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Speaker 1: This is Master's in Business with Barry Ridholds on Bloomberg Radio.

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Speaker 2: This week on the podcast, I have an extra special guest.

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Speaker 2: What can I say about Julian Salisbury. He is the

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Speaker 2: chief Investment Officer of Asset and Wealth Management at Goldman Sachs.

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Speaker 2: He's a member of the Management Committee. He co chairs

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Speaker 2: a number of the asset management investment committees. He covers pe, infrastructure, growth, equity, credit,

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Speaker 2: real estate, on and on. Really a fascinating person who

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Speaker 2: has seen the world from a unique perspective in multiple

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Speaker 2: cities as an investor. He's been with Goldman for twenty

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Speaker 2: five years and helps oversee over two and a half

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Speaker 2: trillion dollars in assets under supervision. I thought this was

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Speaker 2: an absolutely fascinating way to see the world of investment management.

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Speaker 2: And I found this conversation to be fascinating and I

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Speaker 2: think you will also, with no further ado, my discussion

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Speaker 2: with Goldman Sachs. Julian Salisbury, Welcome to Bloomberg.

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Speaker 1: Thanks Berry. It's great to be here.

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Speaker 2: I've been looking forward to this conversation for a long time.

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Speaker 2: Let's start out with a little bit of your background.

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Speaker 2: You begin in audit practice at KPMG. What was the

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Speaker 2: original career plan.

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Speaker 1: Honestly, I didn't really have a long term plan. I

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Speaker 1: grew up in a family where my mother was a mathematician,

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Speaker 1: my father was a chemist. I didn't really know much

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Speaker 1: about the world of finance. Investment banks were not really

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Speaker 1: a known concept in the area I grew up. I

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Speaker 1: graduated college, realized I need to needed to get a job.

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Speaker 1: And my dad had always said, as you know, many

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Speaker 1: young kids get this advice doctor, a lawyer, accountant, engineer,

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Speaker 1: and accountants seemed like a reasonable option. And I kind

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Speaker 1: of stumbled my way into accounting and what I found

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Speaker 1: was it was just a phenomenal training ground for somebody

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Speaker 1: who wants to then go on to invest especially doing

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Speaker 1: more micro level analysis like that. Background of being an

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Speaker 1: accountant was just was just great bedrock training.

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Speaker 2: Very precise, very specific. So how do you then go

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Speaker 2: from tax and order practice to finance and invest in

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Speaker 2: very different fields.

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Speaker 1: Yeah, I'd love to tell you there was some great

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Speaker 1: master plan, but you know, in the UK, you when

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Speaker 1: you qualify as a chartered accountant, first of all, you

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Speaker 1: have to complete your three years training. So you know,

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Speaker 1: people these days want to change job after a year

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Speaker 1: eighteen months you had to finish the three years. I

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Speaker 1: finished the three years. I qualified. The following week, I'd

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Speaker 1: lined up a bunch of job interviews with a variety

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Speaker 1: of banks, and again, I had ended up in the

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Speaker 1: financial services audit practice at KPMG, so I'd got to

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Speaker 1: know banks a little bit, and frankly, you know, I

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Speaker 1: heard they pay more. So I interviewed with a bunch

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Speaker 1: of banks, got a number of job offers by the

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Speaker 1: end of the week, and joined Goldman Sachs in October

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Speaker 1: nineteen ninety eight.

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Speaker 2: So let me throw one of your own quotes back

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Speaker 2: at you, because I feel like it's so revealing. Quote

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Speaker 2: the world defining and is it as complicated as newcomers expect.

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Speaker 2: It's simply shrouded in techno jargon. Explain what you mean there.

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Speaker 1: I continue to find this truth to this day. But

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Speaker 1: when I first joined the firm, I was doing P

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Speaker 1: and L and risk reporting for a credit trading desk,

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Speaker 1: and people start talking about DEVO on this, and duration

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Speaker 1: that jumped to default, this, futures versus cash. I didn't

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Speaker 1: know what any of these terms meant, so I took

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Speaker 1: it upon myself to go off and took a course

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Speaker 1: in bond math, took another course in derivatives, and realized

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Speaker 1: the underlying fundamental concepts were barely I mean, it wasn't

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Speaker 1: even high school math in most cases. And it was

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Speaker 1: really more about learning not a different language, but a

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Speaker 1: different dialect. And it's interesting because you'll find people who'll

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Speaker 1: be fluent in one dialect, and then you know, they

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Speaker 1: become fluent in credit dialect. And then you talk to

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Speaker 1: somebody who works in an equities business and they start

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Speaker 1: throwing greeks at you, and you've never come across these terms. Again,

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Speaker 1: it sounds highly complicated. Most people, you could sit them

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Speaker 1: down in half an hour and explain, you know, the

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Speaker 1: majority of the concepts.

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Speaker 2: That that's been kind of true in a lot of

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Speaker 2: professions over history, is that almost by design, their language

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Speaker 2: keeps outsiders at arms distance, and hey, if you want

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Speaker 2: to learn our secrets, you have to pay us. Are

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Speaker 2: you suggesting that all of this techno jargon is just

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Speaker 2: to create a little mystique around.

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Speaker 1: I wouldn't say that's entirely what boy you find it

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Speaker 1: And this becomes more and more true, I think is

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Speaker 1: people become very specialized in order to compete and win

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Speaker 1: in so many things today and finance, you have to

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Speaker 1: be super specialized. So you find people who are super

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Speaker 1: deep in one area, one narrow area, and it might

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Speaker 1: be it might be investment, great credit or distress credit.

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Speaker 1: It might be equity derivatives, it might be growth equity,

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Speaker 1: and they all develop their own little system of useful terms.

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Speaker 1: But then they end up becoming almost like a barrier.

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Speaker 1: That makes it hard for an outsider who hasn't grown

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Speaker 1: up in the world of finale, who doesn't have you know,

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Speaker 1: a father who ran a hedge fund or an unkleho

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Speaker 1: ran a private equity firm. It's hard for them to

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Speaker 1: break in without some way of developing that jargon.

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Speaker 2: So that shorthand works for the practitioners, and there's no

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Speaker 2: malicious intent there, it's just, hey, that's how these people

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Speaker 2: talk in their chosren specialty.

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Speaker 1: Yeah, it's quite natural.

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Speaker 2: Really interesting. So you mentioned you joined Goldman Sachs in

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Speaker 2: nineteen ninety eight, coming up on your twenty fifth anniversary. Congratulations,

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Speaker 2: thank you, that's pretty good heady times in ninety eight.

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Speaker 2: What's kept you with Goldman for twenty five years.

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Speaker 1: Look, I think first of all, it's the people just

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Speaker 1: super high quality people across the business, no matter what

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Speaker 1: part of the firm they operate in, just the average

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Speaker 1: intensity level, integrity level capabilities, and it's just really hard

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Speaker 1: to match when you get to other organizations. So people

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Speaker 1: is a huge part of it. Another part of it

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Speaker 1: is I've been lucky in that I've you know, although

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Speaker 1: I've been in one firm for twenty five years, I've

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Speaker 1: just done so many radically different things.

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Speaker 2: You've been in a lot of different divisions, You've had

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Speaker 2: a lot of different job description.

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Speaker 1: Yeah, I've been in I think all but one division

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Speaker 1: at this point, and I've worked in three different offices

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Speaker 1: too continents. I would say it's been a little more

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Speaker 1: evolutionary after the first five or six years, but that

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Speaker 1: ability to constantly be learning and at times be quite

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Speaker 1: entrepreneurial in terms of starting new businesses. So what I

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Speaker 1: tend to find is after three or four years, it

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Speaker 1: depends how big and complicated the task is. But after

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Speaker 1: in some cases it might be two years, in other

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Speaker 1: cases it may take a little longer. Three four years,

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Speaker 1: you know, you start to think what's next. You know,

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Speaker 1: you develop reps. A lot of things are hard to

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Speaker 1: start with, and then it's like I love sports analogies.

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Speaker 1: It's like lifting weights. At some point you have to

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Speaker 1: start changing the exercise or increasing the weights, otherwise you

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Speaker 1: stop developing and learning. And sometimes it's a and then

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Speaker 1: you can go back to what you were doing before

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Speaker 1: and you come back and you've benefited from that cross training.

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Speaker 1: But it's the ability to constantly learn and keep adapting.

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Speaker 2: So you mentioned a couple of continents. You've worked in London,

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Speaker 2: in Moscow and now New York. How have your roles

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Speaker 2: changed in each of those locations and what do you

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Speaker 2: learn working in very different parts of the world.

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Speaker 1: Yeah, So I joined, as I said, in ninety eight,

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Speaker 1: and I was doing P and L and risk reporting

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Speaker 1: for the investment grade trading desk and then the high

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Speaker 1: yield desk. I ended up being hired onto the high

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Speaker 1: yield desk as a research analyst and did that for

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Speaker 1: a number of years, a couple of years, and then

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Speaker 1: I was the beneficiary of the TMT bubble bursting in

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Speaker 1: two thousand and one, so the whole sector that I

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Speaker 1: was covering went bankrupt. So I went from being a

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Speaker 1: publishing high old research analyst to a distressed debt analyst

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Speaker 1: and an investor.

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Speaker 2: Same companies, just same companies. Yeah, they just became distressed.

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Speaker 1: The high your bonds quickly went to zero and then

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Speaker 1: you're buying the bank loans at discounted prices. So and

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Speaker 1: that was that was fairly evolutionary. And then in about

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Speaker 1: two thousand and three we set up a group called

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Speaker 1: the European Special Situations Group, which was a multi asset

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Speaker 1: class proprietary investing business. It was centered around credit, but

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Speaker 1: really invested in both credit real estate growth equity. I

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Speaker 1: led the corporate research team there for a few years

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Speaker 1: and then, you know, in a fit of madness, I

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Speaker 1: guess at the end of six you know, the credit

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Speaker 1: markets were pretty uninteresting. There wasn't a lot to do.

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Speaker 1: It was kind of bad companies issuing low quality bonds,

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Speaker 1: and I thought about, you know what's next. I actually

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Speaker 1: went out to visit the team in Asia and thought

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Speaker 1: about moving out there. And my wife happens to be

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Speaker 1: Russian or bella Russian, so I had an interest in

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Speaker 1: the Russian market. And around that time, Russia was starting

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Speaker 1: to open up a little bit. It was a very

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Speaker 1: different place till we find ourselves today. They were starting

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Speaker 1: to want to attract international capital and I did a

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Speaker 1: couple of trips out there and the next thing I know,

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Speaker 1: my boss is buying me a one way ticket to Moscow.

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Speaker 1: So I spent the next couple of years there. The

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Speaker 1: role there was quite different. Was really building a growth

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Speaker 1: equity business, and we had some great successes. Not backing

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Speaker 1: oil and gas companies or formerly state owned assets. It

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Speaker 1: was really finding growth equity companies, young entrepreneurs that were

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Speaker 1: building businesses. I did that for a couple of years

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Speaker 1: and then I moved back to London at the end

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Speaker 1: of O eight, which was a really interesting pivot. Yeah,

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Speaker 1: I was asked to come back to lead the European Business,

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Speaker 1: which you know, took about buying at the bottom. You know,

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Speaker 1: at the end of eight we owned a lot of

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Speaker 1: I liquid assets and whilst on a relative basis, you know,

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Speaker 1: those assets outperformed what was going on in a lot

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Speaker 1: of other private firms. You know, it was certainly I

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Speaker 1: think we had one hundred and sixty nine positions on

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Speaker 1: the book at the time and there was a problem

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Speaker 1: with one hundred and sixty eight of them at the

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Speaker 1: end of eight. That was kind of like a you know,

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Speaker 1: almost like a distressed buy at the bottom assignment. But

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Speaker 1: was interesting about that was the quick need to both

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Speaker 1: separate the portfolio between the old stuff and the new stuff,

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Speaker 1: because there were a lot of new investment opportunities and

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Speaker 1: if people were too burdened down by dealing with legacy situations,

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Speaker 1: they couldn't really focus on the new opportunities. And frankly

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Speaker 1: had to do with the same with the people.

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Speaker 2: I think that was a proposal from one of the

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Speaker 2: central bankers. We need a bad bank and a good bank.

