YouSaid · the spoken record

Tom Joy

lines on the record: 72
first: 2023-04-03
most recent: 2023-04-03
sittings or episodes: 1
sources: podcast

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“I think there I'd have to say patience. Don't worry, everything will be fine and don't rush to decisions. Early in your career, you're wanting to make an impact. Sometimes I wish I'd be more patient.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“Like to say two things because my parents were such opposites. I mean, they really epitomized that adage that opposites attract. For my father, I would say he really taught me not to worry too much about what other people think. To follow your own path and not worry, I mean, I think through life, and I see it now with my own children, the sort of peer pressure is so strong. And I've never really bothered by that or succumbed to that. And that really came from my father. I think it's brilliant, actually, and helpful in an investment role. So I really thank him for teaching me that. And from my mother's side, who was just the most caring human being, she taught me always, no matter what, always treat others as you wish to be treated. So those two things I've really sort of carried with me.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“On the people front, just being sort of really clear and transparent and sort of thoughtful about how we did it. Being clear in communications, being sort of patient and knowing, I've seen other cycles, I've seen the sort of dot-com bubble bursting. And so, you know, I knew that eventually it would all work itself out. I exercised a lot during that time. So making sure that you found time for your own self, your own well-being, which I think is just important at all times, but particularly important during stressful times to not allow the stress to build up.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, like, I guess many people would say if they've been working as long as I have, it probably would have been post GFC. We weathered that pretty well, actually. And I was at Ram Merchant Bank. That institution did really well on a relative basis during that period. But I had to let team members go. And I never liked doing that. I think when I do it, when I've had to do it, I've done it in a kind and thoughtful way. But, you know, at that moment, letting people go at a time when you knew that it was going to be difficult for them to get other roles, et cetera. I was dealing obviously then with clients. Clients were very worried, even though their performance was pretty good. It was just an incredibly stressful, stressful time.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“One would have to be a gentleman called Andreas Whittam Smith, who was the person that decided that the church needed a CIO and was ultimately the person that decided that he wanted to take someone still in his thirties and give them a CIO seat off a fund. So that he would have to be won because I hope he would think that I've done a good job and that it was worth it. But I feel at the time they may have had other safer or easier to make options, but they went for me and I'm super grateful for that. The other one would be probably a gentleman called Justin Abercrombie at Schroeder's who plucked me out of the fixed income team to work on the corn equity and investment strategies and took, you know, again an individual that I guess took a leap of faith and chose gave me that break because they're the people that have really, if you like, given me opportunity that I'm incredibly grateful for. Hopefully I've justified their trust in me, but they would be the two I'd point to.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“I would say peer group benchmarking. I think that is just wrong on so many levels. Thankfully, I'm not subject to it, but I think it destroyed the UK defined benefit pension scheme and that whole industry is just so problematical on so many levels. So that would be my biggest one probably.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“Would say an investment where there's a real need for institutional capital. Not many other people are doing, or it's not common, which normally means that the price you're going to have to pay for investments in that space is still attractive. And I can find aligned partners. You need all of those things to line up. It's not common. I've had examples, though, in the past where that's occurred in, be it forestry in 2011, private credit in the post-GFC or sort of music royalties in the sort of 2015, 2016 space. So they would be the ones. That would probably be what the characteristics really love.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“We do a lot of skiing in Switzerland that not many people have heard of called Murin. Many people have heard of Wengen where they have the Lauberhorn, which is the big, most famous ski race. That's the opposite side of the mountain. The other side of the mountain is the most picturesque village you could imagine. And not many people know about it. So that would be probably one.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“Would probably have to be skiing. I love the mountains. I can still just about keep up with my children on the ski front. So yeah, that would be probably my happy place. I'm much more into sort of active holidays than I am into sort of the relaxing ones and I love the skiing in the mountains.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“Pretty comfortable with the portfolio that we've got. We've got a lot more, I think, genuine inflation hedges and things that tend to do well in an inflationary environment than most. So that seems to be playing out. That's helpful. We're making more use of our TAA than we have. Well, we have been for a while. We continue to do so, I guess. It's probably what I would say in terms of not being too greedy and making sure we've got the right sort of hedges in place to protect. Looking for more, you know, that transition metals piece that I talked about, you know, I think that could be something interesting. You know, adding more hedges to the portfolio would do well if inflation does surprise on the upside. They would be the main ones.