YouSaid · the spoken record

Greg Dowling

lines on the record: 82
first: 2022-05-02
most recent: 2022-05-02
sittings or episodes: 1
sources: podcast

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“A lot of times at firms where you have different teams of analysts from a manager's perspective, they never quite know who the team is. Sometimes there's the consultant in the field, and then there's the research team. And how does that work at FUG?”
2022-05-02 · Capital Allocators · Greg Dowling – Mid-Market Institutional Consulting at FEG (Capital Allocators, EP.248) · IDENTIFIED FROM THE TRANSCRIPT · source
“Natural tie-ins. So for example, if we're doing a private debt manager and it is mainly sponsor-backed, it's great to get the buyout analyst involved because They hold hands together. They're financing that business and industry. So it's interesting to talk to the buyout team and the private equity team and say, hey, talk a few of your managers. I noticed that XYZ private debt fund has been doing a lot of their deals and get them involved. So we try to do that. I think that's an advantage of our size. We're big enough to cover the beachfront. We're not so big where analysts don't know each other and don't have this like, hey, this makes sense. Like we're looking at a couple areas that I'm not even sure what they are if they're real assets or they're kind of diversifying strategies. That's the gray process. So Devil's Advocate, we have our QERs. You write a research report. It goes to our investment policy committee. I chair that.”
2022-05-02 · Capital Allocators · Greg Dowling – Mid-Market Institutional Consulting at FEG (Capital Allocators, EP.248) · IDENTIFIED FROM THE TRANSCRIPT · source
“And we use this to help to try to measure some of these qualitative things. Because if I ask a younger analyst, what did you think about culture? Usually it'll say it was good. Oh, it's always good. And if you ask another one, they'd be like, it was really good. So between good and real good, what is that? I put a number to that. And so we have them score that. And that's really helpful to look at not only on the front end, but through time. And it's also good to, I'm using good again. lots of goods in our language is the look at the difference between them. So if one gave a four, we used to do a zero to four. So if one did four being the best and then one had two, that's a pretty big gap. Let's sit them down and say, well, why did you do four? What did you pick up on that I didn't? That's kind of a pretty useful tool. And then we'll also have a devil's advocate. So we'll assign somebody to the process to shoot holes in it. And we try to find.”
2022-05-02 · Capital Allocators · Greg Dowling – Mid-Market Institutional Consulting at FEG (Capital Allocators, EP.248) · IDENTIFIED FROM THE TRANSCRIPT · source
“But culture is important. And so if somebody is telling you that it's a very collegial work environment and then you go there and everybody's working in offices with their doors closed, you start going, tell me more about this collegial environment. And so we try to score, so we have two different analysts score our six investment tenants. And it's a little bit of our Rosetta stone. We use that for any of our different asset classes. And so it's conviction, it's culture, it's consistency, it's pragmatism, it's risk controls, and active return. And active return is last.”
2022-05-02 · Capital Allocators · Greg Dowling – Mid-Market Institutional Consulting at FEG (Capital Allocators, EP.248) · IDENTIFIED FROM THE TRANSCRIPT · source
“Take that, take an investment letter, start talking through it. We have an open door policy, so we'll take meetings with anybody. So we have all this information out there and we start to build peer universes. So we'll look at them versus peers. You know, at some point you're doing a deeper dive and you're going on site, maybe multiple times. A couple of unique things that we do. Is we have a process we call QER. So it's a qualitative evaluation review. And this is where we try to quantify the qualitative. So, culture is a big thing. And this is tough. This has been the toughest part during COVID because it's really hard to pick up culture in a virtual setting.”
2022-05-02 · Capital Allocators · Greg Dowling – Mid-Market Institutional Consulting at FEG (Capital Allocators, EP.248) · IDENTIFIED FROM THE TRANSCRIPT · source
“It may or may not explain how they do in the future, right? It's all backwards looking. And teams change and people change. So we do that. We have a director of quantitative research that works with all of our individual, again, breaking it up a little bit. So let's take hedge funds. We'll stay in the hedge fund area. We might look at a manager and break out. Let's say it's a long, short equity manager will get their returns, both long and short. We would get their exposures and we'll try to break it out and say what was their long alpha, their short alpha, what is just leverage? What is their returns by market timing, so changing their exposures around? You look at different periods of time. This is probably the most helpful say like, how did you do in 2008 or how did you do in March of 20?”
