Investment Uncut

In this week’s episode, Mary Spencer and Jacob Shah discuss election forecasts and keeping your finger on the pulse of society with Kelly Beaver, CEO at IPSOS. Before we interview Kelly, we also welcome back fellow co-host Laasya Shekaran from her three-month sabbatical. Laasya gives us her highlights from her trip, the biggest surprises and what she is most looking forward to now she’s home.

In this week’s episode, Mary Spencer and Lia Licietis chat to Peter Oppenheimer, Chief Global Equity Strategist & Head of Macro Research Europe at Goldman Sachs’ Global Investment Research Group. We discuss his two books on equity market cycles and how they relate to the market dynamics we’re seeing today. In light of International Women’s Day 2024, Jacob Shah also interviews Mary. who explains what this year’s theme #inspiredinclusion means to her.

In the fourth and final episode of this special mini-series from the PLSA Investment Conference 2024, we bring you interviews with Sandra Carlisle, Head of Responsible Investment at USS and Nigel Peaple, Director of Policy and Advocacy at PLSA. Our regular Investment Uncut co-host Mary Spencer also returns to share her thoughts on the conference.

This week, Investment Uncut is live at the PLSA investment conference 2024. In this special mini-series, we bring you the PLSA investment conference from our podcast booth in the conference hall.

This week, Investment Uncut is at the PLSA Investment Conference 2024 in Edinburgh. In this episode of this special mini-series, we speak to Paul Johnson at the Institute of Fiscal Studies and Natalie Mee from CMS on Day 1 of the conference.

This week, Investment Uncut is live at the PLSA investment conference 2024. In this special mini-series, we bring you the PLSA investment conference from our podcast booth in the conference hall.

In this week’s episode, Mary Spencer and Jacob Shah explore drug pricing and the dynamics within the pharmaceutical industry with Sreeram Ramagopalan, Principal and Market Access & Payer Evidence Lead within LCP’s Health Analytics team.

In episode nine, Mary Spencer and Jacob Shah explore insurance-linked securities with David Garcia, investment consultant within LCP’s manager research team. Before we interview David, we also speak to Alex Waite, Partner at LCP, for our “Views from the Boardroom” feature. With Alex, we discuss artificial intelligence, the discussions he’s been having with a wide range of groups on AI, what he thinks puts people off using AI and where to start.

In our eighth episode of season five, Mary Spencer and Jacob Shah explore Systemic risk in the financial sector with David Aikman, Professor of Finance and Director of the Qatar Centre for Global Banking and Finance, at Kings College London. Prior to his current role, David spent 17 years working as an economist at the Bank of England – most recently in the role of Technical Head of Division in the Financial Stability Strategy and Risk Directorate where he led the Bank’s work on various macroprudential issues.

In this episode, Mary Spencer, Jacob Shah and Laasya Shekaran all get together to discuss Kate Raworth’s brilliant book: Doughnut Economics. This is the first episode all three have recorded, and a special one as it’s the last from Laasya before she spends three months travelling (we miss you already Laasya!). We are also joined by Tegs Harding, Head of Sustainability at IGG, for our “Views from the Boardroom feature”. We hear from Tegs about how she is shifting the discussions around sustainability from reporting to real world action on the boards she sits on, how we can power possibility in DB pensions to encourage more impactful investments and thoughts on the outcomes of COP 28.

Our last episode before Christmas is a real treat – we’ve been longing to do a debate-style episode for some time! In this episode Mary Spencer and Jacob Shah explore the case for investing in India versus China with Amit Mehta (Portfolio Manager at JP Morgan) and Claire Peck (Investment Specialist at JP Morgan) each representing one country. Before we interview Amit and Claire, Laasya Shekaran also speaks to Kelly Tran, Head of UK Institutional Sales at MFS, for our “Views from the Boardroom” feature. With Kelly, we talk about the discussions she’s having with her clients and current areas of focus for the PLSA Policy Board (of which she’s a member).

This episode of Investment Uncut comes out the day before COP 28 (the 28th United Nations Climate Change Conference) takes place in Dubai. With a “stock take” focus, this event could set the tone for the level of climate action we can expect from industries and governments alike over the coming years. In this episode, Mary Spencer and Laasya Shekaran are joined by two guests: Steve Waygood, the Chief Responsible Investment Officer at Aviva Investors (who first attended COP back in 2000, for COP 6!) and LCP Partner Mark Watts, who leads some of our innovative work combining expertise from our energy business LCP Delta with our Investment team to help investors find the right investment opportunities to support the energy transition, whilst delivering attractive returns.

In our fourth episode of season five, Mary Spencer and Jacob Shah explore the residential property market with Lucian Cook, head of residential research at Savills. Before we interview Lucian, we also speak to Joel Hartley, Partner at LCP, for our “Views from the Boardroom” feature. One year on from the gilts crisis, we reflect on the lessons learnt by defined benefit pension schemes, the changes Joel’s clients are making to their investment strategies, and thinking carefully about illiquid assets for both well-funded and less well funded pension schemes.

In our third episode of season five, Mary Spencer and Jacob Shah explore the policy side of the energy transition with Josh Buckland, Partner at Flint Global who leads Flint’s client work on energy, climate and sustainability issues. Before we interview Josh, we also speak to LCP CEO Aaron Punwani as part of our new “Views from the Boardroom” feature. Aaron talks about his call for action on climate change, supported by re-interpretation of pension scheme trustees’ fiduciary duty.

In this episode of Investment Uncut, Mary Spencer and Laasya Shekaran speak to Amlan Roy: demographics expert, LCP colleague and one of the speakers at our inaugural LCP investment conference. We dive into his research on demographics covering why this is such an important, but underappreciated, topic for all investors to think about.

We’re back with a brand new season of Investment Uncut! We hope everyone had a well-earned break over the summer. Kicking off Season 5, we have a real treat for our listeners: this episode was recorded live at our inaugural Investment Conference! Hear from guests and speakers, feel the buzz and note down those key takeaways… We also introduce our new co-host, Jacob Shah, who will join Mary Spencer and Laasya Shekaran this season.

In our very final episode of Season 4, we leave you with a very special book review: The Opportunity Index by Gavin Lewis, and we chat to Gavin himself.

This week’s episode is a double whammy, combining two recent interviews! First, our interview with colleague Stephen Budge, who we spoke to at the PLSA investment conference in June. He’d just come off a panel session on investing in illiquids in DC. And prompted by that discussion, very excitingly, we were able to line up a chat with the Lord Mayor of London, Nicholas Lyons. It was a real treat to speak to the Lord Mayor the same week as the Mansion House speech, which was so relevant to the conversation we’d already planned to have around productive finance and UK growth!

