London South East 00:01
You're listening to Investing Matters brought to you in association with London South East. This is the show that provides informative educational and entertaining content from the world of investing. We do not give advice so please do your own research.
Peter Higgins 00:18
Hello, and welcome to this Investing Matters Podcast.
My name is Peter Higgins, you can find me at Conkers3 on Twitter.
And on the eve of International Women's Day, I feel truly blessed to be speaking to the women's diversity inclusivity champion, Alexandra McGuigan, the CEO and founder of Inclusive Asset Management (IAM). Alexandra, welcome to the Investing Matters Podcast.
Alexandra McGuigan 00:50
Thank you for having me. I'm thrilled to be here. I actually had a very nice dinner last night to celebrate International Women's Day. So it's wonderful to also be here talking about these issues with you on the eve of the big day.
Peter Higgins 01:05
Thank you very much. I'm going to start with giving people a bit of a synopsis of you, and then we'll get into your backstory if I may.
But this is just phenomenal. I need to read all this out for it to make sense to people how much you've crammed in into your I think very, very, you know, limited years already.
So Alexandra McGuigan is the CEO and founder of Inclusive Asset Management.
Prior to that, Alexandra was the Global Development Director for 100 Women In Finance and was responsible for all the business development and corporate engagement, sales and marketing strategies with a specialisation in alternative investments.
Alexandra was successful, helped international fund managers navigate and developed a presence in the APAC region raising over 2.5 billion in assets under management for institutional investors, based in Singapore, which, which is where you are today, Alexandra, thank you.
You've basically moved responsible organisations and activities across the region. You've also helped and held senior roles at Tribeca Partners, Shed Enterprises, Investec, BNY Mellon.
The list goes on and on here including GAM, Adveq, Och Ziff, Diamond Asset Advisors, you've crammed in so so much, but I want to start if I may, this conversation Alexandra with you telling our audience about your first study at university and what your first job was, because it's an unusual start for most people.
Alexandra McGuigan 02:46
My first job which is that really the one that I told you, wine, I was going to say my first job was actually at Donut King and I don't think I've ever eaten a donut since.
But my first real job was in I was in the wine industry. So my family actually has a long history of making wine in Australia, back actually dating back into the 1850s when they first came over as immigrants to Australia, but yeah, my dad grew up in the Hunter Valley, which is wine region north of New South Wales, and all of my uncles and aunts and everyone in the family.
So everyone in the family lives in that region, mostly. I actually grew up in Sydney, my parents were doctors but found my way back into the wine industry. I had a wine blog for some period, and I'm still very passionate about wine.
Peter Higgins 03:50
Fantastic.
Now, I want to maybe ask you this question then as to you know, you said the family was in the wine industry. So I'm sure family members were saying, you know, it would be fantastic to have a lady leading this business for us and who better to do it then Alexandra so there must have been some push and pull there regarding the family going hmmm you want to go and do what now?
Alexandra McGuigan 04:19
Well, I was only 22 So they certainly weren't ready to let me leave the company.
And my cousin, my cousin Lisa is 15 years older than me and she was she was very successful in the business and was running the marketing, so there was a senior woman running the business but no, it was that it was my first job out of university. I really enjoyed it. But you know, I also going and working for the family business.
You kind of want to make your own strides as well and I wasn't really sure what I wanted to do. And so my father, who is a great mentor of mine, encouraged me to do an MBA so I could expand my and it was, like I did a bit when I was I started when I was quite young.
So 24, so I would say rather than most people think that an MBA is executive education, etc.
But what I would say was, what I did in that, by starting young was very foundational.
And so doing it early meant that I almost had a leg up on when things happened, or when events unfolded in my career in future. I'd already kind of seen it before, even though it was through textbooks and roleplay, and group prep things and stuff like that. It really helped me to navigate. And I would say, get ahead faster, even though when I came out of the MBA program, I was only 27 years old or something. So no one's going to give a managing director role to a 27 year old.
But it certainly changed my life doing the MBA.
Peter Higgins 06:04
Brilliant. So your first start in the asset management industry was with BNY Mellon Asset Management, please tell us about that going in there as a young, professional female, the chance is dominated by men ordinarily. Tell us about that start for you, and your greatest learnings from that first of all?
