YouSaid · the spoken record

Luke Ellis

lines on the record: 71
first: 2021-09-20
most recent: 2021-09-20
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

“I have no regrets. I'm one of the lucky ones in this industry over the last more than 25 years now, to be honest. Of course, there were a few bumps always, right? But I think that one of the things that, and I'm kind of realizing that now today at 53 years old, is the power and importance of the network and how you use that network and how you can leverage a lot of different things and being even much stronger. Where it's brought me in my career. So that's something that I really am realizing at a later stage of my career, but clearly it's never too late.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I don't believe in regrets. I spend my life looking forward, and I'm pretty lucky in terms of I've had a very good life. I've touched with the reason I'm here is because I've had a pretty successful career. I'm very happily married. I've got three lovely kids. I wouldn't want to have learned something which would have changed the path of life because I might have learned something incredibly insightful that would have led to me walking in front of a car the next day. I got no regrets with how my life has turned out.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“Give you one extra thing there, Ted, while I think about it. Amazing, what a high proportion of the really successful people in our industry. have either had or have really bad relationships with their fathers. And I'm always amazed how often it comes up in conversation. And if you didn't notice by omission, I would be firmly in that camp. And I definitely try to have a very good relationship with my kids. But somehow it does seem like... Being pissed off with your father seems to be quite a good way to leading to success in our industry.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“A lot of things from my mother, actually, the value of good work, good hard work. My mother was always working all their life as much as I can remember. And I really got the notion of that quite young, actually. And she's the ultimate, the grit and the resilience of that lady. And I'm sort of rediscovering these thoughts, whether as she was younger in different stages of her life, but these are the things that really marked me as far as she's concerned.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“Mother's a psychiatrist and my sister's a psychologist, so I learned a lot of how to manage complicated relationships from a fairly early age, but I have consciously made my own career and I've tried to learn things from everybody along the way.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“Think one's always learning and investing intellectual honesty or lack of it, I mean I guess lack of intellectual honesty. We obviously have a very big quant business and it is so important that people are honest about how many goes they've had at a problem to avoid a data mining issue and so the bluffers A peeve, and you want people to just say, Look, I don't know. And then that's fine, and then we'll work it out.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“I hate being patronized. I'm really bad at dealing with it if I think somebody's patronizing me. I gets my back up in such a bad way and I express my opinion rather clearly.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“About the horses. I mean, he made me do it properly, right? Form guides and couldn't bet on the name of the horse. It had to be a properly informed decision. And I noticed in a three-horse race that the odds meant we were going to lose whatever and the bookies were going to win. I'm like, he said, yeah, well, the bookies always win. I'm like, okay, I want to be one of them. Well, he said, go and work in finance. That's a more socially acceptable version. I would probably be doing something else in finance, but if not, maybe I should have been a bookie after all.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“All I have to say, money has never been the object for me. Think assuming that you can afford to eat money is a terribly bad reason to choose a career. And I love financial markets. And honestly, I would be doing something else in financial markets because I was drawn to this. So I learned to play cards when I was two or three. And I learned to bet on the horses when I was four or five. And I observed with my grandfather who taught me”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“On my side, I'm rediscovering in the last couple of years cycling and the buzz I get from cycling. But the other thing also that this confinement is helping me rediscover is fly fishing. We have some very nice little rivers around here. So these are the two things.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“I am reasonably wine obsessive, and particularly the red wines of Burgundy, and I would happily spend several hours talking about a bottle of wine, and as my wife will remind me regularly, I do spend several hours very regularly talking about a bottle of wine.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“In the marketplace, and I think it's just to continue on that path. I think also, and this is one of the challenges that Luke and I have with this new term that we have is to really bring the organization into more of a solid footing, I would say. We've grown tremendously fast over the years. We have a very small team. So we need to be able to deliver this buy to the ecosystem. You can't do that with such small capacity. So we're building in a very sequentially on that side so that we're covering all regions so we can nurture, cultivate all of these relationships that we have, continue doing all of the work with the eye touch investors, managers. I think now we have to work more on our process and how we deliver this buy. There you need to have that capacity. You need arms and legs and brains. Hit the road to engage with the ecosystem.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think that one of them, we want to be recognized as that the standard setter, I would say. I think that we've done a good job. I think that we've built and developed a very strong currency. We're not a lobby organization. I think our voice is getting to be more and more.