This week we're joined for a special episode of Investment Uncut, by Sir Steve Webb and Steve Hodder, to discuss the DB pensions aspects of the Mansion House speech on Monday 10 July. Steve & Steve take us through what was announced, why it matters and provide detail on our idea for the future of DB pensions.

This week we reflect on a discussion we had with Adam Matthews, CRIO at the Church of England Pensions Board, at the recent PLSA conference in Edinburgh. We talk about all things responsible investment, from taxonomy to making a difference and what everyone can do.

We talk to David Spiegelhalter, Emeritus Professor of Statistics at Cambridge University and prior Professor of the Public Understanding of Risk. Also known for appearances on Total Wipeout and Desert Island Discs!

This week we’re joined by Helen Price, Director of Governance for the Church of England Pensions Board and Co-Chair of the Asset Owner Diversity Charter. We deep dive into stewardship, what it currently looks like, how it has evolved and how investors can maximise their impact. Helen shares her top tips for asset owners, consultants, and asset managers, stressing the importance of collaboration across all groups to make progress.

Final day at the PLSA investment conference 2023, we discuss responsible investment with Adam Matthews of the Church of England Pensions, emerging markets with Will Ballard of Border to Coast, we ask LCP's Jon Wolff if the UK is going into recession and what that means for business. We speak to Professional Trustee Graham Jung about what his big asks for managers and consultants are, and we catch up with industry veteran Henry Tapper. Plus, we sort through all the conference ideas for the big takeaways (and we’re not just talking about merch).

Recorded live at the PLSA conference in Edinburgh! We’re covering day two of the PLSA conference, including interviews with keynote Sir David Spiegelhalter, Liz Fernando CIO of Nest, Cliff Speed CIO of TPT, Payam Kazemian of Zedra, plus more industry guests. We discussed communication of risks, how to model risk when things change, portfolio construction in this environment, what’s on trustees' minds, plus much more.

Recorded live at the PLSA conference in Edinburgh! Today we’re speaking to Stergios Saloustros of Barclay’s Retirement fund, Richard Tomlinson of LPP and John Chilman of Railpen. We’re reviewing day one of the conference, including the macroeconomic session with Danny Blanchflower and the CIO panel. Keep a look out for further episodes coming out during the event where we’ll be chatting to CIOs, speakers and key industry figures, taking the temperature of what’s on their mind, what they are looking ahead to and asking them what big ideas they will be taking away from the conference.

We’re taking investment uncut on the road and up to the Pension and Lifetime Savings Association conference (PLSA) in Edinburgh! Here we look ahead to the conference with the help of Laura Myers of LCP and Marcin Stepan of PLSA who has been responsible for organising most of the event. We look at the agenda, how the different streams come together and the probable themes coming out of the event.

Some call it styles, some call it factors some call it style factors. But regardless, it’s value and momentum size, and it’s definitely had its ups and downs in the last decade. This week we’re joined by Dan Taylor, CIO of MAN Numeric. Dan reviews the last decade and offers candid thoughts on lessons learnt, how things have evolved and how investors should be thinking about these strategies today. He also offers a bonus reflection on the impact of the growth of passive strategies. If you’re an asset owner grappling with allocating to equity strategies, we’re sure you’ll get a lot out of this episode.

This week we’re joined by John Gilleland of Campbell Global (part of JPMorgan) to discuss one of the fastest-growing areas in investment (no pun intended) – forestry! – and how it fits within the broader category of Natural Capital.

Are your investments exposed to modern slavery? The answer might not be what you think. This week we’re talking to Saskia Kort-Chick who has spent a lot of time investigating modern slavery and human rights abuses in portfolios – a key issue given the continued prevalence of modern slavery in today’s economy and supply chains, which is not just restricted to emerging markets. We discuss the vast nature of modern supply chains and how this complicates the picture, but how consumers and now consumer-facing brands are starting to take note of changing behaviours. We cover how you can link to financial risks as part of a solid framework for investor action and how to identify higher-risk sectors. We examine how modern slavery fits into the wider social pillar of sustainable investing and provide practical actions for asset owners, including what to ask managers and consultants.

This week we have a thought-provoking conversation that might challenge you to think differently about the financial system. We’re speaking to Delilah Rothenberg who spent a career in private markets investing before founding the predistribution initiative to examine and change the inbuilt incentives in the financial system to work toward a more equitable society.

A short special episode this week as Mary returns from a 3 month sabbatical and we take a few moments out to talk about her trip to Central and South America and some reflections. We discuss: highlights including favourite moments, best activity, best food and of course the most dicey transportation situations. We discuss Mary’s journal, some deeper reflections on work and life, plus her reading list.

This week we've got an action-packed conversation that might just spark a little inspiration when it comes to leadership and decision-making. We're chatting with Langley Sharp, a former British Army officer and now leadership consultant who's here to share some incredible insights into the world of decision-making and leading. We're talking about everything from the power of leadership as a "force multiplier" for high performance, to the core values and purpose that underpin effective leadership. Langley has spent years studying leadership and decision-making in the military, and trust us, you're going to want to hear what he has to say. We'll be diving deep into the social connections that are so important for building strong teams and exploring the delicate balance between focusing on tasks, individuals, and the team as a whole. Plus, we'll be taking a look at some of the decision-making frameworks used by the army that are transferable to corporate settings. This is one conversation you won't want to miss. Langley's insights are relevant, relatable, and downright inspiring. Grab a coffee and tune in!

Buckle up, folks - this week we're diving headfirst into the world of fixed income and corporate bonds with Jeff Boswell, a portfolio manager at Ninety One. Corporate bonds have been on a rollercoaster ride lately, going from zero yields to plummeting values even for low-risk assets, and now returning to yield levels not seen since the days of yore. We'll be discussing all the juicy details, like whether yield or spread is the more important factor for investors to consider, and how to navigate the different parts of the market. We'll also be taking a look at how macro factors like the Covid-19 crash and recovery have influenced corporate bonds, and whether we're in a new cycle or just continuing an old one. We'll even be talking about rising stars and fallen angels - and no, we're not referring to a new reality TV show. Trust us, this conversation with Jeff is one you won't want to miss, especially if you're an allocator looking to maximize your returns. So grab a drink, get comfy, and let's get ready to talk bonds. Bond voyage!

This week we’re speaking to an expert on investing in China: Jason Hsu, CIO and founder of Rayliant Advisors. If and how to invest in China are key questions for long-term growth-oriented asset owners with different issues to unpack around political risk, geopolitics, ESG and even the mechanics of listing an entity. Jason walks through these questions and others including: should western investors understand President Xi better, how investors should think about political risks and whether economic growth is rewarded in share prices (“no” is often the answer)? We weigh up to what extent hidden biases toward unfamiliar cultures interfere with investors thinking about China. Anyone who likes to think deeply about China and Emerging markets investing will get a lot out of this episode.

