28: JANA's John Coombe - Impact of Choice, Consultants and Investment Philosophy

In this podcast, MarketFox columnist Daniel Grioli speaks to John Coombe, executive director with asset consultant JANA. John is one of Australia's most respected asset consultants, advising some of the largest pension funds in the country. He is known for his outspoken, but always insightful comments and this time is no different. He speaks about the impact of Choice regulation on the end beneficiary: "Choice by its very nature takes the asset allocation decision away from trustees and puts it back onto the individual investor". On UK consultants, who face intense regulatory scrutiny, he says: "Throw them in the Thames and let them all drown". And on assessing fund manager returns: "90% of returns are driven by a manager's investment philosophy". He also gives tips to fund manager startups on how to engage with consultants and funds. Strap yourself in for a roller coaster ride! Overview John Coombe's podcast 3:20 Got a job in superannuation, because I was the only one who knew how to use a PC 4:30 Spent most of my early days selling equities, because the market was so rampant. 6:30 Meeting some of the great investors two days after the '87 crash 9:00 Backing start-up fund managers 10:30 What went wrong with those managers that didn't make it? 17:00 The biggest asset allocation call in the firm's history 18:40 Shifting 15% out of equities into property 21:23 Allocating nothing to US equities 29:00 If 95% of risk is due to asset allocation, then why do we spend so much time on manager selection? 32:00 Never bet against the central banks 36:00 Do consultants add value? 40:00 Regulatory scrutiny of consultants; "throw them in the Thames and let them all drown" 45:00 Consulting is about making educated guesses. 49:00 Consulting is relationship management; don't kill it with being dogmatic 53:30 90% of returns are driven by a manager's investment philosophy 58:30 There was a ton of money in hedge fund land being run on quant 1:01:00 Do performance fee ever make sense? 1:03:45 Tips for fund managers in dealing with consultants 1:08:00 Discussing the different consultant models. 1:12:00 Is consultancy getting too concentrated in Australia? 1:13:00 John's tips for institutional investors 1:14:00 Are CPI targets set today achievable? 1:17:00 The biggest challenges for instos today 1:18:00 A word of warning