YouSaid · the spoken record

Tom Joy

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72
first
2023-04-03
most recent
2023-04-03
sittings or episodes
1
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podcast

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  1. “Words are free. It's amazing if you really praise someone and you do it sort of publicly when it's merited. How good that makes someone feel and it's free. I remember how that made me feel when it happened to me early in my career. And I equally, on the opposite side of the coin, examples where I've done masses a man of work, and then someone has taken that work and presented it, and whoever they're presenting it to has lauded it as fantastic, brilliant. And not once through it have they ever or later after the fact, have they given any credit? It's not that I needed to take all the credit, but just, you know, and I remember how annoyed I was about that. I think it's just focusing on that and thinking through that. Yeah, I never really went on, you know, management training courses or haven't done a huge amount of, if you like, leadership courses. So it's more sort of learning on the job. But thankfully, we've managed to hire really, really good people.”

    2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “The first thing to sort of say is that we had to sort of change the structure to make sure that we could be competitive. Although we're not a top payer, we're certainly competitive. That was an important thing to get right. Next, I wanted to sort of really make it sure it was one team. Because I went on to say, you know, before it was really the securities portfolio and then the real, probably they sat on different floors. They didn't interact a huge amount when I first got there. And in fact, it was only really the senior people that came together at an IC level. That's when they sort of saw each other and that didn't seem to make a lot of sense. It was one team, but with areas of specialism. And it's gone through it. So we were more siloed. So I put in place sort of asset class heads, but that was within both public and private markets. And now I've consolidated it into just one public markets team and one private markets team and a real assets team. I wanted a differentiate between people that were doing direct investments and those that were doing third party fund manager selection.”

    2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “First one is that, of course, trustees love meeting managers. They love it. When I first got there, they still held beauty parades. So the team would put up a number of managers and the trustees would choose from them. When you think about the amount of work that the team can do relative to a decision being made ultimately on the basis of a forty five minute presentation, I don't think that's a recipe for tremendous success, if I'm honest. So that was the first thing to sort out. Then getting rid of the firing that we would be the ones responsible for the firing took a couple of goes, but ultimately we got there where it's all now in place. So that would be probably an example.”

    2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “Oh, yeah, for sure. And this comes back to this patience. It comes back to the sort of evolution, not revolution. And I think because I've been able to have that mindset and I've never once, well, you'd have to speak to my investment committee. But I've never once shown emotion or frustration if they've said no or they never say no typically, but they'll say we need more work or we need more time or evidence to sort of contemplate doing this. I wouldn't call them sticking points, but where we've just had to take more time. And that's fine.”

    2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “And it keeps my investment team on their toes candidly. If they know that papers are having to go up to the IC, and these people really do study them in some detail, the quality of the work that's produced, I think, is of a higher standard, if I'm honest. Now, the firing, though, I think is a sort of behavioral sort of aspect to it. I think, and history shown me that it's very hard to get an investment committee to agree to firing a manager when their performance is stellar, or to not re-up with a manager when they've got absolutely shoot the lights out numbers. But in our view, they've got ahead of themselves. They're raising too big a fund. It's just not possible to get comfortable that what's been done in the past is going to be repeatable given what they've done. So that was really why we felt that we wanted it that way around.”

    2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “I really wanted to make sure that we got buy-in. If all that the trustees are getting are investment performance numbers or reporting, I think it's hard to get that real depth of understanding about why the investment team are making the recommendations that they are. So part of it was really ensuring sufficient depth of buy-in by our trustees in what we're doing. But candidly, I'm really blessed to have some of the really very best investment minds on my IC. And I thought if we didn't make use of them, if they're just for show, so to speak, that's such a wasted opportunity. I feel in some ways they're helping me do my job. I'm vetting the investment ideas from the team. If I get additional vetting from my IC, that is typically normally value added. Now, of course, the key there is how they do it. So I really want sort of challenge and support. And to date, I think it's worked really well because we've really got fantastic trust.”

    2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “Then inform the investment committee that we've done it. So reups with private market managers are all done by us. And if we choose not to re-upp again, that's done by the investment team.”