Alexandra McGuigan 06:29
Yeah, so I, well, I wanted to travel, I knew that I wanted, I just done a stint in my undergraduate degree at Cornell. So I'd done an exchange there. And I found that international experience very fulfilling.
And obviously, it's a bit of an adventure. But learning in different environments and different cultures is additive to your toolkit, I would say.
And so I knew that I wanted to do that again, I also had really wanted to try and learn a language, Australia's kind of a difficult place to learn language, probably easier now.
But at the time it is very English dominated, unless you come from an environment where you're surrounded by language, then it is very difficult to learn.
So I knew that if I wanted to go and learn a language, I would have to go and live in a, obviously a non-English speaking country and be surrounded by it.
And so what I decided to do was try and do part of my studies overseas. And at the university that I was at, at University of Technology in Sydney, which is an absolutely amazing university, I can't, I can't give more credit to that university.
They had a program and so I could do a portion of the MBA as an exchange student in France.
And so in doing that, I knew that I needed to sort of get some more money together, and I had an interest in finance and so I just thought, well, I'm just going to try my luck and see if I can get a job in finance, even though I didn't really have the experience yet to do it.
And so I was very fortunate to I mean, it was just an entry level job office management kind of role.
But I was very lucky to meet athe man who was the CEO, actually, at the time, it was Mellon Financial before the merger. But he was an American guy. And I think that because he saw that I'd been to Cornell that was, that was a good thing.
And he said to me, look, you're overqualified for this job to start with. But if you do it and you do it really well, then I'll teach you how to run a business. And I was like, Alright, let's do it. I mean, I had nothing to lose.
And when I spoke to a lot of people about that, to get advice, whether or not I should take the job, because it was an entry level job. It was interesting, because most people said, oh, don't do that, you'll get stuck in something that you don't want to do. If you don't, not going into the actual job that you want to go into, then you won't, you won't ever make it anywhere.
And the only two people who told me if you get the opportunity to take that job, take it with both hands and work your butt off. We're the dean of the MBA program at the University and my father.
And so when I got offered the job, I took it and it could not have been a better experience.
So basically, I just got to shadow this very dynamic, a very driven, ambitious individual who had been sent out from the UK to set up their business there.
And so, you know, he used to joke about it that while I was doing my academic MBA at university at nighttime, I was getting an MBA in finance in the real industry working at that office, and I did so that was a pivotable time for me where he really encouraged me to go and originally I wanted, I'd wanted to study luxury brand management in Paris.
But he convinced me that the companies that the luxury brand companies, they needed people that could also understand finance and economics, and I'd already studied enough of the marketing.
So it was, it would be a good idea to broaden out my skills. And that, and that, if I did that, then I would probably end up liking a job in finance anyway, and working there.
And so it actually kind of worked out that way. Because when I studied that, I did, I guess there's impostor syndrome for women where I didn't know at school, I'd had a bad experience in maths and I was actually very good at it and I'd liked it.
But I had a bad experience with a teacher and then that sort of took my path in a different direction.
And I'd lost my confidence in it. So when I studied those subjects at university, I realised that actually, I was really good at it and I really enjoyed it. So it kind of took that a roundabout pathway to get me back into it.
But once I started studying those subjects, I was like, actually, this is fascinating. I really like talking about this stuff, it's interesting subject matter, you get to talk to interesting people, and it's about everything that's going on in the world. And I just hadn't even been aware of it before.
So definitely his guidance helped me to, to get on this path. And I've been grateful to be on it ever since.
Peter Higgins 11:25
Absolutely fantastic.
I love the fact you just seize that first opportunity and just worked your way up and, you know, applied yourself.
And you know, to use that term, grafted, you know, because a lot of people want the success but are not willing to put the work in and haven't got the work ethic.
And you've just have absolutely done that, and from then on, you know, Investec, Tribeca, you know, tell us a bit a bit more about some of the other roles that you, you know, you've surpassed?
Alexandra McGuigan 11:55
Yeah, sure.
So when I came back, so I spent 2009 and so I had been at BNY Mellon for two years, which was amazing.
And then it was always the deal that I was going to go off and do the year in France.
So I still did that, learnt French, some time ago now.
But I still achieved that additional educational element there, which is totally enriching.
So learning another language, I would highly encourage people to do that, or at least spend time in another country, because it helps you to understand that people think differently.
