Partners Capital 2018 Annual Investor Workshop

17 October 2018

Partners Capital 2018 Annual Investor Workshop

Partners Capital covers “a lifetime of investment learning in a single afternoon” at their third Annual Investor Workshop

Partners Capital Investment Group, the Outsourced Investment Office serving sophisticated institutions and senior investment professionals in Europe, North America and Asia, held its Annual Investor Workshop on Wednesday 10th October 2018. The afternoon focused on the golden rules of investing in each asset class, summarised as a “lifetime of investment learning in a single afternoon”. Held at the St. Pancras Renaissance Hotel, it was the largest event to date, with 170 of the firm’s clients in attendance, including investment committee members from Eton College, Guy’s and St. Thomas’ Charity, The Royal Academy Trust, INSEAD Business School, The Metropolitan Opera, the Los Angeles Museum of Contemporary Art, and the Hong Kong Cancer Fund.

Stan Miranda, Chief Executive Officer of Partners Capital, kicked off the event saying it will be “a firehose of information..…with presentations from 14 different speakers, including 10 senior investment professionals from Partners Capital and four external speakers”.  “We find that our clients, some of the most sophisticated investors in the world, truly appreciate going deep with our evolving science on finding and exploiting exceptional sources of return. As a continuous learning culture, we always have new insights and analysis to share at our annual investor workshops. This year the inventory of fresh ideas is particularly full”.

As context for the afternoons event, Kamran Moghadam, Partners Capital’s Deputy CIO, kicked off by summarising the firm’s macroeconomic view, reminding the audience that expansions do not die of old age and this one is far from over. Mr. Moghadam addressed the likely outcome of the upcoming US midterm elections which should see the Democrats taking over the House of Representatives but asserted that they were unlikely to reverse any significant Trump policies including those supportive of the economy (regulation and spending) and those more threatening (immigration and trade policy). Mr. Moghadam was joined by Professor Keyu Jin from the London School of Economics for her insider’s view of the trade war with China. She shared her view that the trade war is likely to be a permanent feature reflecting the beginning of a long-term effort by the US to contain China’s expansion as a major global economic and political power.

Arjun Raghavan, Partner and Head of Portfolio Construction, provided an update on Partners Capital’s approach to institutional investing, christened the ‘Endowment Model Redefined’. Arjun summarised the changes in the global investment landscape since David Swensen first published his Pioneering Portfolio Management in 2002, and how Partners Capital has adapted the Endowment Model to these changes. The three key learnings in the last 10 years underscore that asset classes tend to conceal true risk characteristics and that it is always better to measure portfolio risk in terms of aggregated market exposures, or betas, across equities, credit, inflation and interest rate risk. Similarly, asset manager performance is best measured relative to a passive replication of normative market exposures. These learnings have driven enhancements to the original Endowment Model and has evolved into what the firm calls the Partners Capital Risk Managed Endowment Approach (“PRMEA”).

The afternoon then moved to the ‘dynamic duos’ of each asset class who ran through the golden rules of investing for their investment area:

  • Stan Miranda (CEO, London) and Suzanne Streeter (Managing Director, Boston) – Private Equity
  • Colin Pan (Partner and CIO, London) and Euan Finlay (Partner, London) – Private Debt and Alternative Alternatives
  • John Collis (Partner, London) and Alex Band (Managing Director, Boston) – Public Equities
  • Will Fox (Partner, Boston) and Rich Scarinci (Partner, Boston) – Absolute Return and Liquid Credit

Three additional external speakers provided insights on their specialist topics:

  • Ric Lewis, Co-CEO and Chairman of Tristan Capital Partners, walked the audience through the opportunities in European real estate investing highlighting that the spreads between low quality and high-quality property were still very attractive to investors equipped to buy the former and turn them into the latter
  • Andrew Saker, Managing Director and CEO of IMF Bentham, was interviewed by Partners Capital CIO, Colin Pan, on litigation finance, an uncorrelated ‘alternative alternative’, which Partners Capital has been investing in since 2015
  • Omar Selim, Founder and CEO of Arabesque Asset Management, discussed one of the key topics on investors’ minds – Responsible Investing, and specifically the measurement of the impact of Environmental Social and Governance (ESG) factors on returns

The meeting closed with Colin Pan addressing the question of whether Partners Capital is “too big?”. He concludes that with $24.5 billion assets under management, Partners Capital remains in the AUM sweet spot, sitting between the Yale and Princeton endowments, squarely in the middle of the AUM range of some of the leading endowments and foundations in the world: “With our scale we are able to become strategic partners with our managers, enabling us to provide guidance on governance and fund structure, access co-investments and negotiate better fees to drive enhanced returns and investment opportunities for our clients”.