YouSaid · the spoken record

Kristian Fok

lines on the record: 85
first: 2018-08-27
most recent: 2018-08-27
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“The way we want a physician working with our team is that. Success is based on not just your own individual effort, but also the way that you work with others So, if people come in and say, OK, look, I don't want to be disturbed, just assess me on my individual portfolio outcomes, that just doesn't work. A lot of pride in the team about innovating and disrupting and finding the best idea. So there's an alignment there. So it's not about sort of hiding. You do need to make a visible contribution, but it's with others. That focus on the member purpose and really just that true understanding about what you're there for is really important. I think also, I mean, we've been very strong in sort of drawing the connection between the money that we have and its impact on the economy and society”
2018-08-27 · Capital Allocators · Kristian Fok – Australia's CBUS Superannuation CIO (Capital Allocators, EP.66) · IDENTIFIED FROM THE TRANSCRIPT · source
“That we can sort of think about in totality like a total portfolio aspect. So if we have something that doesn't quite fit in one portfolio, there's enough people, whether you've got credit skills or direct investing skills or listed equity skills that you can sort of pull them together and say, well, actually, can we do something with that? And I think that's got some attraction for people. So they're very capable in their own sphere, but if they see an opportunity that doesn't quite fit into their capabilities, there's still a way to take advantage of that. And I think the other thing that we've been very focused on is sort of cultural fit.”
2018-08-27 · Capital Allocators · Kristian Fok – Australia's CBUS Superannuation CIO (Capital Allocators, EP.66) · IDENTIFIED FROM THE TRANSCRIPT · source
“So in Australia, there are a small number of funds that have decided, actually they do need to think about taking more control on the investment side. So we weren't the first to talk about internalisation, but we were sort of a close follower. For us, I think a lot of the people when they come to us, I think they're driven by the funds, their sole focus on generating strong risk-adjusted returns to members, so they don't have to worry about marketing and multiple investors and so forth. I think the other thing that really attracts people That I've been quite deliberate in trying to build a team with capabilities across multiple types of investment strategies.”
2018-08-27 · Capital Allocators · Kristian Fok – Australia's CBUS Superannuation CIO (Capital Allocators, EP.66) · IDENTIFIED FROM THE TRANSCRIPT · source
“And that they are being assessed in the conventional way that we assess a team against other fund managers. We've actually picked a couple of fund managers, a universe that we think have broadly similar strategies. So we want to not just assess them against a benchmark, which we do do, like a market benchmark, but also allow for style and approach that doesn't always generate alpha over all periods.”
2018-08-27 · Capital Allocators · Kristian Fok – Australia's CBUS Superannuation CIO (Capital Allocators, EP.66) · IDENTIFIED FROM THE TRANSCRIPT · source
“So we were a $45 billion fund now. And we look at the construction of our portfolio and the relative size, so 17% of our international equities portfolio should belong to a manager. But when we first invested, obviously it was new. So we chose not to allocate a full allocation. So we started off with about 400 million, which actually was enough for us to cover the costs. This is a real illustration of why the outsource funds management model is quite challenging for bigger funds. Because no matter what, particularly if it's market driven, you pay them more, right? In our case, we have a relatively fixed cost. And if we double the mandate, then we're not paying that much more. So for us, break-even relative to a fund manager was $400 or $500 million. They're now managing $1.2 billion, which is getting close to equal sized.”
2018-08-27 · Capital Allocators · Kristian Fok – Australia's CBUS Superannuation CIO (Capital Allocators, EP.66) · IDENTIFIED FROM THE TRANSCRIPT · source
“About 40 notes. Only been going for a relatively short period of time, although the performance is actually quite promising.”
2018-08-27 · Capital Allocators · Kristian Fok – Australia's CBUS Superannuation CIO (Capital Allocators, EP.66) · IDENTIFIED FROM THE TRANSCRIPT · source
“So with public markets, one of Australia's that we have is we call it the global quality strategy. So we look for companies that have a strong business model that we think endures, that has something about the way they do things that creates a moat for disruption. Not value or gross bias. We have a combination of companies in that way, but again, it comes down to fundamentally, do you want to trade rapidly around companies or do you want to think about picking companies that provide a service that specifically think about it, ultimately... The returns you get are based on the willingness of your customers to pay and keep paying.”
