[i3] Podcast – MarketFox interview with Brian Singer

In this podcast, MarketFox columnist Daniel Grioli speaks with Global Macro investor Brian Singer about his time working for Gary Brinson, his views on mean reversion, the essence of dynamic asset allocation and the attributes of a good investor.

Brian is the Head of the Dynamic Allocation Strategies Team at William Blair. Singer was the former head of Global Investment Solutions and Americas Chief Investment Officer for UBS Global Asset Management.

In 1991, Brian co-wrote a landmark update to one of the pioneering studies on asset allocation, ‘Determinants of Portfolio Performance II: An Update,’ with Gary Brinson and Gilbert Beebower.

Overview:

4 min: No one wants diversification when markets are going up.
7:30 min: Joined Brinson Partners
8:30 min: What was it like working with Gary Brinson?
10:30 The importance of collegiate arguments and the ability to express dissenting views without ramification
12:30 Arguing as a form of passionate debate
13:30 Brinson’s study is one of the most misquoted papers of all time. It is about the variation of return, not return itself.
17:30 Most portfolios have only 2, 3 or 4 bets in it and you can find them with principal component analysis
24:00 Factor-based portfolios are active, but they are compulsory. I rather not be compulsory
26:30 Asset allocation is something that is meant to meet long-term objectives, not to achieve something this week.
32:30 The person with the shortest investment horizon in the value chain is the weakest link
33:00 When are dynamic decisions market timing?
34:30 The pendulum is swinging back to a macro focus, where asset allocation is thought of as important.
38:30 Is mean-reversion broken?
39:00 I’m not a fan of mean reversion investing, because it is investing based on the past.
39:30 The mean today is more like the period between 1900 and 1932. That is a more representative period in terms of a central banking and political environment
43:30 Dynamic Asset Allocation; is a 5 per cent shift enough to make a difference?
49:45 Dynamic risk capital allocation is about path, not about end result
56:30 The first thing of importance in an investment team is culture. You can’t dictate culture, it is something that emerges over time.
1:02:30 Boredom is a much bigger risk than compensation. While people will move for higher compensation, boredom is on the top of the list for people leaving.
1:03:30 Where does the role of an investment board or committee start and end?
1:06:30 Good investors have a voracious appetite for reading, not just newspapers, but more widely
1:09:00 Singer talks about a moment in his career when he had to change his mind, where at first he wasn’t convinced it was the right move.