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Ranji Nagaswami

lines on the record: 78
first: 2017-09-28
most recent: 2017-09-28
sittings or episodes: 1
sources: podcast

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“Exactly right. And so the real story is today equities look attractive to bonds and within equities the most interesting parts of the world are non-US developed markets, particularly Europe and the emerging markets. Now all of these markets have done really well in the last year to date, in 2017, but we think that there is still room for the growth, further improvement in earnings prospects. So we are not yet pulling the reins in, but we are remaining very cautious. In particular in bond markets, we are very cautious in our client portfolio.”
2017-09-28 · Masters in Business · Ranji Nagaswami: The Outsourced Chief Investment Officer · IDENTIFIED FROM THE TRANSCRIPT · source
“And when we look at the first two assets are quite overvalued. But when you look at the macro environment, corporate earnings are still strong. Growth is not as strong as it has been in some periods in the past, but we seem to be doing just fine. Inflation is subdued. So we appear to be prolonging this Goldilock scenario of stable growth, low inflation, and corporate earnings have been robust earnings revisions in the US looking forward for the next 12 months. U.S. earnings revisions are still positive up about 5%. But outside the US earnings revisions are in the double digits. So the real story is...”
2017-09-28 · Masters in Business · Ranji Nagaswami: The Outsourced Chief Investment Officer · IDENTIFIED FROM THE TRANSCRIPT · source
“The way we think about valuation is first relative to history, but also relative to other asset classes that are available in the marketplace. And finally, relative to the level of growth and prospects for earnings and returns going forward.”
2017-09-28 · Masters in Business · Ranji Nagaswami: The Outsourced Chief Investment Officer · IDENTIFIED FROM THE TRANSCRIPT · source
“And Well, we have come a long way from March 2009 when the exact opposite was true, when all assets were priced very, very cheaply. We've had a long bull run in the global risk asset classes. Fueled by a Fed, by a US Fed and global central banks that have kept interest rates low for a very long period to be sure we were out of what was a potentially generationally unnerving crisis going back. That has gone on for a really long time. And at this point, all risky assets appear to be fully valued and some indeed are overvalued. The most overvalued parts of the markets are indeed the bond market, and in particular the risk-free. Parts of the bond market, even though credit is now appearing quite fully valued to us as well.”
2017-09-28 · Masters in Business · Ranji Nagaswami: The Outsourced Chief Investment Officer · IDENTIFIED FROM THE TRANSCRIPT · source
“So I come back to this because the themes of what the approach we take to asset management is really to remember that as an outsourced chief investment officer, we are representing the owners of capital. Our job is to take our investment acumen, our people, our investment philosophy, our process. ever losing sight that we are here to help these savers use their capital to That has a mission, a college that wants to be more tuition free and offer more discounts, or a family philanthropy that seeks to change its role in society. We really are here to bring our investment acumen to a more productive use in society.”
2017-09-28 · Masters in Business · Ranji Nagaswami: The Outsourced Chief Investment Officer · IDENTIFIED FROM THE TRANSCRIPT · source
“Before I jump into the portfolio construction piece, one of the real reasons I think asset management is a gem of an industry in society is because of what it means for the average investor. Asset management is the part of finance that really allows investors to take their hard-earned savings and turn them into very productive capital. And pooling of assets, the first mutual fund, the way we now invest and take it for granted, but was so novel in the last 40 years has really been a tremendous innovation in finance that has not only brought capital to industry and create businesses, but has propelled investors by making their savings far more productive than it would have been had it been sitting in gold or cash.”
2017-09-28 · Masters in Business · Ranji Nagaswami: The Outsourced Chief Investment Officer · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it goes back to culture. And I really believe that it's not just a hiring process issue because this talent comes in the door. There are many, many women. Today you look at the college graduate numbers and ratios and there are many women entering the workforce, but we lose them along the way. And my belief has really been that it is about the culture of a firm and how the workforce is managed and treated as it matures within a company.”