This week we’re talking about one of the key issues of the moment, health in the UK. We’re speaking to well-known actuary and LCP colleague Stuart McDonald MBE, Head of LCP’s longevity and demographic insights team, who specialises in understanding and explaining health and death data. Stuart gained a high profile during Covid-19 when data interpretation of the government statistics became an essential skill and has continued this work in recent analysis of the impact of NHS waiting times on deaths, and the drivers and implications of the higher-than-usual excess deaths we’ve seen over the last year. Stuart has been behind front-page headlines in recent times including the 300-500 deaths per week caused by longer waiting times in A&E.

This week we’re discussing a particularly booming area of the markets in 2023: the market for buy-outs of DB pension funds by insurers. We’re speaking to LCP’s Catherine Hopper who thinks that 2023 will see record volumes in the “bulk annuity” market. We discuss the key changes in the funded status of UK DB schemes over the last year and what this has meant for their buy-out deficit, we cover the supply/demand dynamic in the market and what this means for trustees looking to do a transaction for their scheme. We also discuss the implications of potential future changes, such as solvency 2 regulation and the potential entry of new participants into the market. We think anyone involved in DB pensions will find this a worthwhile listen on one of the big themes of the moment.

Today we’re speaking to author Annie Duke. Annie’s work bridges the behavioural finance theory and practice. Her latest book Quit asks whether quitting gets a bad rap and whether we should all embrace the power of walking away from things that aren’t working so we can reallocate resources to better ideas.

Today we’re speaking to author and principal at AQR, Antti Ilmanen. Antti has made a career out of bridging the gap between finance theory and practice, and this year updated his 2011 book “Expected Returns” for a new environment. A lot has happened while Antti has been updating and releasing the new book so we dive first into how Antti thinks about setting expected returns on various assets including the use of historical data, the emphasis to place on current valuation levels and how to use forward-looking yields.

This week we’re speaking to author and CIO of Fundhouse Joe Wiggins. Joe’s latest book focuses on fund investing and the ways this is different to generic ideas around investing. There is a huge amount of wisdom in Joe’s ideas here and quite a lot that goes against the grain of the fund and consulting industries. We talk about what “risk” really is, complexity, and the lure of certainty. Joe catalogues many of the underappreciated behavioural challenges facing fund investors. We think anyone involved in fund investing will get something useful out of this conversation.

This week we’ve got a bonus special episode on …. Football! Alongside pensions, investment and other areas LCP has a team that specialises in football analytics (yes really!). In this episode Ashley Mould and Bart Huby explain how their systems use data from thousands of events across dozens of leagues to form a model of each player’s impact on a game and how this can be used by scouts and managers. We discuss what the data had to say about world cup teams and the decisions facing England manager Gareth Southgate. We reflect on analytics in sport generally and what this might mean in the future.

Today we’re talking decision-making with Chris Martin who is an independent trustee and Executive Chair at ITS with over 30 years of experience working with pensions boards and committees to make better decisions for members’ best interests. Chris shares some of the key ingredients to good decision-making in this setting drawing on his experience of advising schemes, particularly those in stressed situations. We cover the need to think live in the room, be mission-driven and prioritise functional working groups focused on outcomes rather than grand set-piece meetings. Chris also covers his key asks of consultants and asset managers.

This week we’re joined for the second time by Karen Ward, Chief Market strategist EMEA for JP Morgan Asset Management. Karen was also recently appointed to the chancellor’s council of economic advisers. A year after we last spoke to Karen we’re taking stock of the global rate-rising cycle, how far through we are, where interest rates might peak, how central banks will likely respond to data from here and whether a recession is on the cards. We look out into the future discussing whether markets have forecasted inflation and interest rates well or badly, and in particular what this means for bond investors going forward. Finally, we look at what the crucial data points are over the coming months and what Karen’s biggest worry is for the next year. If you’ve got any interest at all in making sense of the economic environment here and what it means for investors this is a must-listen!

This week we’re revisiting one of the key market issues of the moment: DB pensions and LDI. First, we’re joined by LCP Partner Steve Hodder where we discuss some of the actions being taken by pension funds, frameworks for helping clients approach the decisions, a reminder of the core reasons behind LDI and its continued popularity, how the market for LDI is changing going forward and the role of leverage in investing. We are then joined by independent trustee Keith Scott for his perspective as a fund manager-turned-trustee reflecting on recent events, the role of LDI in the future, the challenges being navigated by managers and what he would like to see from managers going forward. If you’re interested in how one of the biggest market stories of recent years is evolving, this is a must-listen.

This week we’re joined by James Baldwin, Real Assets Researcher at LCP. We’re talking about the future of infrastructure investing. James shares his insights from recent research on a raft of new infrastructure assets and funds becoming known as “infrastructure 2.0”, including battery storage, EV charging, data centres, sustainable transport and, of course, renewable energy. We cover some of the characteristics of these investments compared to traditional infrastructure as well as the investment case. We cover the investment case for investing in, and decarbonising, more traditional infra assets. We also touch on a number of fund-level features of infrastructure investing such as open vs closed-ended, specialist vs multi-strategy etc. Anyone interested in infrastructure investing will get a lot out of this episode.

This week we’re joined by Andy Bradley, Partner in our energy team, LCP Delta. Andy’s work covers what’s known as the “demand side” of the energy system spanning things like energy efficiency, storage and smart meters. We discuss some of the features of the UK energy market that have contributed to the current moment and how these might change. We explore how the low-carbon energy transition relates to the current crisis and how the solutions being deployed for the transition also help address today’s issues. We also cover trends in the energy industry including efficiency, electrification, flexibility and storage, and how the demand side is set to take centre stage in the energy transition. Finally, we discuss how fundamentally different a decentralized energy grid based around renewables is compared to the current system and the implications. Anyone interested in understanding today’s energy market, and some of the challenges, as well as opportunities, will get a lot out of listening.

In this first episode of our fourth series, we are talking about inflation. Dan and Mary speak with a range of experts to get a rounded picture of the current moment. We discuss insights on the financial well-being implications of higher inflation at a national level and the role of governments, employers and individuals in supporting households. From the political angle, we discuss the current announced and planned support measures with Steve Webb. From the actuarial angle, we run through some of the myriad ways higher inflation may be impacting actuarial work and the running of pension schemes. And finally, we cover the investment angle. What have markets been doing and why, and how we have been advising clients to react. We aim to help listeners think through inflation in a more rounded way and uncover some underappreciated angles.