And if you can, if the language if there's no direct translation for words, it means that it's not important to those, that culture, that society.
And so having that understanding helps you to be to deal with different people from different backgrounds, it helps you to be more empathetic, I think, so that that was the first thing.
Then it's… but I did the finance subjects and I've decided that I wanted to sort of follow in his footsteps and go into institutional sales.
And then I tried to, when I came back, it was the big still beginning of 2010. And, you know, the financial crisis was still in full force.
So there wasn't, there weren't really a huge amount of sales jobs going and particularly for people with no real sales experience. So I kind of went alright, well, I got to get a job anyway. So I reached out to anybody and everybody that I knew in the industry and said, I'm looking for a job in finance, I've just finished my MBA, willing to do whatever.
And I got my break at Investec. So I worked in the private bank at Investec in Australia, I worked in managing, working with a sort of a more senior partner, but the client portfolios of high net worth individuals, which was very interesting, and then that unit of the business got sold.
And they said, look, you can either go with that business, or you can stay with us, because we really like you.
And so, at the time, the only role that that was available was head of marketing in the retail business.
So I did that, realised that definitely didn't want to be in retail, wanted to be an institutional business. So while I was doing that, and just getting experience and learning as much as I could, and making as many contacts as I could, I still kept my feelers out there to try and find a role.
And then eventually, I'd interviewed for someone and I've gotten to the, almost the final round or the I was the second candidate, really, but I didn't get that job. And then, but I kept talking to this CEO who had hired someone else.
And eventually, a couple of years later, he actually recommended me to someone else who was looking for a candidate.
And so I got tapped on the shoulder to join shared enterprises, which is a third party marketing firm. It is the oldest and probably one of the most respected in Australia. And because of the landscape of Australia and how far away it is, and it's sort of quite a clicky and that would be a result of the proximity, the lack of proximity as well, it's an environment where you, you'd need boots on the ground, but it's expensive to set up an office, right?
So until the company fund manager from Europe or the US knows that they're going to have some kind of success in the region, or that their strategies of interest or whatever, then then quite often, these big international fund managers, they would use a third party marketing firm to sort of establish a presence sponsor, some conferences, come to do some road shows and everything. So that was an amazing experience as well, like I've been I've worked very hard, but I've also been very lucky.
And so shared enterprises had some of the names that you rattled off there, they were some of the fund managers that we worked with. And so we were an alternative specialists. So we worked in infrastructure, private equity, active currency, hedge funds, and all of that kind of stuff.
And so I ended up working with I worked with Och Ziff, we've worked with primarily with GAM and had we had great success with GAM on a number of their strategies.
And then I also got to work on a really fun product called the Diamond Asset Advisors, which was still my favorite product that I worked on.
Because that was the where I learned a lot, obviously, about diamonds, which is, which is an alternative asset in itself. But it was a very fun project, when they were they were trying to structure a private equity like deal to with the diamond industry. Anyway, that almost got up.
We didn't, we didn't quite get it up. But it was, it was certainly a fun project to work on.
Peter Higgins 16:33
I saw the little glint in your eye there because you actually were able to actually live the bit that you wanted to live previously about working in the luxury end of the market when you're working with Diamond Asset Management.
So the must be you must have absolutely loved that during that time?
Alexandra McGuigan 16:49
Yeah, it was fantastic. And actually that the what they've done was, so the senior, well the CEO of the business was he was the former CEO of Adveq, which was which is a private equity fund of funds a Swiss based, very famous, very successful business.
And he finished working there and he had a personal interest in in diamonds. And so he partnered up with someone who had worked for De Beers, and working for him to be is from actually diamond for quite a mining play.
And so De Beers has that they have, they go from mines all the way to shopfront. And that's where you get the greatest value on the diamonds pulling the diamond out of the ground.
And then you polishing it and taking it all the way. So actually understanding the supply chain of things like that was super interesting to learn about. But yes, you're absolutely right, I did get to go to the Harry Winston store.
And then I think it's in Bond Street, and I got to see all of the really precious big stones, which was a highlight I have to say.
Peter Higgins 17:52
Amazing, amazing, fantastic.
Now I want to talk because in the middle of all of that, with the bits that we've missed is your first investment foray, which wasn't stocks and shares.
But I want to talk about that first because you did a very, very early age, which was property.