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Speaker 2: You inherit a whole bunch of positions that have come

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Speaker 2: through the financial crisis. You really want to look at

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Speaker 2: this as hey, here's the legacy stuff that comes with

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Speaker 2: a little air on it, and here's our opportunistic Hey

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Speaker 2: look at all this stuff that we have no exposure.

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Speaker 2: What was the financial crisis like when you were in London?

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Speaker 2: How in the US? It was sheer mayhem? What was

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Speaker 2: it like over there?

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Speaker 1: Absolutely? I mean it was an existential event. I mean

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Speaker 1: people were wondering, am I going to have a job?

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Speaker 1: It was the here I made partner actually in two

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Speaker 1: thousand and eight, and I thought, great, I just made partner.

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Speaker 1: Is this group? Is this business is going to exist

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Speaker 1: by the end of the year. So it was certainly stressful,

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Speaker 1: but in some ways those events and we saw it

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Speaker 1: again in March of twenty twenty, we saw it again,

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Speaker 1: you know, around you know, we see these big moments

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Speaker 1: where it draws people together. So actually everybody gets, you know,

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Speaker 1: any kind of nonsense and couch time, all dissiplates because

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Speaker 1: everyone's so focused on dealing with a task at hand.

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Speaker 1: So in that way, it was quite a good defining moment.

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Speaker 1: The other thing I would say is in some ways

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Speaker 1: it was I remember a few years earlier there was

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Speaker 1: one investment that I was working on that ended up

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Speaker 1: being spectacularly successful, but there was a period of time

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Speaker 1: where I was quite worried that it was going to

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Speaker 1: lose a lot of money. And the reason I was

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Speaker 1: worried it was my position. It was me and the

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Speaker 1: rest of the world was looking good. The thing in wait,

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Speaker 1: everything was broken and bad. So that actually helped in

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Speaker 1: a way that everybody was dealing with the same broad

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Speaker 1: based crisis as opposed to when it's just you or

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Speaker 1: just your firm or just your fund, where in some

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Speaker 1: ways it can feel more stressful.

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Speaker 2: So what brought you back to New York and what you.

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Speaker 1: Was at SO I led the European Special Situations Group

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Speaker 1: from eight to twenty thirteen, and then at that time

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Speaker 1: I was asked to run the global business and it

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Speaker 1: seemed pretty natural to move to the US at that time.

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Speaker 1: There are a couple of reasons for that. One, the

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Speaker 1: London market is where it's about most of my career.

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Speaker 1: I knew the market, but I also knew the people there.

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Speaker 1: I was very well calibrated at a very strong and

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Speaker 1: trusted team, the vast majority of which are still with

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Speaker 1: the business today. So I felt like that was the

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Speaker 1: last place I needed to be. So then it was

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Speaker 1: a question of Asia or the US. If I'd moved

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Speaker 1: to Hong Kong, I think it would have looked like

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Speaker 1: a fairly self serving tax trade. If I had done that,

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Speaker 1: it would have been because I thought that was one

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Speaker 1: of the more interesting markets at the time where there

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Speaker 1: was real out for generating capability.

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Speaker 2: But so you said, let's find the most expensive taxable city. Yeah, world, Yeah.

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Speaker 1: Now, what I decided to do what's right for the business,

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Speaker 1: and what was best for the business at the time,

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Speaker 1: was to be in New York. It's a New York

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Speaker 1: headquartered firm. It's a it's a US centric firm. I

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Speaker 1: think that's fairly well understood. And at the time, we

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Speaker 1: were going through a lot of regulatory change. Capital rules

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Speaker 1: were changing, risk appetite was changing, and being at headquarters

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Speaker 1: where you could stay close to the people, you know,

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Speaker 1: whether it's head of compliance, head of legal, head of risk,

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Speaker 1: some whoever was running the business needed to be close

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Speaker 1: to those decision makers in order to shepherd the business

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Speaker 1: through that post financial crisis period where there was a

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Speaker 1: lot of you know, the volcal rule like brought into focus.

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Speaker 1: You know, could we do these businesses? Could you run

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Speaker 1: private equity business? Could you run distress credit businesses? So

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Speaker 1: we really had to work through that over over a

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Speaker 1: number of years, and that's what really brought me to

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Speaker 1: the US. And you know, I wasn't a huge fan

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Speaker 1: of New York before I moved here, but now we've

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Speaker 1: been here almost ten years, we love it and you know,

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Speaker 1: I can't imagine leaving.

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Speaker 2: Tell us a little bit about what the Goldman Sachs

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Speaker 2: asset and wealth management business is, like, what do they

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Speaker 2: focus on?

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Speaker 1: Sure, Well, at the simplest level, we manage money for

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Speaker 1: our clients about two point seven trillion dollars of assets today.

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Speaker 1: Three main client segments institutional clients, our own private wealth clients,

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Speaker 1: and then third party wealth clients where we manage money

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Speaker 1: on behalf of other wealth managers distribution partners. So those

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Speaker 1: are the three main segments. Within institutional we manage money

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Speaker 1: on behalf of pensions, endowments, insurance companies, sovereign wealth funds.

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Speaker 1: So that's essentially what we what we do from from

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Speaker 1: a client segmentation perspective, and we do that globally US,

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Speaker 1: Europe and Asia. In terms of the from the from

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Speaker 1: the investing side of the business, we really are somewhat

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Speaker 1: unique in that we cover the full range.

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Speaker 2: Of products from meaning both public and alternatives.

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Speaker 1: Yes, and really even within that the full range, so

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Speaker 1: everything from money market funds, core fixed income, high yield,

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Speaker 1: fundamental equity, quant equity, and then the full range of

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Speaker 1: alternatives both direct and indirect. We have a business where

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Speaker 1: we invest in other people's private equity funds, private credit funds,

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Speaker 1: and then we have a series of direct investment strategies

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Speaker 1: private equity, growth, equity, credit, real state, infrastructure, sustainability, life sciences,

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Speaker 1: so what we find and then of course we have

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Speaker 1: a multi asset solutions business where we talk to clients

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Speaker 1: about the entirety of their portfolio, their strategic asset allocation models.

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Speaker 1: So what we find is with our clients increasingly, they

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Speaker 1: don't want to just be pitched on a product or

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Speaker 1: pitched on a single idea. It's like, what do I do?

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Speaker 1: How do I address my needs? What are my liability structures?

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Speaker 1: How do I make long term investment decisions? And then

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Speaker 1: how do I execute upon that overall advice through these

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Speaker 1: individual investment opportunities.

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Speaker 2: So that sounds like a substantial menu of options that

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Speaker 2: can be fairly customized for each individual client, regardless family office,

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Speaker 2: high net worth individual, or one of the institutions. Take

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Speaker 2: us through a little bit of what that process is like,

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Speaker 2: because I have to assume it's not cookie cutter. If

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Speaker 2: you're dealing with a sovereign wealth fund, that's a very

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Speaker 2: different conversation than a family authors.

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Speaker 1: Look, every client is different. They have a different liability structure,

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Speaker 1: different investment goals, different investment risk tolerances, and we have

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Speaker 1: different teams. We have an institutional client team, we have

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Speaker 1: private wealth advisors that cover our own clients directly, and

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Speaker 1: then we have a series of people that cover the

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Speaker 1: distribution partners. So it's pretty bespoken, tailored to their individual needs.

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Speaker 1: And yes, some demand and expect a high level of

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Speaker 1: customization and a higher level of service. If somebody's giving

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Speaker 1: us billions of dollars, then they expect a very high

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Speaker 1: level of customization. At the simpler end, it can be

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Speaker 1: a relatively plain, vanilla product, but even our private wealth

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Speaker 1: smaller private wealth clients are increasingly looking for broader set

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Speaker 1: of advice and customization in terms of how we design

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Speaker 1: their portfolio, which could be implementing values that they have

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Speaker 1: or tilt that they have a desire to include or

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Speaker 1: exclude certain products or q SIPs within their within their

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Speaker 1: equity portfolio or fixed income portfolio.

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Speaker 2: Really intriguing. So so your chief investment officer of asset

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Speaker 2: and wealth management, that sounds like there's a pretty big

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Speaker 2: list of responsibilities under that. So not only are you

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Speaker 2: describing the broader asset allocation decisions with various clients, you're

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Speaker 2: also selecting the specific assets that go within each of

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Speaker 2: those allocations. Is that is that more or less right?

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Speaker 1: So we have we have different teams that do this.

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Speaker 1: So we have our MAS team, a multi asset solutions team,

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Speaker 1: who are really providing more of the overall portfolio advice,

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Speaker 1: and that's that's a discrete skill set by doing that.

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Speaker 1: And then we have investment teams in each of these areas,

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Speaker 1: so we have specialists in each of the sectors that

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Speaker 1: I set out for you. I'm responsible for each of

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Speaker 1: these individual investment teams making sure we have the right

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Speaker 1: players on the field, the right processes in place. And

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Speaker 1: then as it relates to the private side activities, I

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Speaker 1: co chair all of those investment committees, so the individual

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Speaker 1: deals that are coming through in our private equity business

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Speaker 1: and our growth equity business and our real estate business.

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Speaker 1: So we have you know, I'm one person. My primary

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Speaker 1: responsibility at the end of the days to make sure

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Speaker 1: that we have the right people on the field, you know,

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Speaker 1: fulfilling each of these roles and functions.

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Speaker 2: You're the coach and you're sending different players in to

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Speaker 2: do different jobs. So your background, you've worked at merchant banking,

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Speaker 2: you've worked in special situations. How does all of that

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Speaker 2: come into play as chief investment officers.

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Speaker 1: It's interesting because some of it's helpful and useful, and

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Speaker 1: then sometimes it can bur in. You you know, when

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Speaker 1: I ran a special situations group, it was a pure

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Speaker 1: investing business. We didn't really have clients, we didn't really

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Speaker 1: have to worry about marketing or advertising, didn't spend time

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Speaker 1: on podcasts or TV. We kept everything as quiet as

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Speaker 1: possible and one hundred percent of the focus was just

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Speaker 1: finding interesting investments that we generated the highest return on

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Speaker 1: equity possible for the firm. Wouldn't be a dollar of

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Speaker 1: risk that we would deploy that I wouldn't personally review.

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Speaker 1: We'd have a couple of hundred deals a year coming

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Speaker 1: through investment committee. And that was interesting and it was

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Speaker 1: a great model while it lasted. But I would say

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Speaker 1: that the industry changed, the regulatory environment changed, and also

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Speaker 1: I used to sit back and think, this is great.

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Speaker 1: You know, we just get to focus on assets and

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Speaker 1: asset risk management. I don't have to worry about flying

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Speaker 1: around the world collecting capital from LPs. We have one

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Speaker 1: LP and it's the firm, it's Goldman Sachs, and they're

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Speaker 1: in the same building. The problem is, you know that

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Speaker 1: there are multiple problems with that, but one is you

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Speaker 1: miss out on a huge information piece, which is understanding

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Speaker 1: what these huge asset allocators and investors want and understanding

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Speaker 1: what their liability structures are and what their needs are

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Speaker 1: from an investment perspective, really informs your view on the

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Speaker 1: forward path of asset prices. And then you know, I

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Speaker 1: would also say we were seeing increasing need from our

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Speaker 1: clients to increase allocations to alternatives, and we were doing

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Speaker 1: a lot of this for ourselves, but we didn't have

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Speaker 1: enough investment product to be able to offer to our

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Speaker 1: clients and scale and grow the business. So it was

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Speaker 1: a very natural evolution to take a series of businesses

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Speaker 1: which have been prosecuted either wholly on balance sheet or

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Speaker 1: to a large extent on balance sheet, and start to

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Speaker 1: evolve that business model where we continue to commit our

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Speaker 1: own capital and our partner's capital, but to bring in

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Speaker 1: client money alongside us.

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Speaker 2: So you touch on so many fascinating areas. I have

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Speaker 2: to follow up at least with three of them. One

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Speaker 2: is you mentioned clients once. How do you separate when

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Speaker 2: clients want something from when clients need something, and then

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Speaker 2: lastly from when hey, all these clients are all clamoring

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Speaker 2: for the same asset class. Maybe this has had a

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Speaker 2: little bit of a good run and it's time to

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Speaker 2: think about leaning the other way. How do you juggle

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Speaker 2: all of those OK.