In this episode, Dan and Mary wrap up season 3 for the summer break with a quickfire roundup of some of the key moments and themes of the last 40+ episodes! We start with the post Covid-19 “back to school” buzz of September 2021, recap the early days of three of the key themes of the moment: energy, inflation, and interest rates in late 2021, touch on 2022 forecasts, four mega-themes that emerged during season 3: impact, inclusion, communication and storytelling, run through our own top 3 episodes and favourite answers to the question: what’s the most underappreciated thing about investing?

This week we’re speaking to John L Bowman. John is Executive Vice President at CAIA, The Chartered Alternative Investment Association. We’re discussing the five key components of what John has called “The Portfolio for the Future”. We also discuss universal owners, private markets as a beta allocation, crossover funds, permanent capital and lots more. We think listeners will get a lot out of this wide-ranging conversation on alternatives and private markets!

This week we’re speaking to Michael Mauboussin. Michael is head of consilient research at Counterpoint Global, as well as a prolific author and professor at Columbia Business School. We discuss the basics of security valuation, why using simple multiples is not valuation, how intangibles have reshaped valuation, market efficiency, good losses vs bad losses, and a framework for understanding sources of inefficiency. This episode is packed with insight and investing goodies which I am sure all listeners will value!

This week we’re addressing the big question of the moment: rising interest rates. Joining us is colleague Steve Hodder to discuss how pension schemes and other investors are reacting. We cover: what the interest rate moves to date have meant for portfolios, hedges, and progress vs objectives. We discuss the size of the moves compared to risk model outputs. We look forward and run through a quick drains-up review for a typical DB fund highlighting key choices they have going forward. We also talk about the impact of higher rates on other types of investors.

This week we’re discussing a brand new data set on diversity and inclusion within asset management with LCP’s Laasya Shekaran. We discuss – the background to this dataset and what the Diversity Charter entails. We discuss the coverage of the data and the challenges in collecting it. We run through highlights from the data and accompanying LCP report, pulling out key messages. We discuss various government review recommendations that serve as benchmarks to judge some of the data against. Finally, we focus on the future and where Laasya expects this to go over the next five years.

This week we’re joined by Dr Rebecca Newton, Organisational psychologist, visiting Fellow at the LSE, and CEO of CoachAdviser, for a wide-ranging conversation about modern work life. We cover how the landscape of business culture and leadership has changed radically over 20 years, and what’s going wrong today for many business execs and leaders? What is joy and why does it matter in the workplace? What is Gravitas and why do so many of Rebecca’s clients want it, and why does it matter that it’s authentic?

This week we’re joined by Professor of Finance at London Business School, Alex Edmans. Alex also authored the book Grow the Pie and has presented numerous popular Ted Talks on corporate finance, responsible business, and responsible investing. Being a Professor means lecturing and doing research, but Alex recognises the practical relevance of the research he does and uses this to influence the practices of businesses and policymakers.

This week we’re joined by LCP colleague David Wrigley to break down LCP’s strategic portfolio. This covers: our best ideas in investment, how we bring strategies together, how we view asset classes and investment in a time of higher inflation. David covers recent changes to the portfolio, the role of short dated credit, asset backed securities and real assets as well as much more. Listeners will surely take a lot away from this quick tour of a host of LCP strategic investment thinking and ideas with a DB pensions perspective.

This week we’re joined by MD of 2020 trustees Naomi L’Estrange. We discuss her top tips and frameworks for better decision making (including the GROW model), what she’s seen work in investing and why the biggest risk might be risk aversion and not making decisions. We also cover how to review underperforming managers in today’s environment and reflect on the role of diversity in decision making and investment generally.

This week we speak to award-winning freelance finance journalist and communications consultant Charlotte Moore! We discuss how the media covers finance and investing, things asset managers tend to get wrong and right with their communications, and how the changing media landscape impacts the industry. We finish with an array of top communications tips from a media expert that listeners won’t want to miss.

This week we’re joined by Deb Clarke. These days, Deb is a NED following a long career in the City spanning asset management and fund research. We discuss – what Deb thinks the consulting and fund management industry have got right and wrong over the years. We dive into some of her principles for fund research, as well as some of her worst research meetings. We talk about some of the most important and underrated questions to ask fund managers and things managers do wrong. We cover principles for investing in general and thoughts on fund research in today’s world. Whether you’re a consultant, asset manager, or fund investor, we think you’ll take a lot of useful insight from this great conversation.

This week we’re joined again by LCP’s head of Real Assets research Andy Jacobson. During a difficult year for investors, Real assets are in the spotlight for all sorts of reasons: potential portfolio diversifiers, protection from higher inflation, and also risks from decarbonisation and changes to energy strategy. At the same time, we’re seeing a rotation into newer styles of real asset investing including global property, digital infrastructure and renewables. We cover a huge range of terrain in the conversation which is a must-listen for any investors interested in real assets.

Have you heard the term microaggression? Today we’re speaking to Diversity, Equity & Inclusion consultant Mamawa Turay who is taking us through the topic of microaggressions in the workplace. We cover what they are, the significant (and often underappreciated) negative impact they can have, how to spot them, what to do, and why giving them a label has helped. Mawa draws on her own experiences to help listeners understand the potential impact these can have. We hope this episode offers some challenge and food for thought to all listeners to re-evaluate some common workplace situations from a different perspective.

This week we speak to Matt Gibson, head of Manager Research at LCP. Matt’s been asking some interesting questions about passive investing of late, which we debate, including: does the success of passive (ironically) rest on a belief in active management? And, should the onus be on passive managers as opposed to active managers to justify their approach?

This week we speak to Ludovic Phalippou professor of Financial Economics at the Saïd Business School. Ludovic found himself at the centre of a storm 2 years ago following the publishing of his paper: Inside the billionaire factory which took a critical look at private equity and many of the questionable practices which take place in the marketing and allocating to these funds. We recap the paper and cover some of the core ideas including the concept of IRR and why this is such a flawed and potentially misleading way to measure returns.

This week we speak to independent trustee director Graham Jung from Ross Trustees. We cover Graham’s advice to consultants and asset managers working with trustees, including key things they miss, and the questions trustees should be asking right now. We discuss why Graham believes trustees are not the impediment to better decision making they are sometimes seen as, and reflections on what’s changed over Graham’s career in investment.

In this episode, Dan and Mary reflect on many of the learnings that have come from the podcast so far, including some frequently asked questions including building and targeting an audience, the practicalities, and some of the trade-offs involved like time, depth, breadth. They go behind the scenes on the process involved in putting out the podcast each week and talk about some potential directions in the future of audio content. If you’re a fan of podcasting, you will find this interesting – we get a lot of these sorts of questions when we speak to longtime listeners, so it was great to be able to answer them.