2017-09-28 · Masters in Business · Ranji Nagaswami: The Outsourced Chief Investment Officer · IDENTIFIED FROM THE TRANSCRIPT · source
“Look, I generally believe that unconscious bias is one of the most relevant biases when it comes to answering your question. And I also believe that leadership has not made it enough of a priority. I am really struck in all of my thinking about my own career and the trajectory and the arc of my life, how much the choices I have made have been deliberate and have taken a lot of work to kind of create a culture and an environment that leads to certain behavior and leads to certain outcomes. And my fear is it's really about the culture of the firm and the leaders at the top who have, whether they pay lip service to this, but have not created the processes and the commitment that this would take.”
2017-09-28 · Masters in Business · Ranji Nagaswami: The Outsourced Chief Investment Officer · IDENTIFIED FROM THE TRANSCRIPT · source
“To the slate of candidates, to who does the interview if a candidate of diverse background opinion, angle of approach, or gender, ethnicity meets people like them, they are far more likely to be attracted to that firm. Now we are very privileged that almost half of the senior team at the firm at Hurdle Callahan are women.”
2017-09-28 · Masters in Business · Ranji Nagaswami: The Outsourced Chief Investment Officer · IDENTIFIED FROM THE TRANSCRIPT · source
“That's exactly the data, right? And so why would you not design? But for me, this comes to process design. In our own recruitment, we hired an extraordinary talent from Expedia as our chief human resources officer. And Sarah, our CHRO, has brought a whole way of thinking about the inputs that drive recruiting that lead to outputs, which is a balanced workforce. And the inputs are how do we write the job description? How do we insist a recruiter call the pool of talent if you put your job posting on LinkedIn, you're going to get hundreds of hits? Who are the 10 people that you will narrow that down to? What's their gender balance? If nine out of ten are a certain group, whatever group that is, you're likely to hire someone out of that group. So we have examined our entire recruitment process from the job description.”
2017-09-28 · Masters in Business · Ranji Nagaswami: The Outsourced Chief Investment Officer · IDENTIFIED FROM THE TRANSCRIPT · source
“I hope you are right, I hope things are changing, but the data would not suggest that that is really true. In any kind of systematic way, I will tell you that I see it as one of my personal missions in life to make sure that Hurdle Callahan has not just a gender balanced workforce, but a balanced workforce period. And so that really means having people from all sorts of backgrounds at the table reflecting our clients, reflecting the world we live in, and honestly reflecting the best possible pool of talent.”
2017-09-28 · Masters in Business · Ranji Nagaswami: The Outsourced Chief Investment Officer · IDENTIFIED FROM THE TRANSCRIPT · source
“So we designed our own portfolios, which are managed by a third party, but with our design and our innovation to design these portfolios to play a pretty central part of our clients. We are deeply valuation focused. Our entire philosophy, which was a big part of the attraction, so other than the business model, which is conflict-free and uses scale to manage costs and provide our service at reasonable fees, the valuation philosophy was a tremendous alignment of the way I think about investing and the way Hurdle Callahan has always thought about investing. To put it simply, buying assets, whether in equities or fixed income, large or small international or US at the cheapest prices, at a most reasonable valuation level and avoiding them or selling them when they become expensive over long time horizons, five to seventy horizons is by far the soundest way to invest. And this firm has stuck to its discipline over 30 year periods.”
2017-09-28 · Masters in Business · Ranji Nagaswami: The Outsourced Chief Investment Officer · IDENTIFIED FROM THE TRANSCRIPT · source
“So, the first, of course, is in retail or in any product shop which populates a client's portfolio with only their products. There is an inherent conflict of interest. We don't have that. We manage none of the money ourselves. We pull the asset allocation together to meet a client's needs. And then go out. We are completely agnostic, whether we would buy passive or active. When we invest in active, how much is in liquid versus illiquid? We have, the Hurdle Callahan innovated very early in the factor investing space, what is now popular and very well known 10 years ago was not at all known. And yet we recognized that active managers in many, many active manager portfolios, all we were getting was factor beta exposure to a particular risk and paying active fees for it.”