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Speaker 1: Our job as an advisor to our clients is to

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Speaker 1: know them intimately, to understand them, to understand their funding

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Speaker 1: structure or their liability structure, to understand their risk tolerance,

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Speaker 1: to understand their investment philosophy and approach, and then really

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Speaker 1: to bring to them a variety of solutions. We have

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Speaker 1: a team that really looks at their portfolio holistically across

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Speaker 1: all asset classes, and then we have individual teams that

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Speaker 1: can help bring implementation in each of the individual asset

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Speaker 1: classes to make up that overall portfolio. But it's really

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Speaker 1: a solutions oriented approach and a very client centric approach.

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Speaker 2: You mentioned liability. I want to discuss that because I

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Speaker 2: think the layperson who hears this may not understand when

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Speaker 2: we're talking about financial liabilities. What we're really talking about is, hey,

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Speaker 2: we have a bunch of people retiring in ten years

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Speaker 2: and we expect to have to pay out X dollars.

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Speaker 2: Go into a little bit of what those liabilities are,

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Speaker 2: not you know, the usual use of the word sorry.

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Speaker 1: When I say that, I mean, by the way exactly

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Speaker 1: people should be. If people had forgotten about asset liability mismatches,

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Speaker 1: they've got the starkish reminder of it possible, or the

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Speaker 1: collapse of SVB for a few weeks ago. Generally, it's

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Speaker 1: asset liability mismatches that causes you know, the bank bank failures,

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Speaker 1: but it also causes in some cases hedge fund failures

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Speaker 1: and other financial institutions to fail. So what I mean

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Speaker 1: by that is what is your source of funding. If

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Speaker 1: you're an individual investor, for example, your your source of

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Speaker 1: you don't have to give that money back. It's your money,

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Speaker 1: so you may be able to afford to tie it

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Speaker 1: up as long as you've kept enough money aside to

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Speaker 1: meet your near term liquidity needs. You know your cost

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Speaker 1: of living essentially. If you have a private equity fund

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Speaker 1: where you've raised money from institutional clients, they have given

436
00:22:53,240 --> 00:22:57,040
Speaker 1: you that money for ten years, often some cases it

437
00:22:57,040 --> 00:23:00,120
Speaker 1: could be longer, so you have time to invest that money,

438
00:23:00,400 --> 00:23:02,960
Speaker 1: generate a return on that money, and give the money back.

439
00:23:03,600 --> 00:23:06,520
Speaker 1: If you have hedge fund money, you may have to

440
00:23:06,520 --> 00:23:09,440
Speaker 1: give that money at a month or three months notice,

441
00:23:09,800 --> 00:23:12,000
Speaker 1: so you have to be very careful about how long

442
00:23:12,080 --> 00:23:15,600
Speaker 1: you lock up your investments for. And if your source

443
00:23:15,640 --> 00:23:19,200
Speaker 1: of funding is overnight deposits that can be called on

444
00:23:19,400 --> 00:23:22,320
Speaker 1: that are on demand, then you have very very short liabilities.

445
00:23:22,359 --> 00:23:24,960
Speaker 1: So what I mean by that is, first understand the

446
00:23:25,119 --> 00:23:28,360
Speaker 1: duration of your funding source. That's what I mean by liabilities.

447
00:23:28,720 --> 00:23:33,439
Speaker 1: Insurance companies have very long dated capital. Pension funds have

448
00:23:33,520 --> 00:23:35,880
Speaker 1: quite long dated capital. It tends to be quite sticky.

449
00:23:36,880 --> 00:23:40,080
Speaker 1: So first it's understand the duration of those of that

450
00:23:40,119 --> 00:23:44,359
Speaker 1: funding source, and then the second is understand the return

451
00:23:44,440 --> 00:23:47,760
Speaker 1: requirement of that funding source. So, for example, a lot

452
00:23:47,760 --> 00:23:50,600
Speaker 1: of pensions and endowments would tell you in order to

453
00:23:50,760 --> 00:23:54,719
Speaker 1: meet my obligations to pay pensioners for the next few years,

454
00:23:55,320 --> 00:23:58,440
Speaker 1: I need to generate on average a seven percent return

455
00:23:58,480 --> 00:24:02,160
Speaker 1: on that portfolio. And if I do more, that's that's good.

456
00:24:02,160 --> 00:24:05,240
Speaker 1: But I, you know, in extremists, I should want to

457
00:24:05,280 --> 00:24:08,040
Speaker 1: achieve a seven percent return and take as little risk

458
00:24:08,080 --> 00:24:12,720
Speaker 1: as possible. So then they have to look at what's

459
00:24:12,760 --> 00:24:15,760
Speaker 1: my what's my mix, and how does each investment that

460
00:24:15,840 --> 00:24:20,040
Speaker 1: I make help me achieve that goal. So it's it's

461
00:24:20,080 --> 00:24:27,080
Speaker 1: really understanding funding source duration, funding source, return requirement, and

462
00:24:27,119 --> 00:24:31,159
Speaker 1: then for certain types of financial institutions, understanding the capital rules.

463
00:24:31,160 --> 00:24:34,720
Speaker 1: So for example, if we raise, if we invest money

464
00:24:34,760 --> 00:24:37,840
Speaker 1: for an insurance company, how we structure that can make

465
00:24:37,880 --> 00:24:40,840
Speaker 1: a difference to the amount of capital they have to

466
00:24:40,840 --> 00:24:44,240
Speaker 1: hold against it. So it's our job to better understand these.

467
00:24:44,280 --> 00:24:46,159
Speaker 1: Of course, you know, the best funding source is to

468
00:24:46,240 --> 00:24:48,320
Speaker 1: just have lots and lots and lots of your own money,

469
00:24:48,520 --> 00:24:51,280
Speaker 1: with no particular time horizon on which you give it back,

470
00:24:51,600 --> 00:24:53,880
Speaker 1: no particular capital rules that you have to comply with,

471
00:24:53,920 --> 00:24:56,040
Speaker 1: no compliance you know, no clients to actually have to

472
00:24:56,080 --> 00:24:58,440
Speaker 1: answer to. But you know, most people don't have the

473
00:24:58,480 --> 00:25:00,320
Speaker 1: luxury having that much money in it.

474
00:25:00,440 --> 00:25:04,399
Speaker 2: Perpetual capital is the ideal, absolutely and actually can do that.

475
00:25:04,720 --> 00:25:08,040
Speaker 2: So earlier we were talking about assets and then you

476
00:25:08,240 --> 00:25:11,879
Speaker 2: referenced risk management. Tell us a little bit about the

477
00:25:11,960 --> 00:25:16,120
Speaker 2: difference between managing risk and merely owning assets.

478
00:25:16,359 --> 00:25:20,680
Speaker 1: Well, look, I would say whenever you are making investment

479
00:25:21,040 --> 00:25:24,480
Speaker 1: recommendations to your clients, you have to think about a

480
00:25:24,600 --> 00:25:27,960
Speaker 1: range of potential outcomes. Of Course, there's a base case

481
00:25:28,040 --> 00:25:30,520
Speaker 1: outcome for most investments that you might make. If you

482
00:25:30,560 --> 00:25:33,639
Speaker 1: invest in a bond, base case would typically be that

483
00:25:33,720 --> 00:25:36,359
Speaker 1: it pays a coupon until maturity and there redeems at

484
00:25:36,400 --> 00:25:39,120
Speaker 1: par It might not be a straight path between when

485
00:25:39,119 --> 00:25:41,440
Speaker 1: you buy it and when you get redeemed. That's a

486
00:25:41,560 --> 00:25:45,399
Speaker 1: general expectation. There's a general expectation in the markets that

487
00:25:45,560 --> 00:25:47,560
Speaker 1: if you hold equities long enough, they will generally go

488
00:25:47,640 --> 00:25:51,440
Speaker 1: up in price. Again, it may not be a straight line. Similarly,

489
00:25:51,480 --> 00:25:54,560
Speaker 1: when you buy private assets, there's a general expectation that

490
00:25:54,600 --> 00:25:57,359
Speaker 1: these things will are created in value. But what you

491
00:25:57,400 --> 00:25:59,920
Speaker 1: have to really do for each client is help the

492
00:26:00,359 --> 00:26:04,760
Speaker 1: understand what's the risk of the deviation that could occur

493
00:26:04,800 --> 00:26:10,400
Speaker 1: around that base case. And sometimes people become relatively blase

494
00:26:11,040 --> 00:26:15,600
Speaker 1: or they kind of fall into this mode of thinking

495
00:26:16,640 --> 00:26:18,720
Speaker 1: there's only ever going to be a tight range of outcomes,

496
00:26:18,720 --> 00:26:21,200
Speaker 1: and they don't think about the extreme event. What could

497
00:26:21,200 --> 00:26:23,879
Speaker 1: happen in a more stream Could I survive an extreme

498
00:26:23,920 --> 00:26:27,040
Speaker 1: set of circumstances? So a great example. You know, some

499
00:26:27,080 --> 00:26:28,920
Speaker 1: of these things you can plan for and some you can't.

500
00:26:29,000 --> 00:26:33,120
Speaker 1: Like So, for example, it was probably unreasonable in March

501
00:26:33,160 --> 00:26:37,200
Speaker 1: of twenty twenty that companies would have a war chest.

502
00:26:37,240 --> 00:26:39,280
Speaker 1: A hotel company would have a war chest that would

503
00:26:39,359 --> 00:26:42,040
Speaker 1: see them manage through twelve months of zero revenues based

504
00:26:42,080 --> 00:26:43,959
Speaker 1: on the global pandemic. So there are some things that

505
00:26:44,000 --> 00:26:45,879
Speaker 1: you can't but there are a lot of things that

506
00:26:45,920 --> 00:26:46,359
Speaker 1: you can.

507
00:26:47,400 --> 00:26:50,159
Speaker 2: On the flip side, the airlines had a couple of

508
00:26:50,200 --> 00:26:52,520
Speaker 2: weeks runway it turns out now to be enough.

509
00:26:52,600 --> 00:26:55,480
Speaker 1: Yeah, exactly so, but there are certainly things you could

510
00:26:55,560 --> 00:27:00,000
Speaker 1: prepare for. So can I withstand an equity draw down?

511
00:27:00,160 --> 00:27:03,400
Speaker 1: Do I have the liquidity available to meet my ongoing

512
00:27:03,440 --> 00:27:07,480
Speaker 1: cash flow obligations even in the event of a drawdown.

513
00:27:07,240 --> 00:27:09,960
Speaker 1: And then you see some surprise events, So it was

514
00:27:10,040 --> 00:27:13,200
Speaker 1: kind of interesting. We've seen a couple of these events now.

515
00:27:14,560 --> 00:27:18,119
Speaker 1: One you know, when people have asked me to compare

516
00:27:18,160 --> 00:27:21,359
Speaker 1: and contrast today versus two thousand and seven, two thousand

517
00:27:21,400 --> 00:27:23,040
Speaker 1: and eight, you know, what you hear from a lot

518
00:27:23,080 --> 00:27:27,359
Speaker 1: of people is, yes, there's some fairly heady valuations and

519
00:27:27,680 --> 00:27:32,600
Speaker 1: there were some fairly aggressive kind of investment strategies being pursued.

520
00:27:33,040 --> 00:27:35,840
Speaker 1: But I would say generally there's less leverage in the system.

521
00:27:35,960 --> 00:27:39,400
Speaker 1: The banks, the large banks at least, are better capitalized.

522
00:27:39,640 --> 00:27:43,119
Speaker 1: You have fewer hedge funds making long data liquid investments

523
00:27:43,119 --> 00:27:47,359
Speaker 1: with three month capital. There's just generally more duration in

524
00:27:47,400 --> 00:27:50,040
Speaker 1: the liability structure so that people can withstand a storm.

525
00:27:50,359 --> 00:27:52,600
Speaker 1: And then you see the events of September of last

526
00:27:52,680 --> 00:27:55,679
Speaker 1: year where the UK pensions, many of the UK pension

527
00:27:55,720 --> 00:27:59,919
Speaker 1: plans had a very short term liquidity crisis. Because they

528
00:28:01,480 --> 00:28:04,160
Speaker 1: basically had a mismatch between their assets and their liabilities.