This week we speak to Allison Schrager, author, Bloomberg columnist, and senior fellow at the Manhattan Institute. Allison specialises in the intersection of economic policy and finance, leading to some fascinating recent insights into behavior and risk. We discuss some of Allison’s recent work such as: why Americans should be more like Europeans, do people actually make reasonably good risk decisions if given the right information, why the biggest risk in investing is risk-free assets and should people even be allowed to do stock picking.

This week we speak to Gurpal Ruprai, Consultant in our Energy Consulting Team, about all things batteries – the thesis, the impact of 2021 and current events, and what the future could hold for battery storage investment.

This week we’re joined by Jessica Clark, a Consultant in LCP's Insurance Consulting Team, and fellow podcast show host on LCP's Insurance Uncut. On the week of International Women's Day, Jessica joins us to discuss what IWD means to her, her experiences of being a woman in the industry and the importance of allyship.

This week we’re joined by investment author and Director of Liquid Markets at St James Place, Joe Wiggins. Joe is a former fund manager who has written extensively on many of the prevalent and underappreciated behavioural risks in investing. We discuss some of Joe’s recent work including why investors should ignore macro forecast, why setting beliefs out is one of the more useful things an investor can do, and how improvements in cost, transparency and choice can seem good but come with underappreciated behavioural costs.

This week it’s book club time as we speak to FT journalist and author of the book “Trillions”, Robin Wigglesworth. Trillions tells the story of how a band of renegades invented the index fund and changed Wall Street forever. We discuss Robin’s research process of writing the book, consisting of many interviews including with Jack Bogle and weaving together a raft of different stories from the 1970s to the present day. We cover the role of different personalities in bringing innovations to life and the need for outsiders/renegades.

This week we speak to governance expert Rachika Cooray. We delve into the forthcoming single code of practice applying to UK pension schemes, covering the what, why, and when. We discuss what’s new, what’s underappreciated, and what’s surprising about it. And governance, in general, reflecting on Rachika’s experience working with many trustee and committee groups on what gets done well, and the common pitfalls.

This week we’re talking about something that often goes underappreciated – voting. Voting by asset managers, on behalf of their asset owner clients at company Annual General Meetings (AGM’s). We’re talking to the author of an influential research piece benchmarking the voting activity of a huge chunk of the asset management industry, Shareaction’s Sonia Hierzig.

This week we’re talking consumer financial engagement with Tom McPhail, Director of Public Affairs at research consultancy the Lang Cat. In a previous role, Tom spent a decade as Head of policy at investment platform Hargreaves Lansdown. In this episode, we cover the transition to individual responsibility for pensions and savings in the UK, the role of regulation and policy interventions, and the different organisations trying to support individuals with investment and money advice. Tom shares his views on the FCA and financial product regulation in the UK over recent decades.

This week we’re talking about one of the most important and effective communication mediums known to man – stories! Our guest Stacy Havener has worked with boutique fund managers helping them tell their stories in more compelling ways and in the process has helped raise billions of dollars in assets for up-and-coming managers. Stsacy walks us through key components of a good story, what people in finance often miss and how to help tell your story authentically. If you have any sales or marketing component to your role, you are going to want to listen to this!

This week we’re talking decision making with professional Trustee Robert Thomas. We cover chairing investment boards, avoiding groupthink, and making good decisions in a complex environment. We also take a deep dive into why having a clear plan is so essential to moving forward, the value of getting advisers on the same page, and the underappreciated value of simple solutions. Robert discusses some small adjustments to communication and expectations that can change the dynamics of boardrooms. He was also kind enough to share many anecdotes and examples of all this in practice. We’re sure anyone working with trustees would get a lot out of listening to this conversation.

This week we’re reviewing all the various market forecasts we’ve seen for 2022 with the help of LCP Consultant & macro expert Anais Caldwell-Jones. We discuss China, the Fed, inflation, politics, and much more.

In the final episode of 2021, Mary and Dan sit down to review the year through the lens of four key stats, three people who defined the year, and two recommendations. They also reveal the top three most downloaded episodes of the year.

This week we’re talking China with Chris Kushlis of T Rowe Price. We ask all the China-investing questions on our minds, including how to think about Evergrande, this year’s tech crackdown, and the ever-present risk of a China slowdown or hard landing damaging the world economy. Chris highlights the key things to focus on when looking at China and offers a useful perspective to understand the year’s events as well as what many market-watchers get wrong.

In this week's episode, we’re talking big themes with Scottish Widow’s Head of Pensions, Investment & RI Maria Nazarova-Doyle. We catch up on Maria’s time at COP26 and hear her reflections on it, what she is thinking about the Net Zero transition over the next decade, and how this will influence the £170bn of assets run by Scottish Widows.

In this week's episode, we’re talking inflation with LCP’s Jon Camfield. We catch up on the latest inflation stats, how investors and pension schemes should think about these, and get onto the big question: Is this a temporary or a structural shift into a new regime? Have we got lazy over the last two decades with low and stable inflation? And what conventional assumptions would need to change if we enter a new regime?

On this week’s show, we welcome Karen Ward, Chief Market Strategist EMEA at JP Morgan Asset Management. We discuss: how investors should think about inflation and central bank reactions. Why this rate hiking cycle might be more like that of the 2000s, and how some economic models are getting challenged.

This week we welcome Jason Mitchell, Man Group’s Co-Head of Responsible Investing. We discuss Jason’s experiences attending COP26 and some of the main things he’s taking away. Including: what the COP26 decisions mean for investors, Net Zero, emerging markets, and what next to look for in Responsible Investment.

This week, show hosts Dan Mikulskis and Mary Spencer are delighted to welcome back Senior Consultant and fund researcher at LCP, Nikki Matthews. Following a recent research piece from Nikki on Govcoins, they delve into digital currencies, including a digital currency the UK Government is looking to launch, and the implications this will have.

This week’s guest is Zoe Burdo, Co-Chair of LCP’s D&I Steering Group and we’re talking about the future of inclusion in the investment industry. Prompted by the recent FCA discussion paper, which many firms will have completed we delve into some of the discussions that went into LCP’s views on the discussion paper. We cover key barriers to progress, small things that go under-rated, and what ought to be the role of regulation and data. We keep coming back to the issue of authenticity, and what it really means to do this in an authentic way.

This week’s guest is Rob Arnott, quant researcher and founder of Research Affiliates. We discuss the principles of fundamental indexing, the definition of bubbles and anti-bubbles, the future of value investing, what quant researchers tend to get wrong, and the right questions to ask of any backtest. We put some big questions to Rob including: has factor investing been oversold, can passive investing get too big and what should you really ask your active manager?