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“The biggest one would be sort of the macro and they're sort of geopolitical. We don't allow, we don't take really very strong views on those. But the big macro one would be inflation just does not come, you know, that we end up in that sort of wage price spiral, sticky labor markets. And actually, we're only in the first innings of a long period of weak markets. I'm not saying that's what's going to happen, but that's what I'm most worried about because you certainly, I don't think, can argue that at current levels, you know, equity markets are screamingly cheap. And there have been points in history when even though the macro is terrible, the price is so cheap it doesn't matter. We're certainly not there. I always worry about people and losing people. I've been perennially worried about that, but I've always been surprised on the upside, thankfully. I hope that continues. I worry about that. So they would probably be my two main worries.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“Felt we were too siloed. We felt that we didn't have sufficient competition for capital across asset classes. So we've consolidated into a public markets team, a private markets team, and our direct real assets. That's been one that we're working on, given how much we broaden out our internal derivative and TAA capability we've had to sort of really focus on the depth, strengthen depth of our operational function. You know, there's sort of areas that we're sort of looking at. We haven't made any commitments. We're looking quite actively at the sports space, you know, in the US, the sports markets are sort of opening up to sort of institutional capital, and that might be interesting. That's one area that we're looking at. Transition metals is another and mining finance, certainly in developed markets is another area that we think could be quite interesting. And again, you know, I think the climate transition is just into the infrastructure space is going to throw up a ton of opportunity.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, definitely the multistrat. I mean, if you said, well, you know, what's one of your worries? I do worry a little bit about peak platform and the competition for sort of talent, et cetera, but just the amount of capital that some have taken. But there's been a really active, and that's certainly where the bulk of our capital has been allocated. But equally, we've been successful on the equity long, short space, but that sits there within our public equity allocation.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“Mentioned earlier that in the absolute return area part of your alternative strategies, in aggregate, hedgehones don't look so good, but you found certain ones that work for what you're trying to accomplish. Are there particular strategies within the umbrella of hedge funds that you found those opportunities that work for you?”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“In those markets, we have evergreen drawdown structures with managers, and we've been unallocated to them for years, so that everything's set up with the manager to go. We've got sort of trigger points agreed, and we don't pay any fees to the manager unless we're invested. And that's worked really well. So we've started to allocate a bit of capital to them. I think we were quite active in the private credit market in the post-GFC. So I'm talking 2010 to 2014. Starting to get more interesting, we're quite active there as well, but not made a whole bunch of commitments yet.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“Is bonds. People often talk about bonds as a defensive asset. You want to balance your equities with a defensive asset bonds. And at the price that they got to, bonds were really risky. And actually on occasion in the past, not now, but at the depths of the GFC, equities weren't really risky. They were much less risky, actually. Parts of the credit market are not nearly as risky as they used to be and actually can play a more interesting role because you're paid to wait and it all comes back to that. And it's really simple it sounds, but the sort of price that you pay for something is just such a powerful determinant of your returns. And I think not enough people focus on that.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“So we don't have a big allocation today to commercial real estate. I think commercial real estate is closer to equity than sometimes people really realize. So we sold out when I first arrived, we used to have quite a big allocation to commercial real estate. And I thought, well, why have we got this? It's illiquid. I don't think it's going to deliver a better return than equity over the long run. Why take that? Why not use that illiquidity budget more somewhere else? And that's in part why in 2011 I really wanted to build a big forestry portfolio. I felt that that would be a really useful addition to the portfolio. So it's thinking about what are the economic drivers or the influence the returns. I mean, all of what we do comes down a little bit to sort of price. I mean, I've talked a lot about the role that asset classes can play in the portfolio, but and I've said we've got a dynamic asset allocation perspective. The role that an asset class can play in your portfolio also changes through time. And the easiest one to think about.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, the big ones for us would be in real assets. We have a very big allocation to forestry, about 5% of the fund. We have a big allocation to farmland. That's about 6% of the fund. We have big allocation to land more generally in the UK, which is land where we're promoting it for change of use. That's like having 50-odd lottery tickets in your portfolio when you and if you can be successful in terms of taking it from what is now agricultural use to employment use or housing that's not really so linked to the economic cycle. Other one would be infrastructure. I'm not talking here about core infrastructure, you know, contracted cash flow, I'm talking higher, slightly higher risk, particularly linked to sort of climate friendly climate transition initiatives. So we've got a number of allocations there. All of those things have different economic drivers than just, if you like, pure investment in companies. And they particularly do well in an inflationary environment.