2018-08-27 · Capital Allocators · Kristian Fok – Australia's CBUS Superannuation CIO (Capital Allocators, EP.66) · IDENTIFIED FROM THE TRANSCRIPT · source
“Get approvals, get tenants, and you don't really make much return. But if you think about it as a pipeline of opportunity, and then you actually can make that model work.”
2018-08-27 · Capital Allocators · Kristian Fok – Australia's CBUS Superannuation CIO (Capital Allocators, EP.66) · IDENTIFIED FROM THE TRANSCRIPT · source
“But because they're so big, there's a whole space of infrastructure that doesn't get addressed, which is sort of the mid size and also greenfields. So we felt that we could complement that. Plus also sometimes in consortia certain partners actually have a higher chance of winning than others, so you sort of want to have a little bit of optionality there. So that's an example, but equity is the same. The way we sort of thought about how we add value. So one is focusing on being a long-term investor because we have strong cash flows and a fairly young membership. So we think that thinking about your activities, thinking about the investment over a longer time horizons, it's a natural approach for a fund like us. And we think that it lends itself to drive value. So as an example with CBAS property, if you thought about investments in the short term, you never do development because there's a long lead time to buy a piece of land.”
2018-08-27 · Capital Allocators · Kristian Fok – Australia's CBUS Superannuation CIO (Capital Allocators, EP.66) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, within infrastructure, for instance, we already have a number of managers that are high quality global reach, but they're very big, so they can give us access to the really large deals, and in some cases I'll source them and we might actually invest alongside with them.”
2018-08-27 · Capital Allocators · Kristian Fok – Australia's CBUS Superannuation CIO (Capital Allocators, EP.66) · IDENTIFIED FROM THE TRANSCRIPT · source
“How do we ultimately either increase capacity or replace the return stream from the alpha for something else? And so we did work, we talked to a lot of international players, also some of the domestic players that have internalised before. We looked at the academic research. And we went through quite a considered process with the investment committee around, okay, well, what should we do in terms of positioning ourselves over the next three years? It's great to be able to rather than talk about an annual budget, actually talk about a plan over a three to five year period. And in the end, we ended up with a new model, which is a hybrid model. So we think that there's still plenty of managers that we like and can add value that we can't replicate. So those ones still have a place in the portfolio.”
2018-08-27 · Capital Allocators · Kristian Fok – Australia's CBUS Superannuation CIO (Capital Allocators, EP.66) · IDENTIFIED FROM THE TRANSCRIPT · source
“That you can generate strong returns and also a really high quality product. So that was quite an inspiration for us. We thought, well, if we were able to do that in property, surely we should be able to think about how we could do that across the whole portfolio, because that's only 5% of the portfolio. So that sort of helped inspire what do we think we should do going forward? We can't continue to outsource. We have to do something different.”
2018-08-27 · Capital Allocators · Kristian Fok – Australia's CBUS Superannuation CIO (Capital Allocators, EP.66) · IDENTIFIED FROM THE TRANSCRIPT · source
“All in Australia, it's generated really strong returns as well. And the reason being is that we don't have to pay fund managers, we actually know the industry, right, our stakeholders, both employers and the unions, they actually know what's going on in the industry. So we have a good, strong reputation for delivery and for making sure that people on the work site get paid what they deserve and safety is important. The quality of the product is there. And one of the things that you need to successfully get a development off the ground is all those free commits. So that reputation creates a lot of the value. So the last five years, it's earned on average over 20% per annum, which is just astounding. So it's a great example that if you understand industry, you've got people on the ground. You have something distinctive.”
2018-08-27 · Capital Allocators · Kristian Fok – Australia's CBUS Superannuation CIO (Capital Allocators, EP.66) · IDENTIFIED FROM THE TRANSCRIPT · source
“The same time, we were doing a little bit of direct investing, was made in cash. Our property development company had gone through a few iterations. It's now at that time was incredibly successful. So we're, I think, fairly unique, certainly in Australia and probably globally, where we have a dedicated property development company that purchases land, gets the design of a building, gets all the pre-lease tenants, builds a building, and then we hold it. And the portfolio is of the highest quality. We've got Long Whales, we've got a lot of government tenants, high corporates.”