2022-05-02 · Capital Allocators · Greg Dowling – Mid-Market Institutional Consulting at FEG (Capital Allocators, EP.248) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so it's a balance. It's both the quantitative and the qualitative. And I'd probably say we're a blend. There are certainly, this is where it gets to nuances of differences in consultants. Some are very, very quantitative. And we're quantitative too. But we would tell you that. That explains how they did in the past.”
2022-05-02 · Capital Allocators · Greg Dowling – Mid-Market Institutional Consulting at FEG (Capital Allocators, EP.248) · IDENTIFIED FROM THE TRANSCRIPT · source
“They can be very helpful. And so we use that to fill in the gaps in a database. We would use clients. A lot of our clients, we've been blessed with some clients that have started hedge funds, C-suite on hedge funds. So they might have some ideas. We might talk to them about a manager and they're like, eh. I worked with him on the Goldman fixed income desk. What else she got? All right. What do you think we should do? People sit on, often people sit on numerous committees. So you do that. You build up your Rodex. You take all that together and then you figure out how much toothpaste do I want. And that's where you go.”
2022-05-02 · Capital Allocators · Greg Dowling – Mid-Market Institutional Consulting at FEG (Capital Allocators, EP.248) · IDENTIFIED FROM THE TRANSCRIPT · source
“And then once you go from that, you start building market maps of the different areas and who you want to invest in. And so let's be specific here. I'll do hedge funds because I started as a hedge fund guy We know that in the early days, the hedge fund databases were just terrible. They were just terrible and they've come a long way. So much more robust, but there's still holes in them. So each of these asset classes is going to have kind of its unique ecosystem. And with hedge funds, the ecosystem evolves really around prime brokers. If you're a hedge fund, you need a prime broker. So instead of having to go out and talk to 9,000 hedge funds, we can start by talking to the prime brokers and ask them who's launching in the new year, who do you think is interesting? Maybe it's an area that we're trying to build up.”
2022-05-02 · Capital Allocators · Greg Dowling – Mid-Market Institutional Consulting at FEG (Capital Allocators, EP.248) · IDENTIFIED FROM THE TRANSCRIPT · source
“We have to monitor it. We have to do quarterly calls. The team doesn't like to do that when there's no money. The managers hate it when we're sending them questionnaires and doing our quarterly call with them and our annual on-site. And they're like, we have no money from you. Why are we doing this? It's a bit of a balancing act. So that's kind of how that process starts. And sometimes it's not even inventory based. It may be opportunity-based. Sometimes when the financial crisis hit, right after that, even though subprime was at the epicenter, it was pretty cheap. So structured credit was a great place to be. Well, gosh, I didn't, we know a little bit about structured credit. We don't know much about distress structured credit. And so sometimes you have to beef up on an area, drill down, and learn about it. And then sometimes a manager is coming back to market or is reopening. And you don't need that. You already have all the toothpaste that you need. But man, this is a good toothpaste. So you add them. That's kind of the balance between having the right inventory and the right opportunities.”
2022-05-02 · Capital Allocators · Greg Dowling – Mid-Market Institutional Consulting at FEG (Capital Allocators, EP.248) · IDENTIFIED FROM THE TRANSCRIPT · source
“Feel like sometimes you run a grocery store and I need to have enough toothpaste, but I can't have an aisle of toothpaste. So you're going to have commingled vehicles that some people are going to want. Some people are going to want to separately managed account. Some are going to want to have it in ETF. Some are going to want within a category a little hierarchane. Some are going to be a little more conservative in that same category. So you try to find just like toothpaste. You might have like, this is more whitening. This is for sensitive gums. And so you try to have enough, but you can't have too much because you have a whole store. So you can't just focus on small cap. What about large cap? What about fixed income? So it's about trying to figure that all out because at the end of the day, if we screw up in what we bring on.”
2022-05-02 · Capital Allocators · Greg Dowling – Mid-Market Institutional Consulting at FEG (Capital Allocators, EP.248) · IDENTIFIED FROM THE TRANSCRIPT · source
“Is where I spend a lot of my time. I'll start general and then we'll get a little specific because specifics more fun. What we do, or I do in my department, it's a little bit like a factory and a warehouse. So we're always looking to figure out what our clients' needs are. So we try to do some work at the beginning of the year, really kind of late, the previous year to see how much private capital do they need. Are they looking to add small caps? Try to get an idea of what we have. And then you look at your current inventory list and you're like, boy, a couple of these. I know we're closing really soon. We probably need to have more inventory here.”