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“Going to be determined by the same economic drivers as public equities. Now, I do think that private markets have some advantages and public equities and also VC managers have more levers than sometimes public companies have to navigate, et cetera. And I think the construct of our P and VC portfolio means that it will probably navigate a downturn better than maybe public equities generally, but it still ultimately equity. And in the environment that we're in now, there are other asset classes that can really provide you what I would label that more genuine diversification. And I want to make sure that I've got sufficient allocation to them. And they're also often illiquid. And I think any portfolio can only take so much illiquidity. So I didn't want to utilize all of my illiquidity budget from the PE and the VC.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think that the best thing an investor can have is lack of FOMO. I think FOMO is the most dangerous thing in investors. So as a psyche, you've just got to not worry about that. All I care about is creating a portfolio that's going to meet my objectives. And if I look at others that have done better, I say, brilliant. Well done you. That's tremendous. But most other people seem to get FOMO and they want to chase those And that doesn't make me not competitive. I am competitive, but I'm competitive against my objective. Not competitive about others. I want others to do well because that's great because they are of managing assets for other endowments and foundations that are super worthy causes. I really want them to do well as well. So I valued that genuine diversification because PE and VC ultimately is still equity. It's investments in companies.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“Or areas where domain expertise I think gives managers an edge. And that's been, if you like, our approach doesn't mean that other approaches in private equity aren't great, but that's just what we've wanted to do and what we focused on. And our size, you know, if I was running a fund that was 100 billion rather than a fund that was ten billion, I'd have to come up with a completely different construct and approach. But that works really well for us and we've been really fortunate to gain the access that we have and the partnerships that we've been able to build over time.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“So we've been in private equity investing since the mid 1990s. It's roughly about 13 to 14% of our overall book, and which is a sizable amount, but it's not nearly as big as some other investors have. I'm happy with that. It's roughly split equal between, we've got a little bit more in buyout than VC, but it's roughly split 50-50. There, we think a bit differently. So I don't target a VC allocation. I target VC managers. And I will take what I can get from the managers that I'm targeting. We have a very concentrated book of managers and our allocation, if you like, is what drops out of the access we can get with the managers we wish to partner with. That's done really well for us. I would just do more buyout if I lower and even within buyout, it's a very heterogeneous space. We hardly have anything in large buyout. We typically really focus on lower mid-market buyout. There we also focus a bit between generalists in the lower mid-market and sector special.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“We've looked at both. We just prefer the construct that we've come up with. We think we have more control over it. The long short managers that we've partnered with have been more consistent in their beta. So we know what we've got. Ultimately, the critical component part of portfolio is making sure what you think you've got is what you've actually got. And so that is probably what I would say there. Our concept of genuine diversification does focus more at a total portfolio level. So again, coming back to equities, probably I would think on balance are public equity portfolio might lag a little bit in a very strongly rising market typically, even if we get everything right. And that was certainly what we experienced. I don't mind that if when markets go down, it really doesn't go down nearly as much because it reduces, if you like, the heavy lifting that the rest of the portfolio has to do.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“We'd be happy there with market equaling, returns, but with materially lower beta. We then within our TAA determine how much whether we want to be, we can add the index exposure. We do take that to beta one. So our overall equity public equity component will be, if you like, beta 1, or we don't have anything on at all. And roughly speaking, 40% of our fund is in public equities. Of that, roughly 32% is in traditional public equities and about 8% is in long short. What we label defensive equity.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“I would say that we very much focus on slicing and dicing the portfolio and the data in different ways, utilizing different tools rather than sort of having say one to see if it shows differences, any unintended sort of biases. And we've typically always run with a much more balanced approach to growth and value at a simple level. Investment style balance. For most of people's investment career for the last 15 years post-GFC, all you want to do was belong growth. And we always felt that balance was important, that value ultimately would come back. So that's one idea about genuine diversification. The other one is that we typically have also within public equities biased to defensive equities. Coming back to this. These are equity long short strategies or managers where they really have delivered.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“So I'd love to turn to more on some of this portfolio and underneath the concept of genuine diversification, wonderful word. How have you approached within, let's just start with, say, the equities area?”