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“An objective in their yearly evaluation to socialize with their own network, with managers, with prospect managers. So they do that work and they've been doing it in a very good fashion. So every ways that we can use that network and we have such a great network with the trustees, myself, Luke, our staff, it should not be so difficult if we really execute the right way.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a good starter. And today, I think we're doing this, but we run events around the year in normal times. We've been quite engaged across all regions, from Canada to the US to Asia, Europe. We've been quite active going to the regions, reuniting investors and managers and bringing forums, panels, topics around the standards. how does this play into each of the people's business so we've done a lot of that one of our very good weapons is the board of trustees they each go into their own business in their own ecosystem network to spread the good news on what we do i think that's been very effective all of them are very engaged very passionate about what we do they believe in what we do so that's been so far a very good tool actually my team as”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“Don't want someone paying for better liquidity that the other person doesn't know about. That's someone paying a higher fee, but in return they're getting to get out before anybody else in the fund knows about it. That's not acceptable as an example.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“You have to treat clients fairly. You don't have to treat them all equally because they're not equal. You can't have somebody say no one's ever got a management fee reduction while there's a client over here who's got a management fee reduction that is unacceptable in our view and I think we have a strong view about that as a grouping and everybody buys into that idea the answer is if you buy one million of something or you buy 100 million of something the price is going to be different whatever the something is, right? And so you get variation in pricing, but what you want to be sure is that there's transparency. What you want to be sure is that somebody is not getting preferential liquidity in a way which penalizes someone else.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's the area where we've done most of the work. I think that what's important is, and we've alluded to that earlier, importance of really for managers to be transparent in terms of the fees that are charged. And so we've written a lot of things on that. We've done a lot of work and analysis on that, and we've established, I think, solid standards around what should be the good practice on that side. So I think it's one thing to discuss about the level of fees, but also I think what's most important is it's important to better disclose the fees that are charged.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“The way I think about it is the standards board is there. We don't try and negotiate anybody's individual fees on something, but It is a place where there is a lot of discussion about best practice is that type of fee structure appropriate, not appropriate? Is that something clients or understanding the right way, not understanding or managers are? That's an area where the standards board can really be helpful. I would say when we get together either as the board, which as Mario mentioned, is a pretty impressive group of people or any of our now virtual seminars, but previously seminars, it's a chance to get a group of people in a room and talk about it. And while you'll never get to, I think on this fund, you should be paying X and somebody else thinks you should be paying Y. That's not the place for it, but clarity about how do we think about it? How do you think about”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“The way the one turned out because the salesperson had begged the client before the meeting not to ask about it because otherwise you might get in trouble. So if you've got very high quality alpha and you protect it by being careful about capacity, it's perfectly reasonable that it is what goes at the best fee level. If you look at the broad spread of the industry, I would say the negotiating power is really quite balanced. We talk about two and twenty, but 2 and 20 is not the average fee in the industry by a long way. And it's certainly not the modal fee either. 2 and 20 is now the unusual. We've got some people with fantastic performance that are significantly higher than 2 and 20, and you've got a lot of managers that are significantly lower. They don't boast that performance, and that's pretty healthy, I think.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“Maria's right, you can destroy Alpha incredibly easily by taking too much money in. So one of our funds has been effectively shut for five years now and worked out. I've had one client meeting in two years where the client didn't ask for capacity in that fund. Like I do 300 client meetings a year, like every single one for two years apart from one asked for capacity in that fund, saying, but it's special, right? I'm a special friend of yours. We can get some capacity, even if it's shut to everybody else. Your best clients get it. And it's like, no, no, it's really shut because otherwise it will screw the performance.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“My experience is that most investors negotiate fees pretty aggressively and the truth is that buying power of hedge funds is also really concentrated. Mario mentioned we have a decent Canadian presence on the SBAI. Well, we do because there's not one big buyer of hedge funds in Canada, but actually our whole And those are the sorts of clients that one wants to do business with. And so I think it's mostly a pretty healthy push and pull. And you could see if you've got something which has real alpha and scarcity.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“Wins in hedge funds versus private markets for very different reasons, I would say, but it's something that we try to bring at the table all the time. And it ultimately, the fee is part of the decision process because the fee impacts the alpha and ultimately what stays with us.