529
00:28:04,200 --> 00:28:06,200
Speaker 2: Comparable to Silicon validate.

530
00:28:06,400 --> 00:28:08,040
Speaker 1: It was a little different in this case in that

531
00:28:08,080 --> 00:28:12,479
Speaker 1: they had very long dated obligations or pension liabilities. They

532
00:28:12,520 --> 00:28:16,040
Speaker 1: couldn't match those liabilities in the investment market, so they

533
00:28:16,080 --> 00:28:19,600
Speaker 1: bought duration in the swap or the derivative market. And

534
00:28:19,640 --> 00:28:22,719
Speaker 1: then when you saw a sharp move in UK interest

535
00:28:22,800 --> 00:28:27,000
Speaker 1: rates based on inflation concerns that came to arise back

536
00:28:27,040 --> 00:28:29,800
Speaker 1: in September, all of a sudden, these pension vuns were

537
00:28:29,800 --> 00:28:34,520
Speaker 1: subject to margin calls which they had to rapidly liquidate assets.

538
00:28:34,920 --> 00:28:37,080
Speaker 1: Now most of them had pretty much all of them

539
00:28:37,080 --> 00:28:39,840
Speaker 1: had enough liquid assets to meet those margin calls, but

540
00:28:39,840 --> 00:28:42,600
Speaker 1: I don't think they'd really kind of prepared for themselves

541
00:28:42,640 --> 00:28:46,520
Speaker 1: to that kind of like two or three standard deviation event. Similarly,

542
00:28:47,160 --> 00:28:51,320
Speaker 1: you look at what happened in a few weeks ago

543
00:28:51,320 --> 00:28:55,200
Speaker 1: with the SVB situation. You had a lot of people

544
00:28:55,200 --> 00:28:59,360
Speaker 1: who had hundreds of millions of dollars unguaranteed deposited with

545
00:28:59,440 --> 00:29:02,080
Speaker 1: one bank. They should probably never have been doing that.

546
00:29:02,120 --> 00:29:04,320
Speaker 1: They should probably have always had it either in multiple

547
00:29:04,400 --> 00:29:07,600
Speaker 1: banks or more likely in a money market fund where

548
00:29:07,600 --> 00:29:09,960
Speaker 1: you have a truly diversified set of risk. So I

549
00:29:09,960 --> 00:29:14,240
Speaker 1: think it's really not thinking, it's thinking through for each client,

550
00:29:14,680 --> 00:29:17,640
Speaker 1: what's my base case return for their portfolio, what's the

551
00:29:17,680 --> 00:29:20,800
Speaker 1: base case return for an individual asset within that portfolio?

552
00:29:21,280 --> 00:29:25,840
Speaker 1: And based on like large deviations from norms as you

553
00:29:25,880 --> 00:29:28,760
Speaker 1: saw last year, for example, with both bonds and equities

554
00:29:28,800 --> 00:29:31,120
Speaker 1: going down? Can I live to fight another day? Can

555
00:29:31,160 --> 00:29:33,960
Speaker 1: I live to fight another day? That's the number whenever

556
00:29:34,000 --> 00:29:36,880
Speaker 1: I think about you know, crises. You know, number one,

557
00:29:36,880 --> 00:29:38,520
Speaker 1: two and three is liquidity. Can I get to the

558
00:29:38,560 --> 00:29:40,120
Speaker 1: other side, because if I have enough time, I can

559
00:29:40,120 --> 00:29:41,080
Speaker 1: dig my way out of a hole.

560
00:29:41,320 --> 00:29:43,040
Speaker 2: There was a book I don't remember if it was

561
00:29:43,120 --> 00:29:47,480
Speaker 2: the thirties or fifties, The Battle for Investment Survival. Maybe

562
00:29:47,480 --> 00:29:50,560
Speaker 2: that was Gerald Loebe. But it's all about what do

563
00:29:50,600 --> 00:29:52,840
Speaker 2: I need to do to make sure I could get

564
00:29:52,880 --> 00:29:56,360
Speaker 2: through this and still be standing after the storm? Receipts yep,

565
00:29:56,800 --> 00:29:59,480
Speaker 2: dead on. So let's take a look at a day

566
00:29:59,480 --> 00:30:03,600
Speaker 2: in the life of a CIO responsible for that much capital.

567
00:30:03,680 --> 00:30:09,440
Speaker 2: Tell us what a typical day is for Julian Salisbury's.

568
00:30:07,960 --> 00:30:09,520
Speaker 1: It's hard to say a typical day, but I could

569
00:30:09,520 --> 00:30:11,280
Speaker 1: tell you over the course of the week generally, how

570
00:30:11,720 --> 00:30:14,000
Speaker 1: I spend my time. I mean, first of all, you know,

571
00:30:14,040 --> 00:30:15,400
Speaker 1: one of the one of the most fun parts of

572
00:30:15,400 --> 00:30:18,600
Speaker 1: it is sitting on the investment committees for our private

573
00:30:18,640 --> 00:30:21,600
Speaker 1: side activities. So we have our Private Equity committee on

574
00:30:21,680 --> 00:30:26,120
Speaker 1: a Tuesday, our Growth Committee on a Monday. We also

575
00:30:26,160 --> 00:30:29,240
Speaker 1: do infrastructure on a Tuesday, We do real estate on

576
00:30:29,280 --> 00:30:31,760
Speaker 1: a Wednesday, and credit on a Thursday. So that's that's

577
00:30:31,800 --> 00:30:34,040
Speaker 1: kind of like a central core part of how I

578
00:30:34,120 --> 00:30:38,640
Speaker 1: spend my time, really seeing what the teams are bringing

579
00:30:38,680 --> 00:30:40,480
Speaker 1: through in terms of deals that we're looking at in

580
00:30:40,520 --> 00:30:43,520
Speaker 1: the early inception of the transaction as well as you know,

581
00:30:43,560 --> 00:30:45,680
Speaker 1: taking these deals all the way through to final approval.

582
00:30:46,440 --> 00:30:48,400
Speaker 1: That's on the private side, and then on the public side,

583
00:30:48,440 --> 00:30:54,600
Speaker 1: really getting market updates from our various portfolio managers and

584
00:30:54,720 --> 00:30:57,480
Speaker 1: CIOs across the public side business in terms of what's

585
00:30:57,520 --> 00:31:00,680
Speaker 1: been happening in those businesses. So that's the kind of

586
00:31:00,680 --> 00:31:03,400
Speaker 1: more investment side of things. Then there's business reviews going

587
00:31:03,440 --> 00:31:06,120
Speaker 1: through each of these individual investment units and really looking

588
00:31:06,120 --> 00:31:12,440
Speaker 1: at their structure, their resource allocation, their talent, their performance.

589
00:31:12,520 --> 00:31:15,120
Speaker 1: Is something I spent a lot of time on really

590
00:31:15,520 --> 00:31:18,480
Speaker 1: dissecting not only what is their performance? But why have

591
00:31:18,520 --> 00:31:21,680
Speaker 1: they performed the way they've performed, both on an absolute

592
00:31:21,720 --> 00:31:25,760
Speaker 1: and relative basis, both versus benchmark and versus clients. I

593
00:31:25,840 --> 00:31:28,880
Speaker 1: spend a lot of time either individually, one on one

594
00:31:28,920 --> 00:31:31,640
Speaker 1: with people or talking to our different investment teams around

595
00:31:31,680 --> 00:31:34,840
Speaker 1: talent and cultivating talent and building culture within the businesses.

596
00:31:36,160 --> 00:31:38,120
Speaker 1: And then there's clients. I spend a great deal of

597
00:31:38,160 --> 00:31:41,400
Speaker 1: time with clients either on the road, a lot of

598
00:31:41,400 --> 00:31:43,120
Speaker 1: time on the road, probably you know, like twenty to

599
00:31:43,160 --> 00:31:45,560
Speaker 1: thirty percent of the time on the road with clients,

600
00:31:45,560 --> 00:31:50,200
Speaker 1: and I always find those just incredibly informative meetings, really

601
00:31:50,280 --> 00:31:53,880
Speaker 1: really deeply understanding the wants and needs of our clients,

602
00:31:53,920 --> 00:31:58,080
Speaker 1: and that certainly helps inform investment judgment and decisions that

603
00:31:58,120 --> 00:32:01,080
Speaker 1: we're making on the asset side. And then I would

604
00:32:01,080 --> 00:32:04,080
Speaker 1: say the final thing is just you know, kind of

605
00:32:04,400 --> 00:32:08,240
Speaker 1: them from a strategy perspective, what are the new investment

606
00:32:08,360 --> 00:32:13,160
Speaker 1: products or investment solutions, whether it's new strategies or different

607
00:32:13,200 --> 00:32:16,680
Speaker 1: wrappers around existing strategies in order to be able to

608
00:32:16,720 --> 00:32:20,080
Speaker 1: deliver our investment solutions to a broader range of people.

609
00:32:20,440 --> 00:32:24,880
Speaker 2: So so many questions to ask. Let's stay with strategies first,

610
00:32:25,640 --> 00:32:29,280
Speaker 2: So what trends and practice areas have you most excited

611
00:32:29,360 --> 00:32:32,200
Speaker 2: looking forward twenty twenty three and beyond.

612
00:32:32,920 --> 00:32:35,360
Speaker 1: Well, when I think about our need for talent and

613
00:32:35,400 --> 00:32:38,120
Speaker 1: the organization, I think of it as three buckets. There's

614
00:32:38,120 --> 00:32:42,280
Speaker 1: our client business where we're providing solutions and advice to

615
00:32:42,320 --> 00:32:44,920
Speaker 1: our clients. There's our investment teams, and then there's the

616
00:32:45,040 --> 00:32:48,600
Speaker 1: operating platform and we'll come back to that last one

617
00:32:48,640 --> 00:32:51,080
Speaker 1: in a second, because that's a critical area of focus

618
00:32:51,120 --> 00:32:54,080
Speaker 1: for us. I would say from a client perspective, we

619
00:32:54,200 --> 00:32:56,960
Speaker 1: really see growth across all of our client channels. So

620
00:32:57,000 --> 00:33:00,160
Speaker 1: where as we grow the business, as we expand and

621
00:33:00,280 --> 00:33:04,040
Speaker 1: the number of clients, and we expand the number of

622
00:33:04,040 --> 00:33:06,680
Speaker 1: offerings and solutions that we're bringing to those clients, we

623
00:33:06,800 --> 00:33:10,560
Speaker 1: naturally need more client advisors to help support the growth

624
00:33:10,560 --> 00:33:13,120
Speaker 1: of that business and maintain the level of service and

625
00:33:13,520 --> 00:33:18,160
Speaker 1: advice that our clients expect. So, whether it's our institutional

626
00:33:18,200 --> 00:33:22,080
Speaker 1: business across pensions and endowments and insurance, whether it's our

627
00:33:22,120 --> 00:33:25,640
Speaker 1: private wealth advisors where we're adding advisors, or our third

628
00:33:25,680 --> 00:33:28,360
Speaker 1: party wealth channel, you know, as we scale and grow

629
00:33:28,480 --> 00:33:30,920
Speaker 1: the business, there's a general need to have more talent

630
00:33:31,040 --> 00:33:33,720
Speaker 1: to continue to provide the level of advice and service

631
00:33:33,760 --> 00:33:36,720
Speaker 1: that we would want from an investment perspective. You know,

632
00:33:36,760 --> 00:33:40,239
Speaker 1: we're continually looking at our teams and continually looking at

633
00:33:40,280 --> 00:33:44,600
Speaker 1: performance and looking to refine our teams. But you know,

634
00:33:44,640 --> 00:33:49,240
Speaker 1: we really find that those investing businesses are quite scalable.

635
00:33:49,680 --> 00:33:53,000
Speaker 1: So it's really as we expand the size of the platform,

636
00:33:53,040 --> 00:33:56,040
Speaker 1: we do need to add talent in order to help

637
00:33:56,120 --> 00:33:59,840
Speaker 1: manage an expanding pool of assets. And then on the infrastructure,

638
00:34:00,520 --> 00:34:04,640
Speaker 1: I would say there's a you know, continual demand and

639
00:34:04,800 --> 00:34:09,680
Speaker 1: need to invest in technology and operations in order to

640
00:34:09,760 --> 00:34:14,560
Speaker 1: deliver a better crime experience and to continue to improve

641
00:34:15,080 --> 00:34:19,960
Speaker 1: and enhance our already strong risk management capabilities. But you know,

642
00:34:20,000 --> 00:34:21,960
Speaker 1: that's an area that we've added quite a bit of

643
00:34:21,960 --> 00:34:23,200
Speaker 1: talent in the last few years.