2018-08-27 · Capital Allocators · Kristian Fok – Australia's CBUS Superannuation CIO (Capital Allocators, EP.66) · IDENTIFIED FROM THE TRANSCRIPT · source
“The issue we were finding was that the best managers were closing and some of our best managers actually made so much money that they decided to retire early and give our money back. And we felt, well, this is not sustainable for us. And we do a bit of projections on what would happen if we had stronger cash flows or one of the managers closed up shop, another one closed up shop, and then we looked at our list of managers that we had lower conviction in. And so we would have ended up having to either add more managers, which meant that we had to pay the same fees scale again, so we were not getting the benefits of scale, plus our alpha conviction was deteriorating. So we knew that the model wasn't going to sustain. So we had to take a step back and think about, well, how do we want to position ourselves going forward?”
2018-08-27 · Capital Allocators · Kristian Fok – Australia's CBUS Superannuation CIO (Capital Allocators, EP.66) · IDENTIFIED FROM THE TRANSCRIPT · source
“Us adding the platform in terms of information, so forth, allowed us each time we went back to the board, we said, look, returns are still strong, you're seeing the benefit in terms of the depth of information coming to you, investment committees. But we've also saved you $15 million per annum. How about taking a little bit of that savings? I've got a few ideas for some extra people in the team. So we did that for about three years. We really need to, I think at the time when I started this, we were about 30 billion. So we went from 20 to 30 in three years, or 32. One of the things we were finding was that we're getting strong outperformance from our active managers. We were sort of of a size that and also that internal capability allowed us to pick and move those portfolios around to maximise or to get good alpha.”
2018-08-27 · Capital Allocators · Kristian Fok – Australia's CBUS Superannuation CIO (Capital Allocators, EP.66) · IDENTIFIED FROM THE TRANSCRIPT · source
“But at the same time, we were also sitting down on a path of looking at the managers that we had. And actually, we didn't really need to change anything. We just had to go to the managers and say, look, we're resourcing up. Know what your face are. We need a better deal. In some cases, it was a good manager, but they had a bit of downside performance, so we're a bit opportunistic. And at the same time, there was another major superannuation fund, Australian Super that had said they were internalising. The combination of going in and reducing fees without having to sort of materially change the strategy.”
2018-08-27 · Capital Allocators · Kristian Fok – Australia's CBUS Superannuation CIO (Capital Allocators, EP.66) · IDENTIFIED FROM THE TRANSCRIPT · source
“Was still external management. It was building internal capability to better manage the managers and also a more dedicated capability around thinking about asset allocation, but still highly dependent on Frontier at the time. We also were quite deliberate about building out systems better understand the portfolio. We introduced MSCI barrows as a risk that we incrementally added new data information platforms. We sort of argued that on the basis that it gives us better insights around our own portfolio, which gives us a greater capacity to make informed decisions, far more than could be done from an asset consultant who doesn't have that information.”
2018-08-27 · Capital Allocators · Kristian Fok – Australia's CBUS Superannuation CIO (Capital Allocators, EP.66) · IDENTIFIED FROM THE TRANSCRIPT · source
“This is all in Australian dollars. So get your calculators out if you want it in US dollars, it's three quarters of that at the moment So I think it was about 20 billion dollars.”
2018-08-27 · Capital Allocators · Kristian Fok – Australia's CBUS Superannuation CIO (Capital Allocators, EP.66) · IDENTIFIED FROM THE TRANSCRIPT · source
“Area. And coming from a relatively smallish consulting firm which didn't have the money to spend on dedicated people and culture type people and was the deputy managing director at the time, I could see and appreciate the value of having these sort of other resources at your disposal. Also, that I knew that there was a lot of. I thought, well, actually, I could probably do quite a lot.”