2017-09-28 · Masters in Business · Ranji Nagaswami: The Outsourced Chief Investment Officer · IDENTIFIED FROM THE TRANSCRIPT · source
“None of those things were even in the industry lexicon. So 30 years later, it is not a surprise that we are one of the largest still privately held, standalone pure play outsourced chief investment officers. Our business model is one of the most intriguing things that attracted me to the firm. We are conflict-free. This idea, we use our scale. We are over 20 billion in client assets today. Very few CIOs have managed, when they have gone to the outsource model to scale up to that size. That allows us to negotiate fees for our clients and manage our clients' costs down.”
2017-09-28 · Masters in Business · Ranji Nagaswami: The Outsourced Chief Investment Officer · IDENTIFIED FROM THE TRANSCRIPT · source
“30 years ago at this point when John Hurdle and his partner went on to form Hurdle Callahan, no one had thought about the words outsourced CIO. David Swenson was not a household name, the endowment model was not known, a total solution with uncorrelated sources of return were not known, having a single solution taking one hundred percent of a client's money.”
2017-09-28 · Masters in Business · Ranji Nagaswami: The Outsourced Chief Investment Officer · IDENTIFIED FROM THE TRANSCRIPT · source
“Institution wants from this portfolio. And we bring all of the products together in a way that makes sense. For this particular client”
2017-09-28 · Masters in Business · Ranji Nagaswami: The Outsourced Chief Investment Officer · IDENTIFIED FROM THE TRANSCRIPT · source
“We see the entire investment industry as being a very essential role for clients. But most firms are, if you take the analogy from the healthcare industry, most firms are like the large pharmaceutical companies or the drug manufacturers playing a vital role, spending a lot of time on a particular disease or a particular product to help with the particular disease. We see ourselves far more at Hurdle Callahan as the Mayo Clinic. We want to serve the client. We want someone to come in with an issue and a problem or something to solve, something they need help with in investing. And we access the product providers, but we are the ones that's doing the diagnosis. We are understanding the client's fact pattern. We are meeting the client where they are. What do I mean by that? What is your risk tolerance, Barry? Doesn't matter what the rest of the world does. How much liquidity do you need? What does your...”
2017-09-28 · Masters in Business · Ranji Nagaswami: The Outsourced Chief Investment Officer · IDENTIFIED FROM THE TRANSCRIPT · source
“Exactly, not just the operational and administrative infrastructure, but the investment capability, the investment access and the ability to access world-class managers, but at much lower fees. If a $200 million institution went to get a manager, they would pay their highest fee level. But if we are investing hundreds of billions with this investor, we will get a much lower fee. So it is a far more scalable, cost-efficient model to get best thinking about markets into these smaller portfolios.”
2017-09-28 · Masters in Business · Ranji Nagaswami: The Outsourced Chief Investment Officer · IDENTIFIED FROM THE TRANSCRIPT · source
“Think about if you are an endowment, a foundation, or a family, wouldn't you like to have someone by your side as if they were your internal chief investment officer? Only they bring the scale and the expertise and the depth of a much larger firm. If you were a fifty million dollar family or a two hundred million dollar endowment of a Midwestern educational institution, it is impossible for you to create the returns, the access to managers, the access to thinking about markets that a multi-billion dollar endowment is able to do.”
2017-09-28 · Masters in Business · Ranji Nagaswami: The Outsourced Chief Investment Officer · IDENTIFIED FROM THE TRANSCRIPT · source
“Know this role as CEO of one of the greatest firms, I think, in the investment business, Hurdle Callahan, a pioneer in the outsourced chief investment officer part of our industry.”
2017-09-28 · Masters in Business · Ranji Nagaswami: The Outsourced Chief Investment Officer · IDENTIFIED FROM THE TRANSCRIPT · source
“That went into the design of how we restructured the mutual fund division. Essentially over the next four years, we went from 55 mutual funds, multiple tech And I remember making a presentation to Morningstar where I said we have 55 funds today, investors need about a dozen. And that's exactly what we did. We took the mutual fund lineup down from 55 to 13. Now, what we also did was recognize that because investors were far worse off when you looked at returns from a dollar-weighted basis than a time-weighted basis, asset allocation strategies were probably the single best response to human behavior. Barry, I've often said that buy low sell high are the foremost abused words in the investment business. And the answer to that is asset allocation portfolios.”
