John Pearce is the Chief Investment Officer of UniSuper, one of the best performing funds in Australia. In this episode of the [i3] Podcast, we talk about in-house management, sense and nonsense of asset buckets, APRA’s performance test and China. Please enjoy the show.
Overview of Podcast with John Pearce, Chief Investment Officer of UniSuper
1:00 Starting in the back office of Westpac Investment Management
3:00 There is no way you can believe in market efficiency when looking at emotions take over in the dealing room
4:30 You need board support if you are going to run assets in-house
5:30 We didn’t really have a vision going into in-house management. Visions can be scary things.
6:00 Michael Chaney’s ‘Logical incrementalism’
8:00 Moving to in-house is a business transition, not a project. It can’t be done in a day.
10:00 Pearce’ best and worst trades
12:00 We had a $9.6 billion option position on during COVID, which gave us the confidence to buy more risky assets at the bottom of the market.
12:30 But our position in China is not looking good at all.
14:00 We should have loaded up on green tech two years ago when we decided carbon neutrality was going to play a big factor
14:30 If you had to put a label on UniSuper’s investment style, then it would be Quality at a reasonable price
15:30 Has in-house management changed the way you structure external mandates?
16:30 Yes, the questions are better and there is some bluff-calling
20:00 If there is a good investment, then we will find a home for it. Hybrides are a good example.
22:00 On China: “More than the average person, I know what I don’t know.”
22:30 The last three months has really been testing our conviction [in China] and it is not Evergrande
25:30 If China invades Taiwan then all bets are off. You can’t structure a portfolio based on that.
27:30 How do you solve the asset allocation problem of low yielding bonds?
28:00 We are looking at gradually increasing our unlisted assets
30:30 Views on the APRA performance test: “When you get results like that, you know there is something fundamentally wrong with the test.”
36:00 Since becoming a public offer fund, UniSuper has raised $6 million just through word of mouth.
36:30 Yes, we would be open to a merger, but it has to make sense for our members.
39:00 You don’t build real culture over virtual meetings, so we decided as a team to come back to the office the same three days a week.
41:00 But there are also benefits of virtual meetings: our whole team gets to sit in our investment committee meetings
The [i3] Podcast is the official podcast of the Investment Innovation Institute [i3]. It covers major trends and innovations in institutional investing, providing independent and thought-provoking content about pension funds, insurance companies and sovereign wealth funds across the globe.