    2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “So, the board really sort of set the investment objective. The investment committee set and agree the rules of the road, so to speak. So if you like, they agree our strategic asset allocation and the ranges around that. They agree all of our sort of responsible investment policies. All of these are recommendations that are coming from the investment team, but they really sort of sign off on them. The different subgroups below the IC, one that focuses on all assets, excluding real assets and one that is really a real assets group, they determine or approve new partnerships. So if I'm bringing partners in, new managers, external managers, I get them approved by the different subgroups. But once they're approved, then it's really up to me in terms of when we allocate to them the allocations between managers and also we have quite a high degree of delegated authority in relation to altering the dynamic management of the investment risk within the portfolio. And we at an investment team are responsible for firing managers.”

    2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “Realized pretty early on that patients was going to be important, that evolution, not revolution. And often in organizations, there's this desire to make an impact quick. And I think actually if you've got a more patient mindset, you're more likely to carry everybody with you on the journey. So there were four main areas that I really wanted to focus on. The first one was governance and real clarity around what role everybody plays in the process. So what's the role of the board? What's the role of the investment committee? We actually have some subgroups underneath our”

    2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “Since 2005, by about 7% per annum, a little under, which is about three times the rate of inflation in the UK. And that all comes from investment performance. We're a closed pool of capital, no new money in. So the only way we can grow our distributions is through strong performance. Some of the reason behind the recent increase is that we've agreed to some time-limited distributions. Now, time-limited distributions obviously place a much lower burden on the fund compared to distributions that you're going to do for in perpetuity, et cetera. So examples of that would be time-limited distributions to support the church in its net zero ambitions. The church in its operating business is determined it wants to be net zero by 2030 at an investment portfolio level because we're investing in the real world and the whole global economy we've set out at 2050. So there is a difference. But we in our grants want to support the church in its net zero ambitions. And obviously that by definition is a time limited effort.”

    2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “We take independent actuarial advice on what we think is a sustainable spend rate. We publish that advice. So I think that's important so people can be really clear about the advice we've received about what we think is a sustainable spend rate. The investment committee makes a decision on what that sustainable spend rate is and then advises our board that that's what we think is achievable. So that's how it works, if you like. What are the actual numbers? We've typically been at around the sort of three to three and a half percent spend rate compared to some other globally that's quite a low spend rate. We think that's sustainable. We have recently increased it. In fact, just starting this year, we've announced our largest ever increase in spending a 30% increase over the next three years and not per year, but over the whole three years. And also if we look back through time, we've managed, although we target that rate that I said, we've actually managed to grow our distribution.”

    2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “Just what I think is the counterintuitive and worst time when you want to be reducing risk. So I took a recommendation to the board we should lower the target and they accepted it. I wouldn't rule out. I certainly wouldn't do it today. We don't change it very often. But in theory, we could increase our return target as well. So that's the mechanics and if you like the idea behind why we think that it's not right just to have a fixed return target for all time. But it's only if medium to long-term return prospects are we think really materially changed and out of whack.”

    2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “In practical terms, if I want to change the return hurdle, I have to take a recommendation to the board. That's even above the investment committee, to the board to get sign off for that. I've only done it once. That was in 2019 when I lowered the return hurdle from RPI plus five to CPIH plus four. That in essential, I think, gives me two points because RPI is always higher than CPI. So the RPI CPI wedge they often talk about it. So roughly about two points lower. And I did it principally because I felt the return prospects going forward would be worse and lower and valuation to cross all markets were stretched. So not just in certain markets, really much across the board were stretched. So it was hard for me to see us achieving that higher hurdle without taking what I thought as undue risk. And if you've got a set target and return prospects are not so good, by definition you have to increase risk.”

    2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “Wanted to really focus on our objective, what really mattered for us, and then to put all of the pieces of the jigsaw in place to achieve that objective, rather than necessarily, which I think maybe happens in our industry too much, is looking at what everybody else is doing and then just copying that. So the objective is inflation plus. So it's now CPIH plus 4%. It's not always been that. So our objective is to really grow our support for the church. They put at place a very high value on consistency. So the client or the church really values that consistency. They really don't like the idea of cuts in distributions. Now you have to really think about that from an investment risk perspective. So that's an important point. And the other objective really is to be at the forefront globally of responsible investment, which is obviously something that being who we represent is important for us. So there are objectives.”