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“From our standpoint, one of the variations that we brought, which is in parallel to what Luke said, was the fee structure, which is X or Y. So we pay 1.5 or 15% depending instead of 1.5 and 15%, which actually helps us capture the portion of the alpha that's closest to 70% if we're in a low return type environment. It's been very difficult on that side. I mean, the thing is, I still realize that there are still not a lot of investors that are voicing that portion of negotiation or trying to align. There's still a lot of price takers out there. And ultimately, the pressure comes from the board, where the pressure comes from the return. So it's been clearly a very tough spot. But I think that if you compare to private equity, for example, I think we've had more.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“There's always been this dichotomy of the theoretical understanding of what you should pay for, and then the practical reality of relative market power in the, call it the negotiation of a fee. So given this ecosystem you described where there's more and more concentration, there's probably 100 hedge fund firms that manage most of the assets in the industry. How do you get from a historical fee structure that was a one-size-fits-all for the package to something where you really do have disaggregation and sort of appropriate paying for the value add.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's in beta. And if you think of it like that, then you can scale whether it's market neutral or it's very long biased and find the right place for you on the spectrum.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“Because it's so easy to replicate that too much money replicated and goes in and out of it. And so those have become risk factors. But the pure alpha is still there. So I think if you run an equity long short fund and you run with a 60% net long all the time, you order not charge any fees or client should look at that and go, okay, I'm going to work out the fees on the alpha you make and I'm going to net out the sixty percent that's the beta effect. And you can do it in a complicated way by saying, okay, well, I'm literally going to pay you an alpha over a benchmark that's 60% of the index, or you can do it in a rule of thumb way, but you sure as heck shouldn't be paying a 2% management fee for the”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“For nothing the alpha is what's valuable and people are happy to pay for that and should pay for that. What has been interesting to work through and challenge is Alpha and Beta in an academic study are clear and black and white, what's one, what's another. You know, in the last few years, we've had this thing where factors went from being an alpha source and being long value stocks or long momentum stocks was a sort of in a fairly rudimentary way was a source of people's alpha 20 years ago to that being something you could replicate and so then it starts being an alternative beta a smart something or whatever to today where frankly it's really a risk”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“One of the bits the standard board is very focused on is transparency and clarity around fees. You can get three or 33 investors in a room and you will probably get 40 different views about the best fee structure. Some people hate performance fees, some people love performance fees, some people want complicated fees, some people want really simple. I think what's really important is you've always got transparency. You've always got clarity about how they work. There isn't a sort of second guessing of the process. In terms of the question around equity hedge funds, my own view in very simple terms goes back to that thing I said before. The fee for beta today is nothing, right? I mean, you can go and buy a passive index of whatever beta you want.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“I want to dive in a little bit on these points on longshore equity in particular because Luke, as you're talking about this range of volatility you can imagine, well a 45 vol might be a trend or a future strategy and the lower vol could be sort of a more market neutral strategy. And the long short equity world portfolio volatilities have come in and what's driven higher vol tends to be either concentration or the degree of market exposure, which, as you said, is for free. How are you thinking about the appropriate fee structure, both in terms of your business and then also just more broadly in the standards board for just the long short equity world, and you could break that into market neutral and with some net exposure?”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“Luke's point, Ted, I just wanted to add one big evolution I would like to mention that we've done over the years is that in order for us to be a better evaluator of talent, we have transitioned a big part of our program in hedge funds onto managed account platforms because we've seen that same trend where the manager tells you from the get-go we usually take between 10 and 12% volatility and all of a sudden you realize that the real volatility is half of that, right? And you're paying 2 and 20. So for us, transparency has been a good way for us to better evaluate the active management that these managers are doing and getting more comfortable also with the fee we pay. We still have some managers where we pay 220, but usually it's highly justified. So transparency is something that we've done.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“Agree here's the per unit of risk fee you tell us whether you want us to suck up a lot of cash and run at a low volley or you want to minimize the cash in this strategy and we'll strip it out and the fees are just proportionally. So the pressure on managers is can you deliver out of? And if you can't deliver alpha you shouldn't be in the business and clients shouldn't even pay zero fees, right? You've got no alpha, you're not worth anything to them. They can get the beta for nothing. And so I think the pressure is to prove, can you deliver alpha? And if you can, physa fine. But they might be delivered in different formats. So they might be in a more diluted format than they used to be. But as I say, some people it's a more concentrated format. So to me, the pressure is on that. Can you generate out?”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“And the sharps generally went down because the world gets more and more competitive every day. And so the unit of fees per unit of risk and per unit of value add that clients were paying went up a lot. And that was frankly not right. The clients were getting a bad deal in there. And the last 10 years has been about a process of reorienting that. Today, clients are generally much more sophisticated and we have clients invested in strategies with everything from a, I think, the lowest is about a two volt and the highest is about 45 volt. And they pay very different fees between those different things. But that's all right because we just...”