644
00:34:23,320 --> 00:34:26,200
Speaker 2: I've had a number of people sitting in that exact

645
00:34:26,280 --> 00:34:29,080
Speaker 2: seat also the same thing. I'm going to throw their

646
00:34:29,160 --> 00:34:33,760
Speaker 2: questions at you. Finding talent is not only the most

647
00:34:33,800 --> 00:34:37,520
Speaker 2: important part of their job, it's also the hardest part. YEP.

648
00:34:38,040 --> 00:34:40,440
Speaker 2: Is that overstating it or is that a fair no?

649
00:34:40,480 --> 00:34:45,000
Speaker 1: It's it's absolutely It's absolutely critical, and it's amazing the

650
00:34:45,040 --> 00:34:49,960
Speaker 1: difference one person can make so we have a pretty

651
00:34:49,960 --> 00:34:53,359
Speaker 1: well tried and tested campus recruitment approach. So we're going

652
00:34:53,360 --> 00:34:56,640
Speaker 1: out to schools across across the nation as well as

653
00:34:56,640 --> 00:34:59,400
Speaker 1: around the world to find, you know, the best and

654
00:34:59,640 --> 00:35:02,160
Speaker 1: brighter talent. I would say we've opened up the funnel

655
00:35:02,360 --> 00:35:05,840
Speaker 1: materially over the last you know, decade or two to

656
00:35:05,960 --> 00:35:10,040
Speaker 1: try to expand the size of the of the searchable universe,

657
00:35:10,160 --> 00:35:13,399
Speaker 1: essentially to attract not just the obvious kid who did

658
00:35:13,400 --> 00:35:16,520
Speaker 1: the finance degree at the obvious finance focused school, but

659
00:35:16,600 --> 00:35:19,000
Speaker 1: to attract a broader range of talent. I really find

660
00:35:19,000 --> 00:35:22,400
Speaker 1: that diversity, and I mean I use that term broadly

661
00:35:22,440 --> 00:35:26,400
Speaker 1: defined people who come from a variety of different backgrounds, experiences,

662
00:35:26,640 --> 00:35:30,480
Speaker 1: different college degrees can be very useful to bring that

663
00:35:30,480 --> 00:35:33,560
Speaker 1: that that range of people into an investment business. So

664
00:35:33,600 --> 00:35:36,520
Speaker 1: we have a tried and tested kind of campus recruitment approach,

665
00:35:36,920 --> 00:35:38,880
Speaker 1: you know, in addition to that you know later or

666
00:35:38,960 --> 00:35:41,759
Speaker 1: hiring you know, while we well, we certainly endeavor to

667
00:35:41,800 --> 00:35:45,120
Speaker 1: bring people in at the campus level and and and

668
00:35:45,200 --> 00:35:48,359
Speaker 1: grow them and help advance them over time to take

669
00:35:48,360 --> 00:35:51,240
Speaker 1: on more senior positions, so that often when somebody leaves,

670
00:35:51,239 --> 00:35:53,640
Speaker 1: there's you know, somebody behind them. Ready to take on

671
00:35:53,680 --> 00:35:55,520
Speaker 1: that job, and in some cases more than one person

672
00:35:56,400 --> 00:35:59,200
Speaker 1: willing to take their job. You know, we do attract

673
00:35:59,719 --> 00:36:02,920
Speaker 1: a lot of lateral talent as well, especially around specific

674
00:36:03,000 --> 00:36:07,560
Speaker 1: new areas that we're growing in. So it's really broad

675
00:36:07,600 --> 00:36:11,440
Speaker 1: based and look where it's a constant hiring approach. I

676
00:36:11,480 --> 00:36:14,279
Speaker 1: mean in a I think I heard some stats the

677
00:36:14,360 --> 00:36:17,320
Speaker 1: other day that a little over fifty percent of the

678
00:36:17,360 --> 00:36:19,719
Speaker 1: people at the firm have joined in the last three

679
00:36:19,760 --> 00:36:23,279
Speaker 1: or four years. And that's that's quite natural and understandable.

680
00:36:23,320 --> 00:36:25,520
Speaker 1: That's a combination of natural attrition that you have in

681
00:36:25,560 --> 00:36:29,120
Speaker 1: any business, growth of the business, some acquisitions that we've made,

682
00:36:29,160 --> 00:36:32,879
Speaker 1: So integrating all of that talent and integrating ensuring that

683
00:36:32,920 --> 00:36:37,640
Speaker 1: there's like a cultural assimilation is really important. But you know,

684
00:36:37,719 --> 00:36:40,560
Speaker 1: the other thing that's key is as you're whilst you

685
00:36:40,680 --> 00:36:45,359
Speaker 1: naturally have people joining and some attrition, is making sure

686
00:36:45,400 --> 00:36:48,120
Speaker 1: you have a strong core of people who are consistent

687
00:36:48,200 --> 00:36:50,360
Speaker 1: and have been there for a very very long time,

688
00:36:50,719 --> 00:36:53,080
Speaker 1: especially in the asset management business, because when people give

689
00:36:53,160 --> 00:36:55,480
Speaker 1: us money to manage, they're giving us money to manage

690
00:36:55,480 --> 00:36:58,400
Speaker 1: for a very long time. It's not about a transaction

691
00:36:58,560 --> 00:37:00,960
Speaker 1: or a trade. So if you look at our core business.

692
00:37:01,480 --> 00:37:06,640
Speaker 1: You know, we have many hundreds of investment professionals that

693
00:37:06,680 --> 00:37:08,719
Speaker 1: have been doing this for decades.

694
00:37:09,160 --> 00:37:15,200
Speaker 2: You mentioned lateral hires on new business areas. What sort

695
00:37:15,239 --> 00:37:18,439
Speaker 2: of sectors and trends are you excited about looking out

696
00:37:18,440 --> 00:37:19,720
Speaker 2: over the next couple of years.

697
00:37:20,239 --> 00:37:22,680
Speaker 1: Well, when I think about our need for talent and

698
00:37:22,760 --> 00:37:25,439
Speaker 1: the organization, I think of it as three buckets. There's

699
00:37:25,480 --> 00:37:29,640
Speaker 1: our client business where we're providing solutions and advice to

700
00:37:29,640 --> 00:37:32,239
Speaker 1: our clients. There's our investment teams, and then there's the

701
00:37:32,400 --> 00:37:35,920
Speaker 1: operating platform and we'll come back to that last one

702
00:37:35,960 --> 00:37:38,400
Speaker 1: in a second, because that's a critical area of focus

703
00:37:38,480 --> 00:37:41,400
Speaker 1: for us. I would say from a client perspective, we

704
00:37:41,520 --> 00:37:44,279
Speaker 1: really see growth across all of our client channels. So

705
00:37:44,320 --> 00:37:47,279
Speaker 1: where as we grow the business, as we expand the

706
00:37:47,360 --> 00:37:51,480
Speaker 1: number of clients and we expand the number of offerings

707
00:37:51,520 --> 00:37:54,200
Speaker 1: and solutions that we're bringing to those clients, we naturally

708
00:37:54,239 --> 00:37:57,640
Speaker 1: need more client advisors to help support the growth of

709
00:37:57,640 --> 00:38:00,880
Speaker 1: that business and maintain the level of service and advice

710
00:38:00,960 --> 00:38:05,120
Speaker 1: that that our clients expect. So, whether it's our institutional

711
00:38:05,160 --> 00:38:09,040
Speaker 1: business across pensions and endowments and insurance, whether it's our

712
00:38:09,080 --> 00:38:12,600
Speaker 1: private wealth advisors where we're adding advisors or our third

713
00:38:12,640 --> 00:38:15,319
Speaker 1: party wealth channel. You know, as we scale and grow

714
00:38:15,480 --> 00:38:17,840
Speaker 1: the business, there's a general need to have more talent

715
00:38:18,000 --> 00:38:20,720
Speaker 1: to continue to provide the level of advice and service

716
00:38:20,760 --> 00:38:23,719
Speaker 1: that we would want. From an investment perspective, you know,

717
00:38:23,760 --> 00:38:27,239
Speaker 1: we're continually looking at our teams and continually looking at

718
00:38:27,280 --> 00:38:31,560
Speaker 1: performance and looking to refine our teams. But you know,

719
00:38:31,600 --> 00:38:36,200
Speaker 1: we really find that those investing businesses are quite scalable,

720
00:38:36,680 --> 00:38:40,000
Speaker 1: so it's really as we expand the size of the platform,

721
00:38:40,040 --> 00:38:43,040
Speaker 1: we do need to add talent in order to help

722
00:38:43,120 --> 00:38:46,200
Speaker 1: manage an expanding pool of assets. And then on the

723
00:38:46,239 --> 00:38:50,319
Speaker 1: infrastructure side, I would say there's a you know, continual

724
00:38:50,880 --> 00:38:57,279
Speaker 1: demand and need to invest in technology and operations in

725
00:38:57,400 --> 00:39:00,839
Speaker 1: order to deliver a better crime experience and to continue

726
00:39:01,400 --> 00:39:06,720
Speaker 1: to improve and enhance our already strong risk management capabilities.

727
00:39:07,200 --> 00:39:09,719
Speaker 1: But you know that's an area that we've added quite

728
00:39:09,760 --> 00:39:11,240
Speaker 1: a bit of talent in the last few years.

729
00:39:11,920 --> 00:39:16,400
Speaker 2: Really quite interesting. So this has been kind of a

730
00:39:16,440 --> 00:39:20,959
Speaker 2: funky year. Inflation seems to be coming down. We don't

731
00:39:21,000 --> 00:39:23,640
Speaker 2: know when the Fed's going to be done their rate

732
00:39:23,760 --> 00:39:27,520
Speaker 2: hiking cycle. How do you look at twenty twenty three

733
00:39:28,280 --> 00:39:31,680
Speaker 2: from an investment perspective. Do you think, hey, we have

734
00:39:31,719 --> 00:39:36,280
Speaker 2: to make some wholesale changes, or are you building portfolios

735
00:39:36,360 --> 00:39:40,759
Speaker 2: where hey, that's what happens the market cycle. Rates go

736
00:39:40,880 --> 00:39:44,359
Speaker 2: up and down. You have to have robustness in order

737
00:39:44,400 --> 00:39:46,240
Speaker 2: to encounter these.

738
00:39:46,800 --> 00:39:49,840
Speaker 1: I think you have to have some consistency to your process,

739
00:39:49,880 --> 00:39:53,920
Speaker 1: but also have the humility to realize that you need

740
00:39:53,920 --> 00:39:56,239
Speaker 1: to make adjustments. And every time there's an event in

741
00:39:56,280 --> 00:39:59,440
Speaker 1: the market, it should cause you to rethink how you

742
00:39:59,480 --> 00:40:03,120
Speaker 1: do things, whether it's SVB or the events that we

743
00:40:03,160 --> 00:40:05,759
Speaker 1: saw in the UK pension system last year. These are

744
00:40:05,880 --> 00:40:09,040
Speaker 1: these are opportunities to learn and enhance your process. But

745
00:40:09,200 --> 00:40:14,120
Speaker 1: I don't think this is a wholesale shift. We're in

746
00:40:14,160 --> 00:40:18,279
Speaker 1: a higher rate environment obviously for now, and while rates

747
00:40:18,280 --> 00:40:21,040
Speaker 1: will likely start rolling over, you know, into next year,

748
00:40:21,120 --> 00:40:23,360
Speaker 1: I think I think we're in an environment where the

749
00:40:24,000 --> 00:40:29,200
Speaker 1: hurdle rate for making more illiquid investments is higher, so

750
00:40:30,120 --> 00:40:32,160
Speaker 1: you've got to be really mindful that you're getting paid

751
00:40:32,280 --> 00:40:35,800
Speaker 1: enough for the on a nominal return basis versus the

752
00:40:35,880 --> 00:40:38,080
Speaker 1: risk free rate. But I don't think this is a

753
00:40:38,120 --> 00:40:40,880
Speaker 1: major shift. I mean, the way we're looking at the

754
00:40:40,920 --> 00:40:45,080
Speaker 1: market today is the equity markets are fairly fully valued

755
00:40:45,160 --> 00:40:48,360
Speaker 1: on most metrics that you look at, and therefore, you know,

756
00:40:48,400 --> 00:40:52,400
Speaker 1: we view rates as most attractive generally, credit as somewhere

757
00:40:52,400 --> 00:40:55,280
Speaker 1: in the middle, and equities as looking like the most stretched.

