Outsourcing strategic tilting fails when pooled LPs lose nerve
Matt Whineray · Matt Whineray – Leading New Zealand Super Fund (Capital Allocators, EP.108) · Sep 9, 2019 · at 32:47
Matt Whineray, CEO of the New Zealand Superannuation Fund, explains why sovereign funds should manage mean-reversion strategies internally rather than via pooled third-party vehicles.
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“The thing about strategic tilting is that you can be for a long time underwater, and because you're waiting for these markets to mean revert, and they might be slow, or they might move further away from whatever you think the mean is, and so that one we thought is really hard to get alignment with external managers, and also what we've seen is where managers are running those types of programs, sometimes they have a pooled program, And other clients in that program start to lose their nerve and want them to take the risk off, and that's exactly the wrong time to do it”
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