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“Pre 2008 and maybe you have to go back a little bit further but back Mary and I first met over a reference I gave him on a hedge fund which I happen to know today is the 20th anniversary of that hedge fund starting so it's been almost exactly 20 years Mario and I have known each other back then funds used to run typically at 10 to 15 volts But it wasn't that hard to have a net sharp of one. If you've got a ten to fifteen ball and a net sharp of one and you charge two and twenty, actually that works out that maybe the manager's getting a thirty percent and the client's getting seventy percent and that's fine. What happened was that the vol generally went down and a lot of hedge funds stated that they were trying to do a six or eight ball and then ran a three or four volume.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“So I have a slightly quirky view on the thing on fees, because I'm not sure that it's really a pressure on fees. I think the proportion of alpha that clients are happy to leave with a manager has not really changed over years. You can debate and maybe it's something to do with the quality of the returns some number between 25 and 30 percent of alpha that clients are pretty happy to live with a manager and to feel they're getting a fair proportion. And I think to me it's really important, remembering the only people who take risk in all of this process are the end clients. It's really important they get more than 50% of the value add. What's changed over the years is two things.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“Which brought sort of the 220, not no longer the right fee structure. So we're very mindful of that. Our board is always reminding us every time we bring a new manager to our committee. So this is something that is top of mind for us, the fees, especially in a more difficult environment to invest.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“And this is how we're using edge funds. Hedge funds for us, how they sit in our bigger portfolio is really something that's complementary, something that, of course, gives us a good risk adjusted return, but also will help us in some ways better manage other areas of CDPQ. It could be risk system usage of AI data, global macro trend following, for example, is a strategy that we've used over the years. So I think that for us, that's really important. I've been very active on bringing more of an alignment of interest over the years. I think that the performance fee is the right structure, but we need to be careful of the management fee over the years as it is an incentive, obviously, to amass assets. The problem we've had in the last 15 years really is a whole rate structure fell.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“View has changed a bit on this. At some point in our program, we were kind of looking at the smaller managers, like more Nietzsche and trying to really extract and exploit interesting alphas. I think that from what Luke has mentioned, the reality has changed a bit on that side. Not to say that small is not beautiful. I think that one has to be mindful that size ultimately is the DME of performance. So we're kind of paying a lot of attention to this. One comment I wanted to bring, we're in 2020 and I can't believe I'm still saying this, but my hope is that at some point the industry understand that hedge funds are not at the wild fringe of finance, but they're rather the yang of markets. They're typically investors that do not follow the pact. They bring a variant perception. And this to me brings a stabilizing effect.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“And I think having gone through the period where it was all about the managers and it was frankly too many people, it was about how rich could they get as a manager, today it is about can we deliver value to the clients and a fair share of that value going to the clients in most cases. And I think that is delivering value in a portfolio where if you're an investor today, it's hard to build a portfolio because you've basically got a choice between equity beta and cash. And that's about it. And so actually something which is designed to be orthogonal to those two factors is a really valuable thing for portfolios.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a reality. I think hedge funds, whether you are discretionary or you're quant, technology plays an incredibly important part in collecting and processing all the information you need to be successful. And in any technology empowered industry, you see a concentration of power because of the ability to invest and spend the big dollars it takes to keep ahead. The days of talking about 10,000 hedge funds are over. I don't know what the right number today is, but the reality is that probably there's a thousand credible hedge funds out there and the top 100 have a significant proportion of the assets. But that's okay because what's really it's all about is can we deliver a valuable service to our clients, to the investors, to the”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“I feel pretty good about the state of the industry, the sort of hyper growth phase of the industry is clearly passed, and the industry went from being very small and very cottage to being quite big quite quickly. And with that came a whole lot of growing pains, and this was all about solving a lot of those growing pains. Fundamentally, the AUM of the industry has been going somewhere sideways, but that's okay. We run a significant amount of risk for our clients, and I don't think growth at an overall industry should be the goal. I think what you're seeing is a concentration of AUM and firepower and talent within the industry. You might say, I would say that given I'm one of the larger players, but”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's interesting that on this one, well, obviously to complete what Luke said, I think that the US for us is really a focus in some ways. We've had good success over the last five years, but we still have a lot of work to do there. But I would say an area also that we see lots of growth right now is in the APAC region. And we've had tremendous leaders over there with Ted Lee at CPPIB, for example, and the trustees over there, the board over there. China's growing quite fast in terms of new manager, asset management industry. They are looking to structure themselves in terms of standards. We've had a bit of an impact there. I think it's a good region for growth. So these are the places where we see the evolution of what we do.