2022-05-02 · Capital Allocators · Greg Dowling – Mid-Market Institutional Consulting at FEG (Capital Allocators, EP.248) · IDENTIFIED FROM THE TRANSCRIPT · source
“Next step is really the ingredients. And you can get some funky ingredients in there or you can kind of go a little bit plain vanilla. And oftentimes you can get pretty close. So that's where you kind of figure out what that looks like.”
2022-05-02 · Capital Allocators · Greg Dowling – Mid-Market Institutional Consulting at FEG (Capital Allocators, EP.248) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so one, you try to figure out what's the right delivery mechanism for and what kind of services do they want? So through that, you might say, well, if you want to do private capital, here's what you got to do. We're going to come to you, staff from, I think last year, I think 80% of the funds that we recommended were single closes or oversubscribed. And so you're going to get the docs late and you got to turn around quick. Can you do that? Is that going to tax the overall resources of the firm? So you start thinking about like the resources. How often are you going to meet? Are you going to meet quarterly? Are you going to meet monthly, weekly? Are you going to have subcommittees? How quickly can you look at these opportunities if the best hedge fund manager is open because there's a downturn in the market, but they're only open for a short period of time, can your committee meet? So you try to think about those types of things so you figure out the next step. So we talked about earlier in the discovery phase is a little bit about the recipe.”
2022-05-02 · Capital Allocators · Greg Dowling – Mid-Market Institutional Consulting at FEG (Capital Allocators, EP.248) · IDENTIFIED FROM THE TRANSCRIPT · source
“The continuity of the committee is the investor committee all on the same page. Because if it's not, that's tough too. So if half the committee says, hey, we really want to take advantage of time arbitrage and we'll be concentrated in some contrarian areas. We're a long-term investor. We're going to write out the storm. And then you have a few of the other investment committees who may be vocal and said, that's not what I'm looking for. I've got two years left in my term, and I don't want to go out like this. So the magnitude, the continuity are two big areas that we'll focus on.”
2022-05-02 · Capital Allocators · Greg Dowling – Mid-Market Institutional Consulting at FEG (Capital Allocators, EP.248) · IDENTIFIED FROM THE TRANSCRIPT · source
“One question would just be how much of a loss are you willing to take? Because everybody says they're long term until there's losses. And then you're like, whoa, we're down 10% in a quarter. Like, well, you told us your risk tolerance was higher. So a little bit of that, you try to get a sense for patients. You also try to get a sense for”
2022-05-02 · Capital Allocators · Greg Dowling – Mid-Market Institutional Consulting at FEG (Capital Allocators, EP.248) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, the first thing that we do, say this is a new client, is we'll do, we have some questionnaires that we send them because everybody tells you that, hey, we don't mind a little risk. Let's quantify that. So what does that mean to you? We'll have a committee, for example, go through a discovery process to try to figure out what that means and what are their hot button issues, what's your sort of risk return parameters? How much illiquidity can you handle? So that's kind of the starting process is Everybody tells you something. And then when it gets down to when the rubber meets the road,”
2022-05-02 · Capital Allocators · Greg Dowling – Mid-Market Institutional Consulting at FEG (Capital Allocators, EP.248) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'd love to dive into the investing side. How do you think about it, you've got a lot of different clients, though you mentioned mostly nonprofits Do you start when you've got so many different clients?”
2022-05-02 · Capital Allocators · Greg Dowling – Mid-Market Institutional Consulting at FEG (Capital Allocators, EP.248) · IDENTIFIED FROM THE TRANSCRIPT · source
“What's changed is the size of the institution that are outsourcing. It's pretty incredible. You have a billion dollar institutions that are outsourcing. So for us in our development, it was really making sure that we had the right offerings for those larger clients. They want different things. And then also embracing some ambiguity because there's this a lot of stuff in the middle. We call it hybrid where maybe taking discretion of just the back office. So maybe, especially in the private capital side, you have lots of docs and they give them to you late and they want them back early. And that's hard for a staff if you don't have the right resources. So it might be just taking care of that. Or it might be the investment team there has a lot of experience in more traditional investments and they want to outsource the private capital. So our business has gone from 100%”
2022-05-02 · Capital Allocators · Greg Dowling – Mid-Market Institutional Consulting at FEG (Capital Allocators, EP.248) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, like we were talking about the evolution of consulting and how the business grown, everybody was a traditional non-discretionary consultant. And that's still the bulk of our business, but discretionary is growing. And we've had discretionary services. When I say discretionary, this is OCIO. We've had it for about 15 years, but it was probably more oriented to smaller clients. So we'd have a university and someone on the board might say, look, I also serve on this small community foundation in this college town. We meet twice a year. It's all volunteer staff and no one knows anything about investing. So you're like, well. Governance and resource structure probably makes sense to be OCIO. And so we started our practice to fill that void.”