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“I would agree that it is much harder, it's more nuanced, it's harder to measure, and the measurement of the E piece is much further ahead. But that doesn't mean that we shouldn't say it's important and to work on initiatives or ideas or to have a focus on it. So we don't have as hard and fast target, so to speak, on the S as we do on the E. But I think they will come over time. I think the S is really important and will grow in importance, but it's completely fair to say, and I haven't got anything particular that I can point to in relation to sort of measurement that I think is really going to be the benchmark, only to say that there's a lot of very bright people focused on it and recognizing it's importance, and that's growing”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“Great question. Hard thing to pin down with precision if I'm truly honest. The first thing is just how important is it? Respect for the planet and the sort of energy transition is just such an important thing for us. We felt that it was worth it. Second would be confidence of success to some degree. Do we think this has a charming? I think actually to be totally candid in this instance, we probably didn't have as high a conviction that it would work as we would normally like, but that was swayed by just how important if it was successful. So it's multifaceted.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“In that journey, you said you normally would like to stay below the radar. So a lot had to happen to get to the point where you were going to publicly back engine number one's campaign. Where do you decide that it's just not going to happen and therefore you choose divestment? How far does it have to go?”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“To be upped, and we publicly supported engine number one and ultimately came, you know, that was a successful campaign. It changed a quarter of the board. If you think Exxon used to be the biggest company in the world, the thought that a little group of investors could change a quarter of the board's makeup is really quite remarkable. And actually, it has had a lot of change. They have made new capital allocation commitments to sort of low carbon initiatives. They've set emissions targets. I mean, they used to describe net zero targets as beauty contests and now they're making their own. So, you know, I think it can prove that engagement can have an impact. Some may argue whether it works, but it can have an impact and is a really sort of important part of good stewardship.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“Face ultimately an existential threat, and actually you arguably would probably want to divest from them for financial reasons. Now, of course, if you look at the last year or so, they've done tremendously well, but if you look over the sort of long term, and if you believe ultimately the world is going to be successful in the transition, then they need to change. Otherwise, ultimately they will face a stranded asset risk and you'd want to divest from them from pure financial reasons. We really felt that strongly still do. And in the case of Exxon, where we ultimately weren't getting what we needed, we partnered up and supported the engine number one activist campaign. Our strong preferences for engagement behind the scenes. We would love change to happen. And for no one to ever know that we were involved with it, that we're totally fine from that. We just love to fly under the radar if we can affect change. We're never seeking plaudits for it in any shape or form. But in this case, we really felt that it needed to be the anti-needed.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“Happy to. So, I mean, I guess the first thing on divestment versus engagement, people often are in one camp or the other, and I would say it's a false dichotomy. You need both because I think engagement without the ultimate threat of divestment is a very blunt instrument. And I've never met anybody that can tell me that divestment off the bat works. That is really the last resort. And I think you're starting to get a greater degree of realization of that in the media and by investors and that more nuanced approach that recognizes that you want really both of those things in your armory. But in relation to Exxon, it's a long, long-standing engagement of ours. And ultimately, for all oil major companies, we really want them, going back to that point that we're saying we really want a net zero world, not just a net zero portfolio. We really sort of feel that pure EMP or pure oil and gas companies.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“On this spectrum of divestment, which you started with and then engagement, there's this interesting example of your work with Exxon. And would love you to tell the stories of that engagement over time.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“So we manage a reasonable amount of the public equity in house, but we use third party managers as well. So we are engaging with them. What we can do in our role is really make sure that we engage with those managers to make sure that they're really sort of fully factoring in the thinking about these risks in their decision making and improving that. So it's really sort of looking at both on the component part of the public equity portfolio that we manage in-house. We're obviously thinking about those risks and factoring them in. And we're also engaging quite heavily with our third party managers that are also manage public equities and looking at how we're not going to be prescriptive. You know, the last thing we would ever do is try to tell a third party manager how to manage their portfolio. That is certain recipe for disaster and all of the good managers would say no, obviously. So that is really the process.