And then secondly, I want to talk about your then first investing foray into the stock market if we can because I don't want to go to the point that you're going to tell me that the first thing you bought was diamonds, but we're going to start with a property.
Alexandra McGuigan 18:24
Definitely not, never bought myself diamonds. I'm actually quite sensible and pragmatic, be that good or bad. So, so yes, I bought myself my first apartment when I was 23.
I quickly figured out that renting and sharing properties and everything was was difficult and expensive.
And at the time this was before the financial crisis.
So me with not earning very much money, I still managed to get a reasonably large loan.
But I did buy - I mean this is sort of saying how old I was.
But I bought my first property for 200 and was about $300,000 a one-bedroom apartment in the centre of city Sydney in like 2000 I won't tell you what time was because then what date it was because then you'll know how old I am.
Yeah, yeah, Australia Australian dollars, but it but it was the property markets in Australia have gone bonkers since then.
But it was a very good discipline, I think because, well, quite quickly, I learned that I hadn't quite done my numbers so well.
And I underestimated the amount of money that I needed to live on and the interest rates and all of the other things that come along with that and then also having to be responsible and calling. I mean who do you call when you when your water heater breaks, you got to find someone to fix it and get paid for that.
So I think grew up pretty quickly living in that apartment.
But it was it was an excellent educational experience.
And I mean, everybody talks about Rich Dad Poor Dad, that book is genius, because the best way to sort of force yourself to save is to have something to put in, you can either to have it automatically taken out of your bank account, or you can owe the bank the money, and the bank will take it.
And that's, that's a bit scarier, I think, than having to, to save yourself.
So that was a good discipline and I never actually because I did that, I never actually really had much money, excess money, right?
And so I think that what can happen is if you, if you don't do that early on, then you can start earning money, and then you increase your spending, and you increase your habits and interests and, and that's fine.
But it's, it's very hard to go back to a more limited life, if you will, people don't like to go backwards once they've already been forward.
So I kind of set myself up for success in doing that from the outset.
And then then I just did it again, I used like, I'd save some money, and I managed to get the deposit out of that property that I purchased very early on and get the deposit for a new place when I when I came back in 2010.
And so I've done that a few times.
And if you can get property to a point where it's neutral, and you're earning well in Australia that there are tax benefits to having property losses in property.
So you can offset things like that.
But if you can get it to a point that's about neutral, then you can just let it sit and go on the side and then and then carry on in your day. And you'll probably earn, continue to earn a bit more money, and then you put that somewhere else. And so that's sort of been the trajectory that I went on. I'll stop there for a minute.
Peter Higgins 22:04
No, that's brilliant.
No, it's really good to hear that and the fact of learning the discipline of managing a property because, you know, as when we're all younger, we think, oh, actually, it's just, I'm just paying the rent.
And that's it. No, no, no, you've got gas, electric, all the other utilities, you've got to pay for telephone, transport, food, got to feed yourself, you know, all those sort of things.
You know, you realise all your friends are going out because they're living at home with their parents staying home, because you've got no extra money to spend on leisure activities.
Alexandra McGuigan 22:36
Well, and back in the day, we're back in that time, I think people were still renting a lot. So they weren't, I didn't have that many friends who were living at home.
Whereas I think that the there is coming to a point now where people just can't afford to live out of home, which is a little bit scary, because I think that this delays it's like an extended adolescence, I suppose, where you don't have to look after yourself, which is not necessarily good for society having having some self-maintenance skills that are useful, I would say.
Peter Higgins 23:13
Absolutely.
Now I wanted to ask you about your first foray into investing as well, where did you start with regards to the stocks and shares, you know, you're in Australia working with investors, you're working with Shed, seeing all these different opportunities. When did you first go actually, I'm going invest in a stock?
Alexandra McGuigan 23:31
Well, so I had, I've only ever had a limited share portfolio.
So invested in some of the banks, actually, I was kind of limited to what I could invest in.
So when you work in, and you're in a role like that, you have to get permission and stuff like that.
And to be honest, I didn't have much spare cash. What I decided to do is in Australia, we have a thing called superannuation, which is it's the pension scheme.
And so at the time, it was 9% of your salary gets taken automatically. But in BNY Mellon, they had this automatic top up. So if you paid if another 3% of your salary, then they would they would top it up to another that they wouldn't match that.