2022-05-02 · Capital Allocators · Greg Dowling – Mid-Market Institutional Consulting at FEG (Capital Allocators, EP.248) · IDENTIFIED FROM THE TRANSCRIPT · source
“When he was talking about Berkshire Hathaway in the beginning, he said, all we needed to do is find a few good investments. And then now it's about finding a few good large investments. And that's harder to do.”
2022-05-02 · Capital Allocators · Greg Dowling – Mid-Market Institutional Consulting at FEG (Capital Allocators, EP.248) · IDENTIFIED FROM THE TRANSCRIPT · source
“you're dealing with one of our competitors who may also do pensions. I mean, they're $10, $15 trillion. You've interviewed some of these people. They're great. They absolutely do wonderful work, but that's probably not a great fit for a lot of them. Because what is their advantage? Their advantage is their size. They can invest in smaller managers or emerging managers. That's harder to do with a giant consulting firm. But what do those giant consulting firms have? Well, they have probably services that we don't, especially on the pension side. They're going to have in-house actuaries. They're going to use their size to push down some of the fees. That's the one big lever they have. We'll use that lever too. We'll ask for most favored nation. But certainly they have an advantage when they have all that money versus us. We're going to try to find those smaller managers and the paraphrase, Warren Buffett. I always love some of his quotes. He was talking about the growth of Berkshire Hathaway.”
2022-05-02 · Capital Allocators · Greg Dowling – Mid-Market Institutional Consulting at FEG (Capital Allocators, EP.248) · IDENTIFIED FROM THE TRANSCRIPT · source
“Are strengths and weaknesses, and it's about fit. So most of our clients are not for profits, and we don't do any big public pensions, sovereign wealth. So, if you're a $200 million community foundation,”
2022-05-02 · Capital Allocators · Greg Dowling – Mid-Market Institutional Consulting at FEG (Capital Allocators, EP.248) · IDENTIFIED FROM THE TRANSCRIPT · source
“Everybody at FEG is an owner of FEG. And that's helped. And so we're five years into that and that's allowed us to be independent.”
2022-05-02 · Capital Allocators · Greg Dowling – Mid-Market Institutional Consulting at FEG (Capital Allocators, EP.248) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think we are on that same path for a while. I would call it maybe six, seven years ago. We started looking at our partnership. And it's a layered cake, right? You have different partners, but you have certain layers that are a little thicker. And we're going to have a pretty good size vinegar that would be tiring at the same point in time. So we came to this crossroads and we're like, what are we going to do? And I remember every partner's meeting and every partner's off-site for like three or four years we're like, well, what do you want to do? Because we wanted to remain independent. We didn't want to be forced to sell. And so we came up with a Aesop structure. So we're an Aesop. There's a handful of other AESOPs and financial services, a little unusual, but what it allowed us to do is make sure everybody's an owner.”
2022-05-02 · Capital Allocators · Greg Dowling – Mid-Market Institutional Consulting at FEG (Capital Allocators, EP.248) · IDENTIFIED FROM THE TRANSCRIPT · source
“They're focused on pensions or they're focused on ENFs or region. And so all of the business really started at that point in time. Now fast forward to the last decade or so, these people that started in their 30s and 40s, you know, they're 60 and 70 years old and they need a liquidity event. And even if they've passed down the partnership and expanded it, it's still hard for junior partners to buy something where there aren't any hard assets. Your people in consulting are your assets. They leave every day on the elevators. And so that's hard. So you've seen a lot of consolidation. We were talking about all the different firms and do the quarterly consultant updates with them. And none of them around anymore. So it's really changed.”
2022-05-02 · Capital Allocators · Greg Dowling – Mid-Market Institutional Consulting at FEG (Capital Allocators, EP.248) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, there's not a lot of us left. The history of consulting, there were a few firms that were starting in the 70s, but a lot of them were started in the 80s. We were started in 88. And they are usually started by a few individuals, probably in there at the time, late 30s, early 40s, had some experience. And it all came out of this period where a lot of institutions were managed alongside of retail and high-detorth and usually by a regional broker or a bank trust department. And so there wasn't this embrace of passive indexes. So Vanguard just came along in the 70s. And even though it existed, it wasn't really adapted. Alternatives. And institutions are very different than individuals, right? You don't have taxes. You have infinite timeline. You may have better resources. So to be treated in the same way where your high dividend paying stocks versus a total return approach, it didn't take much for a handful of people all over the country within a 10-15-year period to leave startup consulting practices.”
