter discusses his journey investing in CTAs and some of the challenges and pitfalls of selecting managers.
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Episode TimeStamps:
02:56 - Introduction to Peter Madsen and his firm
06:54 - How is their portfolio charactarized?
09:16 - Their investment philosophy
14:33 - A skepticism about equities?
17:04 - How do the macro environment influence them?
21:23 - What is reasonable return expectation for equities?
25:19 - Splitting between public and private markets
28:20 - Where lies the most risk?
30:25 - Opportunities...
Transcript
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| 0:00.0 | We were really well prepared for 2022. |
| 0:09.7 | And so for us, we kind of stand back and say, we're ready for this new, potentially new macro regime with a bit higher inflation, |
| 0:16.5 | or maybe just a bit higher macro volatility on things like GDP, like inflation. |
| 0:22.2 | The different tensions on geopolitics, be it trade or be it conflict. |
| 0:25.6 | I think we're in a really good position for that going forward. |
| 0:29.0 | So, you know, we've never really loved the idea of a really simple 70-30 portfolio. |
| 0:34.3 | Having said that, if, you know, you don't have the resources or bandwidth and your |
| 0:38.7 | fees are a real problem or, you know, behavioral risks are a real problem, you know, |
| 0:43.5 | this 6040 or 7030 portfolio, that could be a great way to go. |
| 0:48.0 | But if you are willing to be a bit more thoughtful, deploy a lot more resources, I think being more diversified and mindful of the different regimes and opportunities that are out there, |
| 0:59.5 | and that's a great way to go forward as well. |
| 1:03.0 | Imagine spending an hour with the world's greatest traders. |
| 1:06.7 | Imagine learning from their experiences, their successes, and their failures. |
| 1:12.6 | Imagine no more. Welcome to Top Traders Unplugged, the place where you can learn from the best hedge fund managers in the world, |
| 1:18.6 | so you can take your manager, due diligence, or investment career to the next level. |
| 1:23.6 | Before we begin today's conversation, remember to keep two things in mind. All the discussion |
| 1:28.6 | we'll have about investment performance is about the past, and past performance does not |
| 1:33.1 | guarantee or even infer anything about future performance. Also understand that there's a significant |
| 1:38.3 | risk of financial loss with all investment strategies, and you need to request and understand |
| 1:43.2 | the specific risks from the |
| 1:44.7 | investment manager about their product before you make investment decisions. |
| 1:48.8 | Here's your host, veteran hedge fund manager, Nealz Kostrup Larson. |
... |
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