    2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source

  15. “Well, the origins for the church commissioners actually date, or they can be traced back to the split with Rome. And when Henry VIII did his thing, so to speak, and split with the Catholic Church, there was a tax. It was called First Fruit and Tents that was collected, and it used to go to Rome, and then obviously it just went to the monarchy. Many years later, Queen Anne ultimately gifted that to the clergy. It was called Queen Anne's Bounty. That then combined with some of the assets of the bishops and cathedrals were merged just after the Second World War in 1948 to form what is now the church commissioners. But the origins of the actual pool of capital that I'm now looking after dates from the split with Rome.”

    2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source

  16. “I was very happy what I was doing. I thought I had more to do in my existing role. I was then at Ram Merchant Bank. I was enjoying working for a very entrepreneurial, although it was quite a big bank in South Africa and big bank globally. It was still really had that sort of entrepreneurial culture. When you're enjoying something, you know, and you feel you've got more to do, you're not really looking necessarily for another opportunity. But I knew this wouldn't come unlikely at least, to come again. So that's why in the end I decided to take it and I haven't looked back.”

    2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source

  17. “Came arguably a bit of. Knew it wouldn't come again. It's like often many things in life. I didn't know a huge amount about the church commissioners, but I was headhunted by a Firm I knew well, and when I sort of evaluated it, it was just fantastic. It was a big pool of capital, single client, pure investment role, really good.”

    2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source

  18. “Sort of really understand the sort of Charlie Ellis winning by not losing mantra, so to speak. So I started in global bonds. Then I moved into direct equity, quant equity, in fact, and also sort of asset allocation in what was then called the investment strategies unit at Schroeder's. When Schroeder set up their own multi-manager program, I headed that up and then I sort of that's when I moved to, if you like, evaluate using the sort of skills that I had learned in both fixed income and equity departments to analyze third-party fund managers. So they were the main roles that Schroded.”

    2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source

  19. “Really luck in an era where most people To go into a role, and they've often stayed in that lane. I've really been lucky enough to have quite a lot of variety. But Asset classes. So I started off in fixed Actually, I think starting out in fixed inc The best place to start if you're going to have a successful career in investments. It really sort of grounds you.”

    2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source

  20. “Very well respected. They actually formed part of Margaret Thatcher's Six Wise people that advised her. So they were quite well known in the city. And I think doing that course helped me formulate a view because up to that point, like many people at that age, wasn't really sure what I wanted to do. They really sort of helped me that a sort of career in the financial markets might be something I'll be interested in. So I applied and was lucky enough to get a graduate training program. And I did that for about 18 months. And I got a good break to go to Schroeder's, which is one of the best well-known UK-based asset managers. And that was really fantastic. So I took that up. I could have had a career in the mountains and the ski industry, but as it turns out, I ended up going into investment management. And that's where I spent my whole career.”

    2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source

  21. “Was straight out of university, well, not quite straight out of university. My undergraduate, and then I had two offers. One was to be a ski guide, one was to take a scholarship and go into a master's, and actually the post went to my home, my mother of Still then was opening my post, I never saw the ski guide job offer. I quizzed her about it because the firm chased me. She said, Well, of course you're not going to take that. You've got a scholarship to do a master's. So that was a course where there were a couple of economists.”

    2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source

  22. “Guest on today's show is Tom Joy, the chief investment officer at the Church Commissioners of England, where he's responsible for the stewardship of the Church of England's £10 billion endowment fund. Our conversation covers Tom's background, the history and goals of church commissioners to achieve sound returns with modest volatility and invest responsibly. We discussed Tom's four pillars to achieve these objectives across governance, people, genuine diversification and operations, and dive into team structure, internal management, external manager selection, responsible investing in the environment, diversification in public and private markets, new initiatives, and risks on the horizon. Private equity deals has been named the number one podcast for private equity dealmakers, and the interest in season two focusing on”

    2023-04-03 · Capital Allocators · Tom Joy – Divine Diversification and Responsibility at Church Commissioners (Capital Allocators, EP.306) · IDENTIFIED FROM THE TRANSCRIPT · source