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, if you look at just that public equity target, you're now coming up on what happens in practice when you're making active decisions, because you can see companies making changes, but maybe they'll make those changes, maybe they don't. What actions do you take at the portfolio level”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“regenerative farming perspective. We often will pilot and test initiatives with different industry people, which is what we're doing on the farmland space in private markets. There's some initiatives as well that we're sort of involved with that are looking at collaboration with other LPs and GPs to sort of determine a”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“A challenge for anybody, it's even more of a challenge for us because we've really got some asset classes where that's not really been thought about yet. So we've set that long-term target as part of our commitment to net zero Accelona Alliance, we've made an interim target, but we want to make sure that the targets as we go along that journey are achievable. You know, we don't have to have all the answers today. But just because we don't have all the answers today, I don't think it should mean that people can't set long term targets. So our first one is to reduce by 25% scope one and scope two emissions in our public equities portfolio and real estate by 2025 based on a 2019 baseline. So, you know, I think that should be achievable. We are focused very much in our real assets portfolio. We own a lot of farmland. We own a lot of forestry. You know, we're looking at ways whereby we can capture an industry sort of initiatives to look at the measurement on, you know,”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“Hurdles, but equally are going to be impactful in some way, really aligned to our major pillars, which is sort of respect for people and respect for the planet”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“Representing, and that was really where it was when I got there. It was all about avoiding harm, so to speak. Now it's much more about doing good. That's about engaging with corporates and trying to effect change at a corporate level. It's about engaging with fund managers. We probably engage as much with fund managers as we do with corporates. It's about engaging on a policy level and trying to effect change there. We've been involved in some policy initiatives, particularly on deforestation, for example. high level. We've led global coalitions on that with the Indonesian government and also the Brazilian government and that's really been quite effective if we can help and solve that deforestation challenge. That will go a huge way to solving the climate challenge. Then it's also about focusing on impact and looking under the bonnet and peeling back the onion of the portfolio to really sort of see and measure the real world impact that we're having in the portfolio. And we've got, if you like, an unlimited appetite for what I would label win-win investments. So they're investments that meet our financial.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“Our goal, as I said, was really to be at the sort of forefront. But what I would say is that our major focus is on doing good, not just looking good. If we take the sort of E of ESG, if you like, or RI and the environment, we have set a net zero target for 2050. We want a net zero world. We don't just want a net zero portfolio. So I think that I think runs through all that we are doing. We're really focused on trying to nudge and effect change rather than just trying to make changes in the portfolio so we can then look good. We really have a sort of full toolkit of our team. I've got seven people dedicated to responsible investment. If you want to effect change, you've got to have the people to do it. And although we're a small fund, you know, we've got quite a powerful voice. So we focus on avoiding parts of the market. That is by definition going to come with who we're”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“And continue to do what they've done in the past. And throughout everything, it's about alignment. We really do focus a lot on alignment. So even in the public equity space, we're really looking to partner with managers where we think they've got that strong alignment. So that would be an important point and that we feel that the assets that they're managing is consistent with the opportunity that they're going after. It means size is a real hindrance to performance. It's often said. So we look a lot about that. But elsewhere, fixed income, for example, where it's sort of really, like I said, winning by not losing, actually we often partner with managers that are much bigger where they really have that depth of resource.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“It would vary asset class by asset class. I mean, we do think that there is an inverse relationship between active management and the efficiency of an asset class. So in some asset classes, it's about access. You know, we have a reasonable allocation to absolute return. If I was to talk generically about the hedge fund industry, I would say that probably on balance at an aggregate level, that industry doesn't justify its fees or its role in the portfolio because on a net of fee basis, it's really not going to give clients what they needed at an aggregate industry level. However, there are some managers that are incredibly skillful and can demonstrably deliver that absolute return or pure alpha, if you like, through time. Thankfully, we've got a number of them in our portfolio and they're very longstanding relationships. So there, it's really just about sort of making sure that we feel that they're going to be able to continue to sort of be competitive.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“And I think it will be more value added. And I'm just incredibly grateful that we've set it up in the way that we have. And we've now got that capability.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I would say first up, why are we doing it? If I was a fund or managing assets for someone where it was all about long-term wealth creation and the mark to market and the volatility didn't matter, they had tremendous flexibility on their distributions, so if things didn't go right, I probably wouldn't do TA. I don't think you'd need to. You'd just go heavy, equity-orientated, maybe high degree of private markets as well if you could get access to really good managers. And away you go and come back in 10, 15 years time and you'll be fine. But we do think about that fact that we don't want to cut distributions. You know, it's painful for the church to do that. We've never had to cut distributions in the past. We didn't cut them post GFC. We held them flat for a number of years in nominal terms. So that was obviously a real cut. So it is thinking about it in those terms as well that, you know, we do need to think about the downside. I do think that the world's changed a bit. Everyone normally says you can't time the markets. I think we're in a different environment now.