Weekend Giant Reading
Hi, everybody. It’s been a crazy few weeks down
here on the Avenue of Giants. Apologies for the radio silence.
Anyway, without further ado... Here now, the news!
- Emerging Managers: The whole financial services industry -
and especially asset management - has a diversity problem. For
example, less than
2% of hedge funds are owned by women, despite the fact that
women-run hedge funds
apparently outperform their male counterparts.You
don’t have to be a libertarian to figure out that
these biases against people of color and indeed women has
commercial and financial consequences for institutional
investors. It’s for this reason that
been a fan of emerging manager programs... they are a
mechanism for rolling back the inherent bias in the system to
stop backing that same pattern fitting managers and start
backing the best managers (full stop). So, kudos to MassPRIM
its emerging manager program today.
- Scaling Impact: The global community of impact investors
$35 billion in assets. And there was much rejoicing. Yaaay.
In other words, all the impact capital in the world does not
add up to a single, small sovereign fund. Boooo. To be candid,
this is a nice accomplishment, but it’s also a
reminder that people who want to solve big problems through
investing would be well served to work within the system of icy
veined capitalists than try to work against it.
- Political Performance: You may have noticed that the
politics of American pension funds is turning nasty (see
here). It’s hard to judge what this means in
the short run for investors. What I do know, however, is that
shows pretty clearly that the more a public pension board
is politicized, the worse its financial performance becomes. In
the meantime, pass the popcorn.
- The Collaborative Model: A growing number of Giants appear
to be working together. For example, Nigeria’s
Sovereign Investment Authority and Morocco’s
Ithmar Al Mawari are
collaborating on construction projects. CDPQ is
partnering with DP World to create a $5B platform that will
focus on global ports and terminals. China’s CIC
and France’s CDC are
teaming up to invest in third-party markets of strategic
interest to both countries. And Mubadala is
looking at two big Agriculture deals in Russia via its
partner RDIF. If you’re curious as to why all this
you can read my new paper on the Collaborative Model.
- Fee Machine: A growing number of Giants are finally
getting serious about their fees and costs. For example,
MassPRIM disclosed its
huge carried interest checks paid to PE GPs for the first
time. CalSTRS is also
owning up to true cost of external investment programs;
$1.6B in fees last year alone. CalPERS also
admitted it is paying insane fees to PE GPs even when
returns are crappy. With all this transparency,
here’s hopin’ we finally see some
significant resources flowing inside public pension funds in
order to hold private asset managers more accountable.
- They Might Be Giants: Saudi Arabia made a deposit of
$27 billion into its revamped Public Investment Fund. Given
the fund is apparently on its way to $2 trillion, this will be
the first of many. With this in mind, the government is also
staffing up its newly revamped sovereign fund.
- They Might Have Been Giants: The Ghana Stabilization Fund
is joining Russia’s sovereign funds in that they
running out of money.
- Taking The Long View: Sweden’s AP2 has now
76 companies on climate grounds. That’s a
- LP To GP Evolutions: It’s interesting to see
so many sovereign funds
RAISING new funds - for various niche projects - from their
- Selfie: In which I argue
that prize linked savings accounts are a replacement for
predatory state lotteries.
Have a great weekend!