This week’s guest is Head of Pensions and Savings at investment platform Interactive Investor, Becky O’Connor. We cover the results of a recent large-scale survey of individuals’ hopes and worries about investing for retirement, as well as a wider discussion of the conversation the investment industry needs to have with individuals.

This week’s guest is LCP partner Norbert Fullerton who sheds some light on the investment approaches and social role of African institutional investors, as well as sharing some thoughts on his own professional journey and where the industry stands today on diversity and inclusion.

In this week’s episode, we speak to Karen Shackleton, founder of Pensions for Purpose and independent investment adviser and NED on impact investing. We cover Karen’s background and journey to setting up Pensions for Purpose, the growth she sees in impact investing when speaking with asset owners and asset managers, and the possibilities for the future.

In this week’s episode, we speak to Energy Analytics expert Rajiv Gogna about the recent bizarre goings-on in the GB power markets. We hear an explainer on how the GB’s electricity market actually works, what’s been happening this month, and what it all means for the future.

In this week’s episode, we discuss our recent climate investment risk report, along with co-author Laasya Shekaran. We cover how we analysed our database of UK asset owners for climate risks, and what some of the key and surprising conclusions were as well as the tangible next steps that investors can take.

Welcome back for season 3 of Investment Uncut! To hit the ground running, we are joined by LCP’s CEO Aaron Punwani to talk about the future of hybrid work and reflect on the last 18 months, including the benefits of Diversity & Inclusion that we’ve seen. We discuss:

In this sixth episode of our "Invest like a..." mini series we speak to Mark Thompson, investment committee member at multiple DC schemes.   We discuss – Investment philosophy Providing options for a vast DC pension membership base The structure of a good DC scheme o Well constructed default o Lifestyle plans o Freestyle options (up to around 20) For DC schemes, the mark of success is often getting members to save and contribute enough rather than focusing on picking the best investment The importance of comms & engagement in DC The only 3 questions that Mark asks fund managers Focus on the right timeframes - not quarterly performance Get your governance right Decision making: learning from doing (from what’s worked) Why governance needs a rebrand The importance of getting beliefs straight as a foundation for everything else The role of a devil’s advocate – not arguing with each other but arguing the point Key trends that Mark’s seen Freedom & choice and three headed dogs Value vs values Biggest risks on the horizon in DC Avoiding good actions becoming compliance check boxes Widening the narrative around impact investing: many things provide a return and have an impact. You could consider more widely about the impact of all investment. The most underappreciated thing in investing There are lots of people that think about investing as a science but it’s as much an art as a science. There is false comfort in numbers and a need for a big dose of common sense. All models are wrong but some are useful. Stewardship – it’s much wider than how your equity managers have voted. It’s about acting as an asset owner and being on top of your agents. This needs more development to move it beyond the compliance level. Recommendations Malcolm Gladwell Tipping Point Give n Take (Adam Grant) The delusion of crowds – why people go mad in groups

This week we speak to Victoria Sant, investment committee member at the National Trust. We discuss The need to know what you own Putting investment beliefs and charitable missions into practice Mixing emotive issues with risk and return Getting deep alignment with the managers of your assets Some of the challenges Victoria’s seen overtime Tips for making effective decisions: who owns what? The sea change in focus on ESG and stewardship Stewardship as a competitive asset management advantage Bigger focus on targeted impact outcomes, aligning to SDGs and looking in more detail at real assets Role of private vs public markets for primary market impact The existence of many different initiatives and organisations – which one should you support? Relevant links referenced in the conversation Notes on the National Trust’s mission The UN Sustainable Development Goals The Transition Pathway initiative Science Based Targets Initiative Climate Action 100+ What’s one thing you would like listeners to take away from this? Recognising the power that investing in the financial markets has to influence change, as a client. As a shareholder you have the power to influence change in the direction of your values. This can shift away from shareholder primacy toward a more long-term sustainable shareholder model. The most underappreciated thing in investing The flexibility that endowments have, the ability to take bold decisions as well as the ability to take more and different types of risk. Recommendations Talking Responsibly Podcast – (and our episode we did with David Hickey) The Authority Gap Mary’s recommendation: Desert Island Discs with Hilary McGrady (Director General of the National Trust)

This week we speak to Katharine Neiss, Chief European Economist for PGIM Fixed Income to take stock on where we are in terms of the recovery in Europe. We discuss – - What’s the current state of play in terms of the European post-Covid-19 recovery (vs expectations at the start of the year and vs the US, Asia) - What data points is Katharine watching over the coming months on this? - Inflation – Katharine's view on this, whether it is transitory or here to stay and why. - Differences across Europe, what’s important, what has Katharine been watching out for? - Influence of the US – the early take on the Biden admin and its impact - The next 10 years: will it be the roaring 20’s or a slow recovery? How is Europe positioned and what might hold it back? - Tech – is the lack of a meaningful tech sector going to hurt Europe? Most important things to watch for the next 12 months It’s not all doom and gloom in Europe, there are elements of dynamism that people may find surprising. The most underappreciated thing in investing Diversification. A good investor doesn’t get captured by your asset class - you need to diversify. Recommendations Factfulness: Ten Reasons We're Wrong About The World - And Why Things Are Better Than You  Macro Musings Podcast

This week we speak to Alex Scott, Chairman of Schroders Global Family Office services, and founder of Sandaire family office. We discuss: - Alex’s journey of setting up and growing a multi-family office - Strategy not tactics in investing – be very clear on the difference - Focusing on a 5-year view in a world full of news about the last week - Decision making in small vs large groups, maintaining that strategic perspective on boards vs executive CIO level - Trends in investment markets: large institutions vs boutiques