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“Main thing is really sort of recognizing that you don't need to do things all the time. That's really why we wanted to build it. If we don't have strong conviction or views, we're just going to be with our portfolio. I mean, it's got sufficient diversification, we believe. You know, we have a lot lower typically equity risk than many of our other funds. We have a lot higher allocation to sort of what I would say genuine inflation hedges and real assets than others. We have quite a reasonable amount of cash to meet liquidity needs. So it is really only doing something when things are at extreme. So decision making process, that is all internal. So we have TAA guidelines over and above our strategic sort of asset allocation. So all agreed with our trustees, a set of permissible instruments, set of investment guidelines and thresholds, et cetera, that's all run and checked by our compliance department and operations function, et cetera. So it's really my MD of investment strategy really coming to me with a sort of view and I play, if you like, the devil's”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“That we do when we're going to do something, we want to do it really robustly and properly, so I hired the global head of cross-asset from Bank of America to come and be my managing director of investment strategy. And he hired then a number of quants to sort of support him. And in fact, we're actually growing the team further currently and looking for another strategist to come and support him. And then we did a whole bunch of stuff on the operational side. It's a combination of whether we're in an environment where we think things are really sort of stretched from a sort of strategic perspective, as well as signals from our models that say that the technicals are terrible, the sort of macroeconomic fundamentals are deteriorating, not necessarily so direction there. It's probably more important than actual level, as well as sort of sentiment flows. And that all sort of feeds into deciding whether we want to on occasion increase risk, but equally quite importantly, put a lot of hedging in place to protect the portfolio.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“The primary one is the price that the market is asking you to pay for asset classes by. So the main area is where we manage investment risk dynamically would be interest rate equity risk and FX. And obviously, although I would say that actually fixed income and credit is very much back on the table for virtually the entire time that I've been at the church commissioners, we've not owned fixed income or very little. We always hold cash and we're very focused on liquidity. We always hold at least two years worth of unencumbered cash from a distribution perspective net of the income we're going to get. So the main one is sort of price. We have a disciplined valuation process where we look across all markets and look at what the market's asking you to pay for things. We also have and have developed a number of very comprehensive set of internal models. They're looking at technical factors, sentiment factors. We're making use of our quantum making use of AI to sort of help build those models. So it's a pretty sophisticated comprehensive suite like anything.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think tactical asset allocation in particular is something that's episodic and you really want to be utilizing it when the elastic is stretched very tight. So we decided actually started decide to do that about the same time as we decided that we wanted to lower our investment return target and we started to build a really robust internal derivative capability be able to dynamically manage the investment portfolio through time. It comes with other benefits actually because it gives you some efficient portfolio management implementation benefits as well but the main one was the capability to do TAA.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“And what to have externally managers. First thing is what we do internally would be things where we feel we've got a competitive advantage. A number of those would be in the real asset space. We're investing in asset classes, but it's not really an institutional asset class. They aren't really sort of products or managers doing what we're doing. So we do that ourselves. Simple asset classes where we don't really believe in active management. That would be cash, government bonds, for example. We do that in-house ourselves. And the other one would be tactical asset allocation. And so we have a very developed internal derivative capability and manage both our investment risk dynamically ourselves internally. You might think, wow, why did you pick that? And the main one there is that you don't want to use it all the time. So if it's something that where we could go externally to do it, and if as soon as you give a manager a mandate, they want to do stuff. They want to earn their fee.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I think, you know, real transparency focus on clear communication, you know, honest feedback. Investment isn't easy. Sometimes you do have to make difficult decisions when we do need to make changes. I've really tried to be sort of kind about it, patient about it. And while those individuals may not be happy at the time, ultimately, I think if someone's in the wrong seat or they're not really sort of performing, ultimately making changes is the right thing to do. I think really giving people opportunity, you know, I really sort of focus and like to have a sort of balance between experience, but equally back youth, back that enthusiasm for the right people, give them the rope to sort of run with. There's a number of people in my team that have joined at investment, you know, not even an analyst level. And they're now leading an asset class. That's enormously rewarding.”
2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source