2017-09-28 · Masters in Business · Ranji Nagaswami: The Outsourced Chief Investment Officer · IDENTIFIED FROM THE TRANSCRIPT · source
“So this was the $180 billion retail mutual fund division that Bernstein actually inherited, it was an Alliance Capital business. And I joined it at a very troubled time in its history. Lou Sanders, the CEO of Bernstein, had just asked the top 10 people to leave the firm in the wake of an SEC settlement and a crisis. And this was a transformation. What was needed was to completely fundamentally rethink the firm's approach to the retail investor. And what I really started with was how do retail investors behave? We embraced the work of behavioral economists like Daniel Kahneman, who had always been a very big influence on the Bernstein value investing philosophy. So the idea of investors being myopically loss averse, the idea that investors were much more likely to believe something that they heard repeatedly and most recently, recency biased, confirmation bias.”
2017-09-28 · Masters in Business · Ranji Nagaswami: The Outsourced Chief Investment Officer · IDENTIFIED FROM THE TRANSCRIPT · source
“And so the next five years of my life were terrific. I loved equity investing. If you can remember that time, 2000 to 2004, all of the darlings of the high yield market became value opportunities. And so I Tremendously enjoyed and think back fondly to my time in the value equities team at Bernstein.”
2017-09-28 · Masters in Business · Ranji Nagaswami: The Outsourced Chief Investment Officer · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, I like to think that once if you had your fundamental training in fixed income, you understand capital structure, you understand term structure, and you understand risk at a far more granular level than most equity. Absolutely.”
2017-09-28 · Masters in Business · Ranji Nagaswami: The Outsourced Chief Investment Officer · IDENTIFIED FROM THE TRANSCRIPT · source
“In that six month period, I had worked very closely with Lu Sanders and Marilyn Fedak, who are, of course, some of the greatest value equity investors of all time. And when that transaction happened, I said, I did not come here to join Alliance. I really wanted to stay with Bernstein. And I was persuaded to join the equity team. And so it's a very unorthodox move from fixed income to equities.”
2017-09-28 · Masters in Business · Ranji Nagaswami: The Outsourced Chief Investment Officer · IDENTIFIED FROM THE TRANSCRIPT · source
“Absolutely value investing is dead. That was the headline. And having been a value investor in fixed income all my life, and by the way, 96 while I was at UBS, the firm was bought by Swiss Bank and Gary Brinson came into my life, a legendary value investor and a thinker about global asset allocation. And that has served me extremely well, that training with Gary Brinson and Brinson partners. Went to Bernstein because, like me, they were still believers that value investing would work someday. Was the fifth person in the history of Bernstein to be brought in as a partner? And Shortly after I joined six months later, the firm was sold to Alliance Capital.”
2017-09-28 · Masters in Business · Ranji Nagaswami: The Outsourced Chief Investment Officer · IDENTIFIED FROM THE TRANSCRIPT · source
“So, all of that negative convexity, you know, tightening cycle, mortgages were the worst performer in the period thereafter. So essentially, a career of jumping into things that were about on their backs as cheap as they could get, being a problem solver, and eventually being asked to run the team in the mid to late 90s.”
2017-09-28 · Masters in Business · Ranji Nagaswami: The Outsourced Chief Investment Officer · IDENTIFIED FROM THE TRANSCRIPT · source
“So I got to UBS right after business school. I was in the fixed income division. Having been a quant, a bit of a self-professed geek all my life with an accounting and mathematical background. It was not a surprise that I started out at the bottom of the investment department in fixed income as a quantitative analyst. And over the 10 years from the time I started to the time I ran the entire department, globally running fixed income for UBS asset management, I wore many hats. In the late 1980s, in 1989, during the SNL crisis, I was asked to help with the high yield portfolios, so being an accounting undergrad and understanding financial statements, I jumped right in to high yield in the middle of that chaos. In 1994, when the Fed started to tighten, I was asked to help with the mortgage-backed securities portfolios.”
2017-09-28 · Masters in Business · Ranji Nagaswami: The Outsourced Chief Investment Officer · IDENTIFIED FROM THE TRANSCRIPT · source