This week we speak to MD and CIO at Wealth Manager AJ Bell, Kevin Doran. We discuss Kevin’s guiding principles in investing and what’s worked well / less well over the years. Investment decision making – groupthink etc. Kevin has seen big changes and discusses what he’s most focusing on over the next few months. Guiding principles: the single most important thing is acknowledging that time is your friend in investing but costs are your foe. Beyond that there is no magic formula other than consistency over time. A private wealth manager is a unique and privileged position at managing one of an individual’s most important things (their money). As an industry we haven’t always done a good job on transparency, letting people know what they are invested in and why. The single biggest problem these days is the 24 hour news channels, as a consequence of that there’s “news from noise”. Stocks don’t go up and down – they surge and plummet. If you can get the big stuff right, time will do the rest for you. What has Kevin put in place to help clients get this right? On the Youinvest platform they aim to cater to three different personas: Confident and in control – looking to implement their ideas as efficiently as possible. Might buy direct securities; Hungry for Help – build own portfolios of funds, perhaps using starter portfolios; Nervous Newcomer – will buy a product of funds. It needs to be easy to understand, jargon-free educational materials. During lockdown seen a surge in the Hungry for Help and Nervous Newcomer profiles on the site. Over last 4 years focused on ability to build portfolios, not just look at funds. Biggest lessons over Kevin’s career? Make sure you get the biggest things right – don’t focus on small stuff eg the difference between a Fed hike in November vs December Easy to spend too much time talking No point in talking around things the market has already discounted – can be very impressive and interesting, but much is already baked into expectations Starting point has to be – what’s already in expectations Can only add value to portfolios if you can identify things that are not already incorporated into prices Understanding where change is coming from and what the catalysts are This implies the need to be more widely read beyond macro variables, history, philosophy, psychology It’s about understanding people as much as anything. History and politics alongside economics For example: currency analysis - There is lots of analysis done over recent decades but really most of what mattered was 3 key events from the perspective of a UK investor. AJ Bell was trying to deliver low cost value solutions: aiming to strip as much cost out as possible without sacrificing the basics. Don’t do “final mile” research in order to keep costs in the chain low. Instead outsource this to fund managers. When looking at hire/fire manager decisions – look at qualitative data first, backed up by quantitative data. For example blending factor styles and philosophies, managers are doing what you expect given the style, it is not just the highest performing. A good starting point is to try and guide to clients that if underlying investors can’t invest over a cycle then shouldn’t be investing (define a cycle as 5-6 years). When looking at decision making, ensure you have built a team with wide ranging interests and views, encourage openness and honesty. For example, the Brexit debate – there were a good range of opinions, outside with what you would get in most asset management businesses.

This week we have a very special episode in honour of Pride Month, and we’re delighted to be joined by two LCP colleagues, Jess Horner and Luke Hothersall.  Jess and Luke share their experiences of being gay in the city, and we also discuss wider LGBT+ issues with them. We discuss: What Pride Month means to Jess and Luke The impact of changing attitudes towards the LGBT+ community Power of networks, both internal and at industry level The importance of pronouns Making sure trans and non-binary aren’t left behind What we can do to better support the LGBT+ community What does pride month mean to you? For Luke, it really demonstrates the value of visibility and it makes him smile.  Literally it’s about feeling proud!  Jess observes that seeing the rainbow sign everywhere makes you feel like you’re the norm, not the minority, and it feels safe to be out. We remember that Pride  has evolved from a riot to a protest to a celebration, albeit it’s become more corporate in recent years.  Potential for it to go back the other way towards a protest and a push for more change? As members of the “L” and “G” in LGBT+, Luke and Jess reflect on whether they are now in a privileged position and stress the responsibility they now have to support other parts of the community. Impact of attitudes Bringing your whole self to work – or maybe not the bit about being bad at washing up (if you’re Luke)!  But to able to be yourself is essential: if you’re constantly in threat mode about what people think, it’s clear you will have less mental space to deliver great work.  In Luke’s early career there was a lack of visible role models, which made it unclear if it was ok to talk about being gay openly. Jess reflects on the power of the LGBT+ network, which showed her there were others just like her and literally opened a network of support and role models.  Views on industry networks? O:Pen is a network for members of the LGBT+ community in the pensions industry, which launched over last year.  Three events so far centred around social networking, to build a community.  Seeing people like yourselves makes you happy and you realise you’re not the only one anymore. LGBT Great is a network for the investment and savings industry – and in particular Project 1000 highlights allies and role models. Impact of lockdown?  Actually very positive.  Possibly accelerated by Black Lives Matter movement or by lockdown meaning we’re at home, with more time on our hands?  Jess has seen much more engagement internally at LCP than before.  Conversations have reached another level and she’s been pleased but surprised with the continued appetite for virtual socials. Mary reflects on joining an O:Pen event and being in the minority.  Having this conversation can feel a bit uncomfortable, but we’re getting used to it, and should approach with curiosity. Pronouns Putting pronouns in email signatures – this opens the conversation about gender identity and shows acceptance that you won’t pre-judge that for someone else.  Luke describes it as a “green light” that says it’s ok to not be a cisgender heterosexual person. Jess adds that it shows that being cis doesn’t need to be the norm.  When she first added pronouns she got a lot of comments and questions, which were inconvenient but didn’t cause stress or damage, so she feels she should do it as an ally to someone non-binary (eg someone who’s pronouns are they / them).  What’s the next big thing? Trans and non-binary inclusion.  We’re all on a journey and don’t always get it right.  There is a long way to go before we reach equal rights for trans and non-binary people.  We discuss the difficulty of putting oneself in someone else’s shows and that it takes time to get your head around how others may feel, particularly if it’s not something you’ve thought about before.  The best way we found to describe it was a leap.

This week we speak to Lothian Pension Fund’s Head of Responsible Investment, and well-known figure and podcaster in the UK responsible investment scene, David Hickey. We discuss: Net Zero is very much “of the moment” – but is that a good thing or bad thing? Transitioning key sectors (eg utilities, mining), observations Reflections on UK government commitment Where does responsibility sit: governments vs asset owners cop26 – what do you expect to happen over the summer? Fiduciary responsibility – does this come after fiduciary, or part of? Notes on discussion The Net Zero movement moment – good or bad thing? Net Zero can focus the mind too much on the mathematical / numerical task of reducing reported emissions, but this only part of a broader picture and needs to be viewed in the round. You can reduce portfolio emissions without having any meaningful effect. We need to focus more on forward looking business alignments. Tools like the Transition Pathway initiative and Climate action 100+ benchmark can really come in handy here. Observations from key sectors David’s own podcast episode with the CEO of Anglo American was a very interesting conversation on the mining sector. It showed that globally there are some countries and communities that will be dependent on coal and fossil energy for many years to come. The concept of a just transition needs to be factored into these conversations and the issues are not as black and white as frequently portrayed, there’s a lot of shades of grey. Some crucial sectors like steel and mining are hard-to-abate, it is not just about divesting them. Asset owners can take a different tack with bond portfolios vs equity portfolios. For example denying debt finance to companies not aligned, but working to transition them on the equity side. Investing into companies performing poorly with regard to climate and helping them transition could be a very valid, useful and profitable investment strategy. The UK government’s commitment From the UK government perspective what’s needed is more detail around some of the proposals in the IEA pathways report for example regarding bans on gas boilers etc. There hasn’t to date been enough political will to make these bottom-up pathways a reality so focus has been on the big headline top-down targets. We can’t do the top down without getting the bottom up right. What’s the government’s role in all this? The big problem is that externalities aren’t properly priced – the market has really failed in this respect. The government also needs to support the less well-off parts of the population through this otherwise excessive costs get heaped on the poor. One issue is the alignment of time horizons between politics and climate change, often referred to as the “tragedy of the horizons”. Related links: The IIGCC Net Zero Investment Framework The transition pathway initiative tool Climate Action 100+ What’s one thing you would like listeners to take away from this? De-carbonisation isn’t so straightforward. You need to look far more closely at where the assets are and the communities that depend on them. There’s a grey area, a lot of nuance. What do you think is the most under appreciated thing about investing People don’t realise how interesting it is - there is so much space for thoughtful, long term analysis and debate. Recommendations David hosts the Talking Responsibly podcast David recommends: A Sustainable Future podcast Redefining Energy Cleaning Up Blood on the tracks by Colin Murray