2018-08-27 · Capital Allocators · Kristian Fok – Australia's CBUS Superannuation CIO (Capital Allocators, EP.66) · IDENTIFIED FROM THE TRANSCRIPT · source
“And helps inform the way you think about the world going forward as well. Post that period, I think the funder decided and also coincided with Bernie retiring off the fund, that he'd need to think about how it structured itself as it grew. And it got Taylor's Watson to come in alongside the frontier and talk about the new model. And we pretty much said you're going to need to increase resourcing. So they already had an internal team, but it was more focused on the operational side of things. And they said, look, you need to have people inside that helps own the strategy rather than just relying on the asset consultant. But I did get asked to consider the role. I thought about it, and one of the things I... thought about as well you know there was a strong commitment from the board around really lifting the internal capability and I looked at the resources around the fund it had built a projects team a strong people and culture”
2018-08-27 · Capital Allocators · Kristian Fok – Australia's CBUS Superannuation CIO (Capital Allocators, EP.66) · IDENTIFIED FROM THE TRANSCRIPT · source
“I was with Frontier until actually until I got asked to join Seabus, which was in late 2012. And that came about, we had the global financial crisis, which was again a really fascinating time. Those sort of experiences burn in your mind”
2018-08-27 · Capital Allocators · Kristian Fok – Australia's CBUS Superannuation CIO (Capital Allocators, EP.66) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, effectively, that was me as the advisor. And again, in those early days, if we wanted to change a manager, we had to do a beauty parade. But again, it was like song was I agreed and Bernie agreed, others at that time were willing to take that advice. Clearly, that's the fun has grown. It operates very differently nowadays. But I suspect there's probably a lot of pension funds around that still have that sort of dynamic between the board and the advisors”
2018-08-27 · Capital Allocators · Kristian Fok – Australia's CBUS Superannuation CIO (Capital Allocators, EP.66) · IDENTIFIED FROM THE TRANSCRIPT · source
“It was a great learning time then. We had early discussions around thinking about responsible investing. So you've got to remember that these funds are comprised of both employers and unions, right? And they need two-thirds agreement to make anything happen. So in the early days, talking about voting on companies was potentially controversial. Address it by setting up an external company that would give advice based on principles and policies that would guide us around how you engage with companies.”
2018-08-27 · Capital Allocators · Kristian Fok – Australia's CBUS Superannuation CIO (Capital Allocators, EP.66) · IDENTIFIED FROM THE TRANSCRIPT · source
“Wasn't in its initial iteration, it wasn't working as well as it should have. So the director spent a lot of time on that, which meant that when it came to all the other issues, effectively if I could get agreement with Bernie Fraser, then most of the stuff got through”
2018-08-27 · Capital Allocators · Kristian Fok – Australia's CBUS Superannuation CIO (Capital Allocators, EP.66) · IDENTIFIED FROM THE TRANSCRIPT · source
“1999. It was actually a bit daunting because the independent director that they had for CBUS was the ex-reserve bank governor. In Australia, it's a bit like Canada. Our currency moves around quite a bit with the global economy. And I'm there expecting to give currency advice to the guy that actually used to run the reserve bank of Australia. The fund itself didn't have at that time internal investment people. And so I was effectively like an outsourced CIO. They had the very early iteration of a direct property company in those days and they spent a lot of time talking about that.”
2018-08-27 · Capital Allocators · Kristian Fok – Australia's CBUS Superannuation CIO (Capital Allocators, EP.66) · IDENTIFIED FROM THE TRANSCRIPT · source
“Sort of saying, well, you know, I know about property, I know about defined benefits, I know about consulting. So I applied for the job. I said, look, you know, I think the principles could be easily learned, but need a little bit of time to understand the asset class, but I'm willing to give it a go. I was lucky enough to get the job. So my first consulting role was actually with CBUS. I became the lead consultant for CBUS. And at that time, they were $2 billion.”
2018-08-27 · Capital Allocators · Kristian Fok – Australia's CBUS Superannuation CIO (Capital Allocators, EP.66) · IDENTIFIED FROM THE TRANSCRIPT · source
“Decline, and we come across competing funds, these industry funds, and I didn't really know much about it, but I thought, well, there's something about this model because the returns are pretty good and the costs seem a lot cheaper than what we can do, and they seem to have scale. I just happen to come across an ad for a company looking for an asset consultant, a consult to the industry fund. So I thought, well, this is a growing area. It asked for knowledge in infrastructure. This was in the early 90s, right? So investing in infrastructure wasn't a very common thing. Direct property, which I was aware of, and private equity, and again, private equity didn't really know much about, but I thought, oh, well, I'll give it a go.”
