ALO22: Finding an Absolute Return Solution for a C$11BN Pension Plan ft. Christophe L'Ahelec
Top Traders Unplugged
Niels Kaastrup-Larsen
4.8 • 715 Ratings
🗓️ 3 April 2024
⏱️ 57 minutes
🧾️ Download transcript
Summary
Christophe L’Ahelec, Managing Director of Public Markets at University Pension Plan Ontario, joins Alan Dunne in this episode to discuss their approach to managing the C$11bn defined benefit pension plan. We discuss the high level Strategic Asset Allocation of the plan and also how the changed macro environment in recent years has motivated a shift in the asset allocation towards more absolute return strategies. Such strategies play a dual role of diversification and return enhancement for UPP and we discuss how Christophe thinks about an appropriate strategy allocation within absolute return. We also delve into the challenges of manager selection and evaluation, why it is important to remember that you are buying an “investment process” not historical returns when allocating to managers and discuss when is it appropriate to remove a manager and when not.
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Episode TimeStamps:
02:50 - Introduction to Christophe L'Ahelec
07:06 - A new initiative
10:01 - What kind of strategy drives their asset allocation?
12:40 - What goes into which bucket?
14:45 - What makes absolute return exposure more attractive at the moment?
16:31 - Constructing an absolute return portfolio
18:38 - How they approach trend following
21:58 - Why do they use leverage?
23:32 - What do they expect from their portfolio?
25:12 - Managing liabilities
27:58 - Public equities - where do they stand?
30:59 - Investing in niche strategies
34:11 - How they evaluate managers
36:21 - Open to early stage manager risk?
41:42 - What makes a manager stand out?
44:56 - When should you remove a manager?
46:47 - What is their governance process?
50:36 - How they make decisions as a team
52:20 - Advice for new investors
55:34 - Thanks for listening
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Transcript
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| 0:00.0 | What I find fascinating in our industry is the fact that we live in a ever-changing world. |
| 0:15.0 | There's always new financial instruments, new ways to implement a given strategy, new tools at our disposal |
| 0:25.6 | to invest. I can think here about machine learning, artificial intelligence. So it's using all the tools that we have our disposal to make the most appropriate investment |
| 0:42.3 | decision. And so it's very important that you stay on top of all those innovations. |
| 0:50.9 | Imagine spending an hour with the world's greatest traders. |
| 0:54.9 | Imagine learning from their experiences, their successes, and their failures. |
| 0:59.4 | Imagine no more. |
| 1:01.3 | Welcome to Top Traders Unplugged, the place where you can learn from the best hedge fund |
| 1:06.1 | managers in the world so you can take your manager, due diligence, or investment career |
| 1:10.5 | to the next level. |
| 1:12.1 | Before we begin today's conversation, remember to keep two things in mind. |
| 1:16.0 | All the discussion we'll have about investment performance is about the past, and past |
| 1:20.2 | performance does not guarantee or even infer anything about future performance. |
| 1:24.8 | Also understand that there's a significant risk of financial loss |
| 1:27.7 | with all investment strategies, and you need to request and understand the specific risks from |
| 1:32.6 | the investment manager about their product before you make investment decisions. |
| 1:37.0 | Here's your host, veteran hedge fund manager, Nealz Kostrup Larson. |
| 1:46.7 | For me, the best part of my podcasting journey has been the opportunity to speak to a huge |
| 1:51.9 | range of extraordinary investors from all around the world. |
| 1:55.3 | In this series, I have invited one of them, namely Alan Dunn, to host a series of in-depth |
| 1:59.9 | conversations on the topic |
| 2:01.7 | of what it takes to be a world-class allocator. In today's world, portfolio construction |
... |
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