758
00:40:55,560 --> 00:40:57,800
Speaker 1: But I wouldn't make a you know that that causes

759
00:40:57,840 --> 00:40:59,719
Speaker 1: you to tilt or lean in terms of how you

760
00:40:59,760 --> 00:41:03,400
Speaker 1: are sure portfolio. But you don't like it's not a radical,

761
00:41:04,360 --> 00:41:07,080
Speaker 1: a radical shift in approach. You know, we look at

762
00:41:07,200 --> 00:41:09,400
Speaker 1: you know, people's long we look at it from a

763
00:41:09,600 --> 00:41:12,560
Speaker 1: long term investment perspective. What are the long term goals

764
00:41:12,560 --> 00:41:15,800
Speaker 1: of the client and do they have an asset allocation

765
00:41:15,880 --> 00:41:17,680
Speaker 1: that's going to help them meet this long term goals.

766
00:41:17,680 --> 00:41:20,160
Speaker 1: So we start with a strategic ass allocation, but then

767
00:41:20,200 --> 00:41:22,360
Speaker 1: there could be tilts around that based on the environment.

768
00:41:22,680 --> 00:41:26,239
Speaker 2: So you mentioned earlier, twenty twenty two was so unusual.

769
00:41:26,840 --> 00:41:29,239
Speaker 2: It was one of the few years that we've seen

770
00:41:29,280 --> 00:41:34,080
Speaker 2: where both stocks and bonds were down double digits. I

771
00:41:34,120 --> 00:41:37,479
Speaker 2: recall a lot of people declaring ass allocation is dead,

772
00:41:37,560 --> 00:41:41,160
Speaker 2: sixty forty is dead. Everybody has to start over. I'm

773
00:41:41,239 --> 00:41:45,480
Speaker 2: going to assume you do. You don't buy into a

774
00:41:45,480 --> 00:41:46,919
Speaker 2: world of allocation is over.

775
00:41:47,160 --> 00:41:49,400
Speaker 1: No, I mean, it was a you know, it was

776
00:41:49,520 --> 00:41:53,080
Speaker 1: a bad year for sixty forty, that's clear, but you

777
00:41:53,080 --> 00:41:55,520
Speaker 1: also have to recognize that the speed and nature of

778
00:41:55,560 --> 00:41:59,839
Speaker 1: that rate hiking is it was pretty unprecedented. By the way,

779
00:42:00,000 --> 00:42:04,080
Speaker 1: it really demonstrated why diversification in a portfolio is important,

780
00:42:04,080 --> 00:42:06,040
Speaker 1: because there were other asset classes you could have owned

781
00:42:06,040 --> 00:42:08,719
Speaker 1: that would have seen better performance. Commodities, for example, had

782
00:42:08,719 --> 00:42:12,239
Speaker 1: a particularly good year. One could argue that it was

783
00:42:12,280 --> 00:42:14,920
Speaker 1: simply you know, the difference between mark to market and

784
00:42:14,960 --> 00:42:17,560
Speaker 1: non marked to market. But if you'd had a more

785
00:42:17,600 --> 00:42:20,200
Speaker 1: heavier waiting towards privates in your portfolio, that would have

786
00:42:20,239 --> 00:42:23,520
Speaker 1: created a ballast and some consistency to your returns. But

787
00:42:23,600 --> 00:42:26,279
Speaker 1: I certainly don't think it's I certainly don't think it's

788
00:42:26,360 --> 00:42:31,160
Speaker 1: it's dead, But I do think people should think about,

789
00:42:31,320 --> 00:42:34,120
Speaker 1: you know, within the sixty forty, for example, is it

790
00:42:34,160 --> 00:42:37,960
Speaker 1: all public bonds and public credit or are there other

791
00:42:39,320 --> 00:42:43,000
Speaker 1: alternative products, private products that can help form that kind

792
00:42:43,040 --> 00:42:47,200
Speaker 1: of bedrock of the income portion of my portfolio. And similarly,

793
00:42:47,200 --> 00:42:50,640
Speaker 1: on the sixty side, it's not just about public equities

794
00:42:50,640 --> 00:42:55,240
Speaker 1: and being in index, it's are their private equity alternatives

795
00:42:55,520 --> 00:42:59,279
Speaker 1: that can give me some diversification exposure to types of

796
00:42:59,360 --> 00:43:02,880
Speaker 1: assets or industries that I couldn't otherwise get exposure to that,

797
00:43:03,160 --> 00:43:05,760
Speaker 1: you know, a crete on a more consistent and persistent

798
00:43:05,800 --> 00:43:08,360
Speaker 1: basis over time and don't have quite the you know,

799
00:43:08,400 --> 00:43:10,800
Speaker 1: the day to day volatility that we see in public markets.

800
00:43:11,000 --> 00:43:14,680
Speaker 2: So you mentioned the rate of FED hikes we've seen

801
00:43:14,760 --> 00:43:19,880
Speaker 2: is has been very rapid, arguably unprecedented. How do you

802
00:43:20,000 --> 00:43:23,160
Speaker 2: look at FED actions and this rate volatility, How does

803
00:43:23,239 --> 00:43:27,600
Speaker 2: this affect your outlook going out, you know, beyond just

804
00:43:27,640 --> 00:43:28,880
Speaker 2: the next month or quarter.

805
00:43:29,120 --> 00:43:31,040
Speaker 1: Again, you have to break it down asset class by

806
00:43:31,080 --> 00:43:33,520
Speaker 1: asset class. There you know, within our macro businesses, wh

807
00:43:33,680 --> 00:43:37,680
Speaker 1: our public markets businesses, you know plus minus twenty five

808
00:43:37,719 --> 00:43:41,399
Speaker 1: basis points in terms of peak and the exact month

809
00:43:41,400 --> 00:43:45,160
Speaker 1: it starts rolling over it. It makes a huge difference,

810
00:43:45,200 --> 00:43:48,480
Speaker 1: and it's something we focus on. We have, you know,

811
00:43:48,520 --> 00:43:51,799
Speaker 1: a research based approach. We have an outlook and a

812
00:43:51,840 --> 00:43:56,120
Speaker 1: set of expectations and if the reality deviates from those expectations,

813
00:43:56,120 --> 00:43:58,719
Speaker 1: will refine the approach. We have other asset classes that

814
00:43:58,800 --> 00:44:01,840
Speaker 1: on the face of it, should be less sensitive to

815
00:44:01,920 --> 00:44:04,600
Speaker 1: the day to day machinations of the rate market, but

816
00:44:04,680 --> 00:44:07,840
Speaker 1: when they move as rapidly as they just did, it

817
00:44:07,880 --> 00:44:10,000
Speaker 1: can have a dramatic effect. So what do I mean

818
00:44:10,040 --> 00:44:12,160
Speaker 1: by that? You know, I sometimes think, as you know,

819
00:44:12,160 --> 00:44:15,640
Speaker 1: when you're when you're a micro investor doing private deals,

820
00:44:16,239 --> 00:44:18,399
Speaker 1: it's like playing a game of chess. If you get

821
00:44:18,400 --> 00:44:20,680
Speaker 1: the macro wrong, it turns out you were playing chess

822
00:44:20,680 --> 00:44:24,040
Speaker 1: on the Titanic. You know you you were. If you

823
00:44:24,440 --> 00:44:26,960
Speaker 1: could have bought the best piece of real estate, you

824
00:44:27,000 --> 00:44:29,600
Speaker 1: could have bought the best class B office, you know,

825
00:44:29,719 --> 00:44:33,120
Speaker 1: twelve months ago and not anticipated the pace of rate

826
00:44:33,200 --> 00:44:36,080
Speaker 1: hiking that we just saw, and it just repriced the

827
00:44:36,120 --> 00:44:40,160
Speaker 1: whole asset class. So I think the approach of the

828
00:44:40,239 --> 00:44:44,040
Speaker 1: focus on the rate cycle really varies from somewhere, like

829
00:44:44,360 --> 00:44:48,920
Speaker 1: you know, our money markets business, where differences in duration

830
00:44:49,160 --> 00:44:52,200
Speaker 1: in how we run that portfolio being plus or minus

831
00:44:52,239 --> 00:44:54,920
Speaker 1: ten days can make a huge difference in our returns

832
00:44:54,960 --> 00:44:58,000
Speaker 1: and performance relative to other money market managers. We have

833
00:44:58,600 --> 00:45:02,319
Speaker 1: other businesses that might hear less rate sensitive or less

834
00:45:02,320 --> 00:45:06,120
Speaker 1: obviously rate sensitive, but then when you have that magnitude

835
00:45:06,120 --> 00:45:08,400
Speaker 1: of move, they really roll over. Another great example of this,

836
00:45:08,440 --> 00:45:10,640
Speaker 1: I thought it's kind of funny that you know, in

837
00:45:10,680 --> 00:45:13,719
Speaker 1: the growth equity space that you know, people didn't seem

838
00:45:13,760 --> 00:45:17,240
Speaker 1: to appreciate the full how much duration risk they were running.

839
00:45:17,239 --> 00:45:19,400
Speaker 1: And guess what, when you own a bunch of public

840
00:45:19,440 --> 00:45:22,680
Speaker 1: assets where all the profitability is ten years out, that's

841
00:45:22,719 --> 00:45:24,560
Speaker 1: a long duration asset. So when you have a rate

842
00:45:24,600 --> 00:45:28,040
Speaker 1: move like that, it really causes a complete de rating.

843
00:45:28,440 --> 00:45:32,960
Speaker 2: Interesting stuff. You've had a pretty busy quarter. You announced

844
00:45:33,400 --> 00:45:38,239
Speaker 2: three funds, Horizon Environment and Climate Solutions, a private credit fund,

845
00:45:38,239 --> 00:45:42,000
Speaker 2: and a growth equity fund that all close their rounds,

846
00:45:42,160 --> 00:45:45,520
Speaker 2: raising more than twenty two billion dollars. Tell us about

847
00:45:45,600 --> 00:45:48,839
Speaker 2: those funds and what they do and how does each

848
00:45:48,960 --> 00:45:51,480
Speaker 2: slot into a client solution.

849
00:45:52,120 --> 00:45:54,920
Speaker 1: Well, so taking each of these, our growth equity fund

850
00:45:55,560 --> 00:46:01,920
Speaker 1: really focuses on a couple of different segments enterprise, software, fintech, healthcare,

851
00:46:02,080 --> 00:46:04,280
Speaker 1: and consumer. Those are kind of like the power allies

852
00:46:04,320 --> 00:46:06,719
Speaker 1: in terms of industries that they focus on them, typically

853
00:46:06,760 --> 00:46:12,360
Speaker 1: making significant but minority investments in fast growing companies. You know,

854
00:46:12,400 --> 00:46:15,600
Speaker 1: these are companies often with an enterprise value in the

855
00:46:15,640 --> 00:46:18,640
Speaker 1: area of a couple of hundred million to a billion dollars,

856
00:46:18,920 --> 00:46:21,480
Speaker 1: sometimes skews higher, but I would say the sweet spot

857
00:46:21,600 --> 00:46:23,839
Speaker 1: is that area and the reason for that. These are

858
00:46:24,040 --> 00:46:27,440
Speaker 1: kind of companies that are growing at least you know,

859
00:46:27,680 --> 00:46:31,080
Speaker 1: we're growing fifty to one hundred percent rates of revenue growth.