2018-08-27 · Capital Allocators · Kristian Fok – Australia's CBUS Superannuation CIO (Capital Allocators, EP.66) · IDENTIFIED FROM THE TRANSCRIPT · source
“And most corporates superannuation was the non core business. So there was this trend to define benefit funds into accumulation, which was a lot of work for actuaries in the short term, but ultimately you don't really need an actuary to run an accumulation or an account-based fund. So I could see the direction of my chosen career was going on the decline. So I thought, well, I better actually think about what I should specialise in next. When you're trained as an actuary, you look at both the liabilities and the asset side. So I figured, well, the asset side was going to endure. So I then switched to focusing on the investments aspect. And start off as a hybrid job, but at the time, National Mutual, a consulting area spun out. And I still sort of felt that the model of that business was sort of on”
2018-08-27 · Capital Allocators · Kristian Fok – Australia's CBUS Superannuation CIO (Capital Allocators, EP.66) · IDENTIFIED FROM THE TRANSCRIPT · source
“Anyway, I got a job with National Mutual, happened to coincide with a downturn in the economy, and that sort of left a bit of an impression on me. Luckily it didn't affect me, but it did affect a few people around me. And what was a trend in those days, and it was a combination of more formalizing the superannuation guarantee, which meant that every sort of working Australian who worked above a minimum amount of hours was entitled to compulsory superannuation contributions, which started off at 6% and has grown to 9.5% now. But when that was introduced, we had to redesign, define benefit funds. But we also had similar issues, I think that probably you see today in the States and so forth, potentially either overfunding or underfunding.”
2018-08-27 · Capital Allocators · Kristian Fok – Australia's CBUS Superannuation CIO (Capital Allocators, EP.66) · IDENTIFIED FROM THE TRANSCRIPT · source
“Had been established a few years earlier as a result of that. And I think that's really an interesting thing to understand is that our superannuation industry in Australia in its current form was formulated in the early stages through the industrial system. So because the members actually sacrifice something to get their superannuation, they have a very strong sense of ownership.”
2018-08-27 · Capital Allocators · Kristian Fok – Australia's CBUS Superannuation CIO (Capital Allocators, EP.66) · IDENTIFIED FROM THE TRANSCRIPT · source
“And it was in the early 90s. I spent a little bit of time in their head office, which is about strategy and the total business. And I spent some time in the corporate superannuation area. And I'd never heard of superannuation at that stage. That was the very early iteration of, it wasn't quite compulsory super at that stage. In the late 80s, there was this accord, so it was an agreement between workers and government effectively through the industrial system employers. So rather than having high wages inflation, there was an agreement to offset some of the claim for increased salary as contributions into superannuation. Actually, at that stage, one of the biggest industries that drove that was the construction industry.”
2018-08-27 · Capital Allocators · Kristian Fok – Australia's CBUS Superannuation CIO (Capital Allocators, EP.66) · IDENTIFIED FROM THE TRANSCRIPT · source
“I started my life as an actuary. And for those that don't know what actuaries do, they sort of combine probability statistics, mathematics with finance modeling. They use those skills to try and solve financial problems where there's a bit of uncertainty. Typically you'll see them in the defined pensions space, but also in insurance and so forth. So when I was growing up, I had a strong interest in math and economics and my father was an engineer and I decided I actually didn't want to do what my father did. So I was lucky enough to have a scholarship with a local insurance company, National Mutual, which ended up being bought out by AXA and then I think subsequently bought out again. So it was a mutual life office at that time, so the owners were the policyholders at that time.”
2018-08-27 · Capital Allocators · Kristian Fok – Australia's CBUS Superannuation CIO (Capital Allocators, EP.66) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, well, I'm actually a big supporter of that. I'm managing people in multiple offices and trying to promote flexible work. So I'm glad we can make it happen.”
2018-08-27 · Capital Allocators · Kristian Fok – Australia's CBUS Superannuation CIO (Capital Allocators, EP.66) · IDENTIFIED FROM THE TRANSCRIPT · source
“My guest on today's show is Christian Falk, the chief investment officer of Australia's $46 billion construction and building industry superannuation fund, or CBUS. Prior to joining CBUS in 2012, Christian spent 14 years consulting to Australian super funds at Frontier Advisors. Australia's superannuation program mandates that employers contribute 9.5% of its employee salaries into a super fund, which is owned by the employee, like a 401k in the U.S., and grows with investment returns until retirement. The employees in turn have a choice of providers to invest their savings. The model has been one of the most successful in the world in preparing the population for retirement. Our conversation starts with Christian's path to the CIO seat at CBUS and focuses”
2018-08-27 · Capital Allocators · Kristian Fok – Australia's CBUS Superannuation CIO (Capital Allocators, EP.66) · IDENTIFIED FROM THE TRANSCRIPT · source