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“We would like to Continue to increase the footprint in terms of the number of managers and the number of investors who are signed up to the standards because it helps everybody. The more people signed up, the more that means the amount of time you spend on operational due diligence goes down, the confidence you have in the manager goes up and so on. We're definitely trying to increase our footprint. But also we are continually pushing around the boundaries of where we can add value. So we're not trying to cover all alternatives and ILPA and other organizations do a great job in the private equity world. But we've taken on some of the alternative credit space because working out what's a hedge fund, what's not a hedge fund is a very blurred line in there. We've looked at the insurance link market because again there are clearly hedge fund strategies and pseudo-edge fund strategies.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“Of the hero, there's people with money, is it? So they love to write a bad story and actually you look at the number of bad stories they've been able to write and they drop down exponentially. And I do believe that's because Standard's borders played a real part in driving that.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“And there you were every day. There was a bad story about the industry. You roll on ten years and the last six months has been a real test. A trial by fire of the industry and I touch word. It has been conspicuous how few stories there have been about hedge funds doing the wrong thing through this period and there have been some funds have had bad performance, there's some good performance, there are some funds shutting down, but you don't read every day the story of fungating you don't see the story of suspending this somebody was taking a fee here, nobody knew about all of those sorts of things. The goal was just to improve the industry's behavior overall. Maybe a way of describing it was let's get off the front page of the newspaper for anything other than delivering values to our clients. And actually when you look at newspapers love to write a bad story about a hedge fund, they absolutely love it. It's got that sort of knocking down the statue.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think the other way of describing it so as Mario said, you know, it's a trillion dollars of AUM on the manager side and when you look down the, I mean, that's at least in theory a third of the assets of the hedge fund industry. I must say, when you look down the list of people who are signatories, it's very hard to see how you add up two-thirds that's not a signatory. But I think importantly, you go back to 2008 and 2009. And for even 2010, 2011, you could not pick up the Financial Times or the Wall Street Journal without seeing some story about a hedge fund behaving badly. And that was a pretty horrible thing. And one of the reasons I got out of the investment banking industry was because just became an embarrassing industry to be in. You know, asset management's supposed to be doing something good for our clients.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“When I look at the comments, especially for the smaller managers The standards have been structuring a lot of what they do on the operational side. And we've had a lot of good comments. These smaller managers, they would write to me and say your ODD team did great work. There's a lot of things that we were not covering. But a lot of things that we were not covering usually are standards and things like that. So we've had some very good comment on that side. As you know, like the startup managers, they're not usually up to par with the operational part of their business. And I think that this has provided them with a very good framework to address ODD, especially as it pertains to what institutional investors are looking for. So I would say from my part, this is what I've seen. The larger managers, sometimes you would be surprised by the quality or the standard of their operations. But I think also we're starting to see from their point of view as well that from the ODD part of what we do, it helps them.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“There was a strong view from other people that part of the point of alignment of interest was the manager and the investors should be getting the same answer. And if it wasn't the same answer, there should be an explanation of why.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“Of stand up shouting matches about to get to the right standard. Because now people mostly come, because we've set standards on so much, people come at it and they're in a pretty similar place. But 12 years ago, people were all over the place in terms of what's appropriate. Is it appropriate that you have a fund where your investors go in and you have a fund alongside it, which is your own money, which is not Paripasu and isn't disclosed to investors? Today, I think people would have a clear understanding of what's right or wrong. I've got to tell you, you know, and there's a pretty famous example about it. You go back half a dozen years ago and that was not something people agreed there were managers who had a very strong view that was okay and they could put the trades they wanted to into what they considered their own account.”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source
“One is about We shouldn't say that all of the standards are easy to agree with the people who are signed on. Each set of standards applied to a particular area takes a lot of work and it's basically volunteer work. So all the managers and the investors or a group of the managers and investors who are interested in the problem volunteer people to sit on a working group and they have some pretty”
2021-09-20 · Capital Allocators · [REPLAY] Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158) · IDENTIFIED FROM THE TRANSCRIPT · source