860
00:46:31,520 --> 00:46:35,680
Speaker 1: Where the potential for takeout isn't exclusively an IPO. They

861
00:46:35,680 --> 00:46:38,799
Speaker 1: could be sold to a strategic and we're trying to

862
00:46:38,840 --> 00:46:41,520
Speaker 1: help grow these companies over a three to four year period,

863
00:46:41,800 --> 00:46:44,880
Speaker 1: prepare them for a public exit or a strategic exit,

864
00:46:45,200 --> 00:46:47,920
Speaker 1: and we build a portfolio of these of these businesses

865
00:46:47,960 --> 00:46:50,520
Speaker 1: and we do that globally. That's our growth equity business,

866
00:46:50,520 --> 00:46:52,880
Speaker 1: and that's a team that's been It's a first time fund,

867
00:46:52,880 --> 00:46:54,919
Speaker 1: but we've been doing it for thirty years just using

868
00:46:54,960 --> 00:46:59,520
Speaker 1: our own money. Are our mes fund. This was actually

869
00:46:59,560 --> 00:47:01,799
Speaker 1: the eighth in a series of mezzanine funds. We've been

870
00:47:01,800 --> 00:47:05,160
Speaker 1: doing this private mezzanine credit. We've been doing this for

871
00:47:05,239 --> 00:47:11,879
Speaker 1: decades and this is really a strong power alley for us.

872
00:47:11,920 --> 00:47:14,400
Speaker 1: In as much that you know we're tied to the

873
00:47:14,719 --> 00:47:18,000
Speaker 1: you know, pre eminent investment bank. We have very close

874
00:47:18,040 --> 00:47:21,480
Speaker 1: relationships with sponsor clients. This means where you know, we're

875
00:47:21,520 --> 00:47:24,200
Speaker 1: at the leading edge. Every time an asset is going

876
00:47:24,239 --> 00:47:26,840
Speaker 1: to trade or refinance, we know about it because of

877
00:47:26,840 --> 00:47:29,919
Speaker 1: our investment banking business, and we can position ourselves as

878
00:47:29,920 --> 00:47:34,040
Speaker 1: the preferred provider of the mezzanine capital to facilitate that transaction.

879
00:47:34,600 --> 00:47:38,080
Speaker 1: And I would say, right now, given what's going on

880
00:47:38,120 --> 00:47:40,640
Speaker 1: in the world, the rates of return available to us

881
00:47:40,680 --> 00:47:44,360
Speaker 1: in the private credit markets generally are just unusually attractive.

882
00:47:44,880 --> 00:47:47,719
Speaker 1: So that's our that's our mezzanine Credit fund, and then

883
00:47:47,760 --> 00:47:50,440
Speaker 1: our Horizon Climate Fund is a this is really more

884
00:47:50,480 --> 00:47:54,959
Speaker 1: of a private equity style control investments, where we're looking

885
00:47:55,000 --> 00:47:59,400
Speaker 1: to invest in companies that will have a positive impact

886
00:47:59,640 --> 00:48:02,040
Speaker 1: on the vironment. It's a it's an Article nine fund,

887
00:48:02,040 --> 00:48:07,440
Speaker 1: and it's it's investing in things like climate, water treatment, recycling,

888
00:48:08,560 --> 00:48:13,759
Speaker 1: and these are fast growing companies. But also, you know,

889
00:48:14,640 --> 00:48:19,560
Speaker 1: so there's a there's absolutely these are these are pools

890
00:48:19,600 --> 00:48:24,759
Speaker 1: of money that are managed with a profit motive, but

891
00:48:24,800 --> 00:48:26,960
Speaker 1: they're also investing in companies that are having a positive

892
00:48:27,000 --> 00:48:28,040
Speaker 1: impact on the environment.

893
00:48:28,600 --> 00:48:31,879
Speaker 2: So let me throw a curveball at you. At one

894
00:48:31,960 --> 00:48:36,239
Speaker 2: point in time, you were a aspiring sports scientist and

895
00:48:36,719 --> 00:48:39,920
Speaker 2: competitive kayaker. What's that about.

896
00:48:41,120 --> 00:48:44,520
Speaker 1: I picked up kayaking when I was you know, eleven

897
00:48:44,600 --> 00:48:49,200
Speaker 1: or twelve. I started competing when I was fourteen or fifteen.

898
00:48:49,360 --> 00:48:52,120
Speaker 1: I got quite into it. I took it very seriously.

899
00:48:52,160 --> 00:48:54,680
Speaker 1: I developed a passion for it, and next thing I know,

900
00:48:54,960 --> 00:48:57,800
Speaker 1: I'm in the top division in the country and competing

901
00:48:57,960 --> 00:48:58,880
Speaker 1: at the highest level.

902
00:48:59,800 --> 00:49:02,880
Speaker 2: Say, when you say kayaker, we're not talking about the

903
00:49:02,920 --> 00:49:06,080
Speaker 2: long skulls that we see on the Charles however, we're

904
00:49:06,120 --> 00:49:08,400
Speaker 2: talking about one or two person kayaks.

905
00:49:08,440 --> 00:49:10,480
Speaker 1: It's a one person kayak. You sit down, you have

906
00:49:10,520 --> 00:49:13,800
Speaker 1: a double bladed paddle and you go down whitewater rapids

907
00:49:13,800 --> 00:49:16,600
Speaker 1: and you navigating poles in the river. You have gates

908
00:49:16,600 --> 00:49:18,680
Speaker 1: that you go downstream through and gates that you go

909
00:49:18,760 --> 00:49:20,640
Speaker 1: up stream through. Most people only know about it because

910
00:49:20,680 --> 00:49:22,520
Speaker 1: it's in the Olympics every four years and they forget

911
00:49:22,560 --> 00:49:26,160
Speaker 1: about it. But it's a pretty interesting competitive sport.

912
00:49:26,400 --> 00:49:29,239
Speaker 2: Were you ever good enough to think about the Olympics?

913
00:49:29,600 --> 00:49:31,759
Speaker 1: I competed at a pretty high level up until the

914
00:49:31,760 --> 00:49:35,040
Speaker 1: age of nineteen, Up until the age of like around

915
00:49:35,080 --> 00:49:38,520
Speaker 1: twenty actually twenty twenty one. I was a British University

916
00:49:38,600 --> 00:49:41,680
Speaker 1: champion for a few years and competed in the top division.

917
00:49:42,160 --> 00:49:44,400
Speaker 1: But at some point I realized there wasn't a lot

918
00:49:44,440 --> 00:49:47,279
Speaker 1: of money in that sport, and I didn't like the

919
00:49:47,320 --> 00:49:50,440
Speaker 1: idea of sleeping in the back of a van chasing

920
00:49:50,719 --> 00:49:54,400
Speaker 1: you chasing glory around the world for the next five years.

921
00:49:54,440 --> 00:49:57,960
Speaker 2: Not a lot of money in kayaking. Whoever would have guessed?

922
00:49:58,840 --> 00:50:01,120
Speaker 2: I know I only have you for a limited amount

923
00:50:01,160 --> 00:50:04,200
Speaker 2: of time. Let me jump to my favorite questions that

924
00:50:04,280 --> 00:50:07,799
Speaker 2: I ask all of my guests, starting with what have

925
00:50:07,880 --> 00:50:11,840
Speaker 2: you been watching, streaming listening to lately? What's been keeping

926
00:50:11,840 --> 00:50:12,600
Speaker 2: you entertained?

927
00:50:13,000 --> 00:50:15,320
Speaker 1: My two favorite shows at the moment are Tedle Asso

928
00:50:15,400 --> 00:50:20,000
Speaker 1: and Succession, very different shows. One speaks to my interest

929
00:50:20,040 --> 00:50:23,680
Speaker 1: in sport and the other one is It's It's it's

930
00:50:23,719 --> 00:50:26,720
Speaker 1: almost a comedy. It's such a dysfunctional family.

931
00:50:27,000 --> 00:50:30,600
Speaker 2: So tell us about your mentors who helped shape your career.

932
00:50:31,280 --> 00:50:34,000
Speaker 1: You know, there's a few people along the way. I mean,

933
00:50:34,040 --> 00:50:36,080
Speaker 1: first of all, I mentioned this earlier, but you know,

934
00:50:36,160 --> 00:50:40,000
Speaker 1: Goldman Sachs, you're surrounded by great people that you can

935
00:50:40,120 --> 00:50:45,120
Speaker 1: learn from developing, you know, and that could be technical skills,

936
00:50:45,400 --> 00:50:48,920
Speaker 1: it could be leadership skills. And the other thing I

937
00:50:48,920 --> 00:50:50,839
Speaker 1: would say is over the years, when whenever I get

938
00:50:50,880 --> 00:50:52,960
Speaker 1: asked this question, I think not just about who I've

939
00:50:53,000 --> 00:50:56,319
Speaker 1: worked for, but the many things that I've learned from

940
00:50:56,360 --> 00:50:58,640
Speaker 1: the people who work for me. In some you know,

941
00:50:58,719 --> 00:51:01,120
Speaker 1: sometimes my level of interact with them is so great.

942
00:51:02,040 --> 00:51:04,120
Speaker 1: You can learn a lot from an analyst and you

943
00:51:04,160 --> 00:51:08,120
Speaker 1: could certainly learn a lot from your your peers, partners

944
00:51:08,160 --> 00:51:10,279
Speaker 1: that work for you, managing directors that work for you.

945
00:51:10,360 --> 00:51:13,080
Speaker 1: So I whenever I get asked this question, I sometimes

946
00:51:13,120 --> 00:51:15,120
Speaker 1: feel like I've almost learned more from the people who

947
00:51:15,120 --> 00:51:18,399
Speaker 1: work for me than the people I work for. But look,

948
00:51:18,400 --> 00:51:21,520
Speaker 1: there have been some particular strong people along the way.

949
00:51:21,560 --> 00:51:25,200
Speaker 1: I remember a guy that I used to work for

950
00:51:25,280 --> 00:51:29,600
Speaker 1: at KPMG, and one year I said to him, g

951
00:51:29,840 --> 00:51:32,840
Speaker 1: at the end of the year, and this guy was unreplaceable,

952
00:51:32,840 --> 00:51:34,520
Speaker 1: and he seemed to be in the middle of every

953
00:51:34,520 --> 00:51:36,760
Speaker 1: piece of business that we did, and you couldn't imagine

954
00:51:36,760 --> 00:51:38,600
Speaker 1: how the place would function without him. And I said,

955
00:51:38,719 --> 00:51:39,839
Speaker 1: you know, at the end of the year, you must

956
00:51:39,880 --> 00:51:43,640
Speaker 1: be able to ask for whatever you want. And he

957
00:51:43,760 --> 00:51:46,279
Speaker 1: just looked at me and said, they'd manage. And it

958
00:51:46,360 --> 00:51:49,880
Speaker 1: was it was really like the humility there and the

959
00:51:49,960 --> 00:51:53,960
Speaker 1: realization that everybody's, you know, replaceable. Some are harder to

960
00:51:54,000 --> 00:51:57,359
Speaker 1: replace than others. But he just kept that grounding and

961
00:51:57,400 --> 00:52:00,120
Speaker 1: sometimes sometimes people lose sight of that and believe their

962
00:52:00,160 --> 00:52:03,000
Speaker 1: own story a little bit too much. That was a

963
00:52:03,000 --> 00:52:06,080
Speaker 1: great lesson I had when I after a couple of

964
00:52:06,120 --> 00:52:08,160
Speaker 1: years at Golden Sachs, I was working for a guy

965
00:52:08,160 --> 00:52:11,719
Speaker 1: in the distress credit business, and his analytical rigor and

966
00:52:11,800 --> 00:52:17,680
Speaker 1: his relentless questioning and skepticism almost to an unhealthy level,

967
00:52:17,760 --> 00:52:21,120
Speaker 1: was actually a great learning experience because he it was,

968
00:52:21,680 --> 00:52:23,000
Speaker 1: you know, in a world where a lot of people

969
00:52:23,040 --> 00:52:26,680
Speaker 1: like to believe the brochure or the prospectus, he never

970
00:52:27,280 --> 00:52:31,960
Speaker 1: it was. Everything had to be founded in analytical rigor

971
00:52:32,040 --> 00:52:35,480
Speaker 1: and facts, not what management told you or what story

972
00:52:35,520 --> 00:52:38,600
Speaker 1: you heard or nothing. For granted, it's like, can you

973
00:52:38,880 --> 00:52:40,840
Speaker 1: prove it in the numbers? I mean, it's back to

974
00:52:40,880 --> 00:52:43,600
Speaker 1: the comment I made earlier around accounting. We get we

975
00:52:43,600 --> 00:52:45,200
Speaker 1: get a lot of kids who come through the business

976
00:52:45,200 --> 00:52:49,920
Speaker 1: who have fancy MBAs, but they don't truly understand the

977
00:52:50,000 --> 00:52:52,360
Speaker 1: interactions between a P and L, a balance sheet, and

978
00:52:52,360 --> 00:52:54,359
Speaker 1: a cashflow statement. And if you don't have all three,

979
00:52:54,760 --> 00:52:57,480
Speaker 1: and I mean a complete one, not a partial balance

980
00:52:57,480 --> 00:53:01,040
Speaker 1: sheet with just the liability structure, but everything, you don't

981
00:53:01,080 --> 00:53:02,240
Speaker 1: really understand the business.

