Panel
New Realities in Asset Management | Global Conference 2024
- Wellington plans to leverage its private partnership structure and global capabilities to maintain independence and innovation, aiming to scale by developing strategic partners in global wealth channels.
- CalSTRS intends to maintain a private markets allocation of approximately 42-43% and shift capital incrementally from public to private markets, having moved roughly $50 billion over the past five to six years.
- CalSTRS is adopting a dynamic asset allocation strategy that may increase exposure to fixed income with spreads of 5% to 6% over SOFR while reducing equity exposure due to subpar opportunities.
- CalSTRS anticipates a continued freeze in private equity exits and plans to pace down transaction volumes by 40% to 50%, noting current volumes are significantly lower than historical levels.
- CalSTRS expects to deploy capital during significant market downturns (down 30% or more) utilizing an unlevered balance sheet and enhanced liquidity tools to manage lumpy cash flows.
- CalSTRS aims to launch a new manager to span the private debt to public fixed income chain and will coordinate with technology and HR teams to address technical debt and cloud computing choices.
- CalSTRS believes the next two years of AI development will be underwhelming, whereas the subsequent 20 years will be overwhelming, and expects to align the board, staff, and teachers to handle systemic risks.
- Ontario Teachers plans to utilize digitized data as feedstock for AI applications across its 130 owned companies, anticipating a shift from experimental preparation to "open warfare" deployment in approximately 18 months to two years.
- Ontario Teachers intends to foster a culture where employees manage 100 processes rather than one, with junior staff potentially instructing senior staff on tools like ChatGPT to solve early-career problems.
- Ontario Teachers has allocated a two-year runway to build AI tooling, foundations, and guardrails while preparing for a less robust capital liquidity environment that requires pivoting opportunities as market conditions change.
- Ontario Teachers expects to focus value creation in owned companies on advancing capacity through AI and climate transition tools like the circular economy, while maintaining competitive compensation to retain execution teams.
- Citadel anticipates that raising capital for new hedge funds will be straightforward, whereas the primary challenge will be hiring top-class investment talent and having operational, risk, and analytics teams functional from day one.
- Wellington expects that if market conditions remain favorable, it must seed capital to ensure proper industry distribution, viewing scaling as a continuous challenge that requires balancing great years with broader ecosystem support.
- Jonathan Hausman identifies invasive regulation with incorrect cost-benefit analysis as a significant challenge, while Scott Chan notes the high cost of acquiring resources for unified technological approaches compared to firms like Citadel.
- CalSTRS expects to attract experienced talent from Wall Street and private equity during recessions by emphasizing its mission to serve over one million educators, maintaining a turnover rate of four to five percent.
- Ontario Teachers expects its mission to preserve retirement security combined with opportunities for interesting work to attract mid-level and incoming staff, with the leadership noting no boredom over a 20-year tenure.
- Scott Chan states that CalSTRS requires 7% or greater returns to meet liabilities for over $1 million in California educator retirement funds while managing the freeze in private equity exits.
- Wellington expects to attract raw talent by offering multiple career paths across public, private equity, and hedge funds, allowing them to plug into an ecosystem rather than a single lane.
- CalSTRS expects to address the challenge of aligning the entire enterprise to adopt a holistic approach to technological innovation and paradigm shifts, acknowledging the high cost of resources required.
- Jonathan Hausman plans to practice "strategic imperfectionism," encouraging the evolution of investment theses and the willingness to abandon them if they do not work, likening the process to crossing a river.