2022-05-02 · Capital Allocators · Greg Dowling – Mid-Market Institutional Consulting at FEG (Capital Allocators, EP.248) · IDENTIFIED FROM THE TRANSCRIPT · source
“Point, he's like, hey, you should come work at FEG. Like, well, what does Fiji do? And so then I had to be educated a little bit on what a consultant does. And at the time. They were looking for someone in the alternatives investment area. We had one group. Group was pretty small. This is 2004 And they were looking to have specialists in private equity or in hedge funds. And I took the hedge fund track. And I had done enough hedge fund trades and had the NBA CFA sort of like took a chance on me even though I didn't have any prior hedge fund experience. And it was a great ride. So it came about it in a weird way, but I've been here 18 years and it's a pretty transient industry. Being someplace for 18 years is great to see the firm grow.”
2022-05-02 · Capital Allocators · Greg Dowling – Mid-Market Institutional Consulting at FEG (Capital Allocators, EP.248) · IDENTIFIED FROM THE TRANSCRIPT · source
“Value sharp that did not only value equities, but we did convertible bonds. We did discounted closed-end funds, so we'd take advantage of. Discount And we would do kind of these RB things, like, but they were just completely unhedged and naked. So we'd buy a company that was getting acquired because you could get it at a discount. And we look at spin-offs and spinouts and things like that. At the time I was studying for my CFA and kind of had this epiphany when I was reading the hedge fund area like, hey, people hedge these things. They don't just go into it naked. FEG was in town and had a friend from school who I also studied with for the CFA. And sometimes I'd actually study at the offices of FEG. We'd take turns studying at each other's offices, a group of us. But I had no idea what FEG did. Zero.”
2022-05-02 · Capital Allocators · Greg Dowling – Mid-Market Institutional Consulting at FEG (Capital Allocators, EP.248) · IDENTIFIED FROM THE TRANSCRIPT · source
“And I've been a refugee for quite a while, so I'm going on 18 years. So first job out of college was a financial analyst at a bank doing commercial lending. Years there, MBA went to an asset manager. So NASA manager, no one's heard of, but maybe the tie-in that people would know is affiliated managers group. So AMG, we were an affiliate of AMG. That acquisition actually took place while I was at the firm. It was weird. They put us together with another group, an AMG is wonderful, but the other group, they kind of put us together with. It was just not a great synergy. You started thinking, wow, what can I do? And that firm that I worked at was pretty quirky. So we had great numbers, and they thought they could get us in the rap channels.”
2022-05-02 · Capital Allocators · Greg Dowling – Mid-Market Institutional Consulting at FEG (Capital Allocators, EP.248) · IDENTIFIED FROM THE TRANSCRIPT · source
“As weird ideas. We close with the evolution of the investment process post COVID, Greg's involvement with his alma mater, the University of Cincinnati, and the coveted FEG Hockey Classic. Please enjoy my conversation with Greg Dowling. Greg, it's great to see you.”
2022-05-02 · Capital Allocators · Greg Dowling – Mid-Market Institutional Consulting at FEG (Capital Allocators, EP.248) · IDENTIFIED FROM THE TRANSCRIPT · source
“My guest on today's show is Greg Dowling, the CEO and head of research at Fund Evaluation Group, or FDG, a mid-market investment consultant with around $80 billion in discretionary and non-discretionary assets under advisement. Greg oversees the day-to-day management of the research team and chairs the firm's investment policy committee that oversees all manager hire and fire decisions. Our conversation covers Greg's background in introduction to FPG, the evolution of institutional consultants, FEG's business today, and its unique advantages. We dive into how FEG supports its clients with portfolio management, manager selection, and inventory management, due diligence, including qualitative scoring and culture assessment, and working with investment committees. We then get Greg's opinion on different market dynamics, including private equity, venture capital, crossover funds, hedge funds, and what he refers to.”
2022-05-02 · Capital Allocators · Greg Dowling – Mid-Market Institutional Consulting at FEG (Capital Allocators, EP.248) · IDENTIFIED FROM THE TRANSCRIPT · source