982
00:53:02,640 --> 00:53:06,319
Speaker 2: Really very intriguing. Let's talk about books. What are some

983
00:53:06,400 --> 00:53:08,280
Speaker 2: of your favorites? What are you reading right now?

984
00:53:08,520 --> 00:53:11,200
Speaker 1: Whenever I get asked this question, my first response is

985
00:53:11,880 --> 00:53:15,920
Speaker 1: about twenty five investment memos every single week. Add to

986
00:53:15,960 --> 00:53:18,960
Speaker 1: that the various other business updates that I get, and

987
00:53:19,000 --> 00:53:21,880
Speaker 1: the prep for management committee on a Monday detailing all

988
00:53:21,920 --> 00:53:24,080
Speaker 1: of the client flows in the business. It doesn't actually

989
00:53:24,200 --> 00:53:28,319
Speaker 1: leave a lot of time or eyesight left to you know,

990
00:53:28,440 --> 00:53:32,520
Speaker 1: pick up other books and you know, with the with

991
00:53:32,680 --> 00:53:36,120
Speaker 1: the with the advent of the of the iPhone, like

992
00:53:36,200 --> 00:53:39,399
Speaker 1: this constant stream of information from Bloomberg and other news

993
00:53:39,400 --> 00:53:42,520
Speaker 1: sources means that I'm reading a lot, but not enough

994
00:53:42,520 --> 00:53:44,759
Speaker 1: time for pleasurable books. But there are a couple. There's

995
00:53:44,800 --> 00:53:49,520
Speaker 1: there's the avoidable War. I think the geopolitical situation with

996
00:53:49,640 --> 00:53:51,799
Speaker 1: China is something that everybody should be very mindful of

997
00:53:51,880 --> 00:53:54,040
Speaker 1: right now. And that's going to that's going to impact

998
00:53:54,080 --> 00:53:58,759
Speaker 1: asset prices and and and flow of money, and I

999
00:53:58,840 --> 00:54:01,239
Speaker 1: think that's something everybody needs to be paying attention to.

1000
00:54:02,280 --> 00:54:05,080
Speaker 1: I've been picked up a book recently looking at it's

1001
00:54:05,080 --> 00:54:07,160
Speaker 1: called The Shallows, which is really looking at how the

1002
00:54:07,239 --> 00:54:09,680
Speaker 1: mind is being rewired by the Internet. The way we

1003
00:54:09,760 --> 00:54:12,880
Speaker 1: think and the way we operate is fundamentally changing. I mean,

1004
00:54:12,920 --> 00:54:17,040
Speaker 1: you know, everybody's become like everybody's developing kind of attention

1005
00:54:17,160 --> 00:54:21,360
Speaker 1: deficit disorder because of the constant flow of information and Actually,

1006
00:54:21,400 --> 00:54:25,040
Speaker 1: the ability to sit down and absorb a long form

1007
00:54:25,120 --> 00:54:27,879
Speaker 1: book is becoming harder for a lot of people because

1008
00:54:27,880 --> 00:54:30,200
Speaker 1: they're so used to the instant gratification of the Twitter

1009
00:54:30,239 --> 00:54:32,440
Speaker 1: feed or the short term news story.

1010
00:54:32,960 --> 00:54:36,200
Speaker 2: Yeah, deep work is becoming more and more rare. Yea

1011
00:54:36,480 --> 00:54:39,719
Speaker 2: our final two questions, what sort of advice would you

1012
00:54:39,719 --> 00:54:43,719
Speaker 2: give a recent college grad interested in a career in

1013
00:54:43,960 --> 00:54:45,760
Speaker 2: either investment or finance.

1014
00:54:46,600 --> 00:54:49,839
Speaker 1: I'd say three things. One, don't be put off, as

1015
00:54:49,880 --> 00:54:52,200
Speaker 1: we talked about earlier, by some of the strange language

1016
00:54:52,200 --> 00:54:54,719
Speaker 1: and the manclature. Become a student of it, study it

1017
00:54:55,000 --> 00:54:59,759
Speaker 1: and break through those barriers, and don't be intimidated by it. Two,

1018
00:55:00,040 --> 00:55:03,960
Speaker 1: I would say, develop an area of expertise early on.

1019
00:55:04,680 --> 00:55:06,880
Speaker 1: And what I mean by that is, in order to

1020
00:55:06,880 --> 00:55:10,440
Speaker 1: start really adding value, you need to prove yourself to

1021
00:55:10,480 --> 00:55:14,799
Speaker 1: be really expert or knowledgeable in a particular area, the

1022
00:55:14,840 --> 00:55:16,680
Speaker 1: go to person on that on that issue. And it

1023
00:55:16,680 --> 00:55:18,960
Speaker 1: could be relatively narrow. So I'll give you an example.

1024
00:55:19,239 --> 00:55:21,600
Speaker 1: I used to be a high old research analyst. You

1025
00:55:21,600 --> 00:55:25,400
Speaker 1: you know, you learn how to model one cable TV company,

1026
00:55:25,880 --> 00:55:27,680
Speaker 1: and then you do a second and a third, and

1027
00:55:27,719 --> 00:55:30,560
Speaker 1: then you because of the process that you go through

1028
00:55:30,600 --> 00:55:34,160
Speaker 1: you start to develop an ability to assess relative value

1029
00:55:34,200 --> 00:55:36,160
Speaker 1: between those things, and then you do a fifth and

1030
00:55:36,200 --> 00:55:38,040
Speaker 1: the sixth, and then you become the go to person,

1031
00:55:38,640 --> 00:55:41,400
Speaker 1: So become a deep expert in that one area, the

1032
00:55:41,440 --> 00:55:44,040
Speaker 1: go to person. But then you want to start if

1033
00:55:44,040 --> 00:55:45,600
Speaker 1: you if you unless you want to do that for

1034
00:55:45,640 --> 00:55:48,000
Speaker 1: the rest of your career, you need to start adding

1035
00:55:48,040 --> 00:55:52,360
Speaker 1: some breadth. But it's it's getting the balance right, because

1036
00:55:52,520 --> 00:55:54,760
Speaker 1: you know you can't if you're skipping from one area

1037
00:55:54,840 --> 00:55:57,440
Speaker 1: to another and you never get deep an expert in

1038
00:55:57,520 --> 00:56:00,280
Speaker 1: any one thing, then you become too much of a gens.

1039
00:56:00,440 --> 00:56:05,680
Speaker 1: So it's getting that balance right between specialist skills but

1040
00:56:05,840 --> 00:56:08,520
Speaker 1: not getting so sucked in that you become siloed. And

1041
00:56:08,560 --> 00:56:09,759
Speaker 1: that's the only thing you ever do.

1042
00:56:10,280 --> 00:56:13,759
Speaker 2: Really interesting, and our final question, what do you know

1043
00:56:13,800 --> 00:56:16,680
Speaker 2: about the world of investing today? You wish you knew

1044
00:56:16,760 --> 00:56:19,880
Speaker 2: thirty or so years ago when you were first getting started.

1045
00:56:20,040 --> 00:56:23,560
Speaker 1: Yeah, well, I started out in life really doing as

1046
00:56:23,600 --> 00:56:28,200
Speaker 1: a micro analyst, like covering distress credit situations, and it

1047
00:56:28,280 --> 00:56:34,520
Speaker 1: was always about finding that complicated, weird, interesting deal where

1048
00:56:34,560 --> 00:56:37,719
Speaker 1: you couldn't really lose money and there was interesting convexity

1049
00:56:37,760 --> 00:56:40,200
Speaker 1: to the upside and it was all about the art

1050
00:56:40,280 --> 00:56:44,719
Speaker 1: of maximizing risk adjusted return on that one trade and

1051
00:56:44,800 --> 00:56:48,080
Speaker 1: almost having like a bit of a dismissive view to

1052
00:56:48,320 --> 00:56:50,600
Speaker 1: people who just put money into like mutual funds and

1053
00:56:50,640 --> 00:56:54,280
Speaker 1: regular equity funds and little you know, fixed income funds,

1054
00:56:54,960 --> 00:56:58,400
Speaker 1: and you know, sometimes you can get lost in the

1055
00:56:59,000 --> 00:57:02,360
Speaker 1: in the wood, you know, uh, looking you can't spot

1056
00:57:02,400 --> 00:57:04,719
Speaker 1: the wood for the trees. And just the power of

1057
00:57:05,440 --> 00:57:08,880
Speaker 1: compounding a diversified portfolio of of decades has proven to

1058
00:57:08,920 --> 00:57:13,359
Speaker 1: be a highly successful path to wealth maximization. So it's

1059
00:57:13,400 --> 00:57:16,480
Speaker 1: really taken a step back from the not just about

1060
00:57:16,520 --> 00:57:20,200
Speaker 1: maximizing the profit on the individual deal, but how do

1061
00:57:20,280 --> 00:57:23,080
Speaker 1: I maximize return on my overall portfolio of a long

1062
00:57:23,080 --> 00:57:23,680
Speaker 1: period of time?

1063
00:57:24,480 --> 00:57:29,800
Speaker 2: Micro and macro exactly, really quite fascinating. Julian, thank you

1064
00:57:29,840 --> 00:57:32,320
Speaker 2: for being so generous with your time. We have been

1065
00:57:32,400 --> 00:57:36,920
Speaker 2: speaking with Julian Salisbury. He is the Chief Investment Officer

1066
00:57:37,440 --> 00:57:40,280
Speaker 2: of Asset and Wealth Management at Goldman Sachs, where he

1067
00:57:40,280 --> 00:57:44,160
Speaker 2: helps to oversee over two and a half trillion dollars

1068
00:57:44,160 --> 00:57:48,240
Speaker 2: in assets under supervision. If you enjoy this conversation, well

1069
00:57:48,320 --> 00:57:50,960
Speaker 2: check out any of the previous four hundred and ninety

1070
00:57:51,040 --> 00:57:53,720
Speaker 2: nine we've done over the past eight years. You can

1071
00:57:53,760 --> 00:57:58,360
Speaker 2: find those at iTunes, YouTube, Spotify, wherever you find your

1072
00:57:58,360 --> 00:58:03,320
Speaker 2: favorite podcasts. For my daily reading list at ridults dot com.

1073
00:58:03,320 --> 00:58:06,760
Speaker 2: Follow me on Twitter at Ridolt's. Check out the fine

1074
00:58:06,840 --> 00:58:11,640
Speaker 2: family of Bloomberg podcasts on Twitter at podcasts. If you'd

1075
00:58:11,680 --> 00:58:14,080
Speaker 2: like to learn more about Julian Salisbury and the work

1076
00:58:14,120 --> 00:58:17,120
Speaker 2: he does at Coleman Sachs, go to LinkedIn and look

1077
00:58:17,200 --> 00:58:21,040
Speaker 2: up Julian Salisbury. I would be remiss if I did

1078
00:58:21,080 --> 00:58:24,000
Speaker 2: not thank the crack team that helps with these conversations

1079
00:58:24,040 --> 00:58:28,040
Speaker 2: each week. Samantha Danzinger is my audio engineer. A tick

1080
00:58:28,080 --> 00:58:32,480
Speaker 2: of Albrun is my project manager. Sean Russo is my researcher.

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Speaker 2: Pariswold is our producer. I'm Barry Ridholts. You've been listening

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Speaker 2: to Masters in Business on Bloomberg Radio.