Leading figures from the investment and regulatory worlds gathered yesterday to discuss the evolving landscape of alternative investing and how regulatory policies can better support investor success.
The AQR Asset Management Institute’s annual Insight Summit, held at London Business School, brought together policymakers, eminent academics and senior industry professionals including:
• Gabriel Bernadino, Chairman, European Insurance and Occupational Pensions Authority (EIOPA)
• Joanne Segars OBE, Chief Executive, Pensions and Lifetime Savings Association (PLSA)
• Magnus Dahlquist, Peter Wellenberg Professor of Finance, the Stockholm School of Economics
• Larry Harris, Fred V. Keenan Chair in Finance, USC Marshall School of Business
• Ju-Hon Kwek, Partner, McKinsey
• Chris Hitchen, CEO, Railpen and
• Stan Beckers, CEO, NN Investment Partners.
Much of the debate during the day focused on how investment strategies are adapting to the changing requirements of asset owners and pension funds, particularly in a low expected return environment, and the way that approaches to benchmarking are shifting away from relative performance to absolute return or other outcome-related metrics. This included:
• Scott Richardson, Managing Director, AQR, making the case that fixed income may be the next frontier for systematic investing and that, whilst factor-based investing has to this point largely focused on equity strategies, a systematic and risk balanced approach based on factors can also efficiently capture the fundamental drivers of relative performance in fixed income markets.
• Eli Talmor, Professor of Accounting, London Business School, drawing attention to the long-term success of private equity and its move to the center of capital markets whilst the number of US listed firms is in decline. The private equity model calls into question the fundamentals of neo-classical finance theory on the separation of ownership and control.
• Ju-Hon Kwek, Partner, McKinsey, offering a perspective on the future of the alternative investments industry over the next five to ten years, outlining the impact of major trends including new orthodoxies in portfolio construction, the rise of large investors with direct investment capabilities, the emergence of “retail alternatives”, and the increasing convergence between the worlds of alternative and traditional asset management – and on the industry’s competitive landscape.
David Kabiller, Co-Founder of AQR, commented: “The event generated meaningful discussions among industry-leading scholars, regulators, and practitioners in the search for investment truths that lead to industry best practices. The goal of the AQR Asset Management Institute is to drive high calibre debate that has a lasting impact on issues relevant to the asset management industry. We are pleased that the Insight Summit event met that broader goal.”
Stephen Schaefer, Professor of Finance, Lead Academic Director and Chair AQR Asset Management Institute, London Business School said in his closing remarks: “What we have heard today highlights both the seriousness of the challenges facing the investment management industry today in areas as diverse as alternative investments, pensions and regulation, and the progress being made to address these issues by academics, policymakers and practitioners.”
Founded in January 2015, London Business School’s AQR Asset Management Institute promotes excellence in asset management, through a combination of research, funding, and awards programmes intended to further the sector’s ability to preserve and generate long-term wealth and economic wellbeing for individuals and societies.
The conference also saw the presentation of the AQR Fellowship Award 2016. Anton Lines, PhD candidate in Finance, London Business School, received the £10,000 prize in recognition of his research into the role of professional asset managers in the financial economy – their role in setting asset prices, response to incentives, and ability to deliver alpha.
Finalist Jean-Marie Meier, who is also a PhD candidate in Finance, was recognised at the event as well.
The Institute’s next event will be the third in the Perspectives series of debates taking place in London on 26 April 2017.