This week we sit down with author, podcaster and go to girl on young peoples’ money questions: Iona Bain. We discuss What first got Iona into working on the Young Money blog, highlights from a decade in the business, research on Gen Z vs Millennial habits and what that could mean for both saving and investing in the future. In addition we explore what do young people tend to “get wrong” when thinking about money and what Iona thinks is the biggest threat to young people’s finances in the next decade. What first got Iona into working on the Young Money blog A lack of people speaking to her generation in a relatable way about money, plus being a way to learn. Highlights from a decade in the business Iona’s appearance on Question Time, as well as mainstream financial press roles such as Financial Advisor, writing about investing through key events like the Retail Distribution Review and being in the newsroom the day after the Brexit referendum. Iona’s recent research conclusions: Young people are most likely to suffer economic fallout from the current environment (particularly Gen-Z) alongside those approaching retirement. This poses questions as we come out of the Covid-19 crisis – how to redress the balance. Differences between Millennials (age 26-40) and Gen-Z (16-25) Gen-Z likely to be more adventurous and entrepreneurial, more likely to be enthusiastic savers than Millennials. Partly because they have seen Millennials get caught out and been affected by too bleak a picture post-2008. There are big changes in saving and investing over the last decade, only one banking app existed in 2011. Since then we have Monzo, Starling, Revolut etc exerting outsize influence in the industry. What do young people tend to “get wrong” when thinking about money Viewing it as a form of gambling and expecting instant results. What’s the biggest threat to young people’s finances in the next decade? A major stockmarket correction, and inflation. One thing for listeners to remember Mistakes are inevitable. No-one’s perfect, we all make mistakes, what matters is we learn from mistakes and are committed to getting to grips with our finances. It’s complex but also rewarding. Most underappreciated thing about investing It has genuinely never been easier to start investing. That has its dangers but the biggest problem is often overcoming apathy. Recommendations Money Week podcast with Merryn Somerset Webb The BBC history extra podcast Links to Iona’s content: Young Money Blog Book: “Own It” Own it! Podcast

We are joined by Rob Groves, CIO of Pension Insurance Corporation, a $50bn asset owner and bulk annuity writer. We discuss Rob’s philosophy on investing, how insurers approach investment, the role of regulation, changes and trends he’s seen as well as current market concerns.  Philosophy As an insurer they are not focusing very much on the performance of the asset portfolio. It is all about cashflows and if/when these get delivered. Their financial success is not driven by the performance of the portfolio, so in the most part the total return of the portfolio is not even measured. This gives a very different focus to most investors, and one that is genuinely longer term. What works well? Ensuring you have high quality people, a focus on things you understand, and not underestimating the importance of gut-feel. Decision making There are particular challenges to a situation where you have an Investment Committee overseeing an in-house team. It’s important to have an open culture within the team where it’s acceptable to write-off several months of work if someone just doesn’t think the investment idea is good enough. One way of avoiding groupthink is having individuals who have adjacent expertise. Changes trends The use of illiquid assets continues to be a big trend among insurers. There can be some laziness inherent in the way the industry looks at these: the liquid/illiquid buckets increasingly don’t always fit. There has been a deterioration in credit quality generally. Current worries Still mainly focused on the Covid-19 impact: downgrades and defaults in bond portfolios eg airports etc. Inflation and interest rates remain bigger picture macro themes that are important, but don’t underestimate the ongoing impacts of Covid-19. One thing to take away An annuity writer is not focused on market values – they are focused on credit quality. Most underappreciated thing The economy often has a fairly low correlation with what’s going on in markets. It is easy to listen to very sensible sounding economic views, but often the markets do the opposite and it’s easy to over-focus on the economic side of things.

We speak to Shyam Gharial, sustainable investing researcher at LCP, on a big research project he’s been doing, looking at setting up corporate bond mandates with sustainability criteria. It aims to tilt portfolios away from companies with bonds most exposed to sustainability-related risks. This has had some interesting results and is particularly relevant for DB pension schemes. With many defined benefit pension schemes reducing their equity allocations, they may well find their biggest climate exposures in their bond portfolios over the next 10 years. How are bond managers looking at climate risks and transition risks and how can portfolios be set up to better align with sustainability criteria? We discuss  Increasingly sustainability is being recognised as something that has been neglected in managing investments and companies, and this has led to systemic risks. Climate change is one of these but not the only one. It also includes biodiversity loss, water risk, natural habitats as well as broader social factors impacting communities and particular segments of populations. Aligning equity mandates with sustainability criteria has become a very popular thing to do and a relatively well-trodden area with many funds and indices launched, but bonds remains less so. Many investors – but particularly UK defined benefit pension schemes – hold increasingly large portfolios of high-quality corporate bonds. These are expected to be paid back over the next 20 years or more which make them very sensitive to longer-term emerging risks such as these sustainability issues. The most obvious ones are climate related, eg stranded fossil fuel assets and/or sharp changes of regulation to meet climate targets that have far-reaching impacts on particular sectors (or companies within a sector that have not addressed the issue strategically). These criteria can be incorporated into bond portfolios such that the bonds selected are better aligned with the low-carbon transition, or with broader sustainability fundamentals meaning they are less at risk. Managers incorporate these criteria in a number of ways but many use proprietary models to assess future climate-alignment and bring together a range of sustainability factors together into a portfolio management tool. This is different to investment in green bonds or social bonds. What we’re talking about here is often what’s called “unlabelled” bonds, ie the general universe of bonds issued by companies and we are talking about sorting this universe in specific ways to align the portfolio with certain risk factors. More detail in LCP’s blog here  One thing to takeaway You can tilt your bond portfolio to focus on more sustainability aligned companies without compromising yield. Most underappreciated thing  That the investment industry doesn’t exist in isolation in a silo. It’s part of the broader world and broader factors should be incorporate outside just returns.