And so when I was there, I decided to also sacrifice that money to build up my superannuation quickly and so everyone else was getting 9% and I was getting 15.
And there's a wonderful thing called compounding interest.
And so that serves its purpose over time. So, so I very early on, so I would say that more of my stock investments has been actually added to other to my superannuation, and then we invest in, in the funds of the businesses that we that that I knew very well and people that I knew and trusted. And to be honest, I was always surrounded by such amazing portfolio managers that I was like, well, I'm not going to go and pick a stock, I might as well give the money to them, and get them to manage it.
Because you know what they're saying makes sense.
And if I'm asking other people to do that institutional investors, then I should also put my money where my mouth is, as well.
So I'm not really a portfolio manager, I'm more of an allocator, I would say, and I like to give money to people who I mean, because he I don't think that you can, I think there are some people who can beat the market, but not many, I'd prefer to have all my money in growth,allocations in my superannuation, so I consolidated all of my superannuation. So put that all in one basket. So then you're building the largest pool and that compounding interest then starts building on itself.
Plus, I said, I salary sacrificed in order to get more than everybody else, I suppose.
And then I, quite deliberately, so you would normally have a balanced fund and a balanced fund would probably be 60/40.
So that would be 60%, to equities and 40% to defensive, fixed income and stuff like that. But it's I mean, I'm still got 25 years or so before, I'm going to actually get any of that money.
And when I was doing this, it was 50 years, right?
So I was like, I can actually forego, I don't need to worry about the risk of markets crashing at this point, because I'm not concerned that I will have time to make it back this, there's going to be several market cycles before, I'm going to need to collect on this.
And so I can put all my chips on the table and pay someone else who's much more talented than I am or was at that time to allocate that money for me, so I quite aggressively I went 100% into equities in my pension, which is still what it is today, I might consider to change that in 10 years or so. But that's my equities allocation pretty much.
And then also I, as I said, I invested in the funds that GAM and I invested in the funds at Tribeca very well.
Peter Higgins 27:40
I love the fact that you just said I went all in, I'm compounding I'm going to be around for 50 years, so let's just go for it.
Alexandra McGuigan 27:46
I hope so, I can't wait. So even if even if I'm not around, hopefully the money will compound.
Peter Higgins 27:52
It will be will be around. Yeah. So you've you've done the plan, you've looked at it, you've planned it, you've looked at your spoken with very, very smart people around you, you've looked at what's going on the industry and you're looking at the compounding effect that's potentially available to you and you've gone yeah, this is the way forward. So that's what we want to encourage people to do to be more long-term, you know, not in our in all the rest of it trying to play the cycles just compound.
Alexandra McGuigan 28:21
Also, if the money is in somewhere that you can't touch, it's easier to be long-term.
So so if you're and look the tax benefits, I mean, I don't get taxed on that superannuation money, right?
So we've made, and I'm not I'm not a wealth manager or planner, but I just thought it made more sense to the money that I had to pay off the loan, that I put money into that because I had a debt there.
And then the money that was taken away as much as possible because you don't get taxed on that money that's taken into superannuation, right?
So that minimizes my taxable income and then, with that money, put it as it's as long-term as possible.
So, so then I've got property exposure, then I have full equities exposure, I'm young enough that, you know, I don't need to be so defensive for the market cycles in that area.
And then also getting a good cash balance, I think, is useful because in the last couple of years, I've had a couple of kids and you know, we had to… life happens and we weren't insured the way because I didn't I didn't make the 12 month thing and so you have we had to pay, right?
So there are things that happen in life where you have to pay large chunks of money.
And so having that available cash means that you don't have to try and pull money out of illiquid assets or scrimping and I don't know get personal loans and stuff like that which have a much higher interest rate.
So that that has been my strategy and then my husband, he works in private equity. And so, again, that's another illiquid asset. So our plan is to…so all of those three are quite long-term, even though the equities there's a much greater return, but I can't touch that money. So So with that, they're all long term. So in the short-term I need, I need it higher cash balance, and so that that is what we prioritise.
Peter Higgins 30:30
Brilliant. I mean, you've almost answered this, I would ask you to expand on it. And I love this phrase that you've used here and intrigues me. Success is more about consistency than being smart, which I just absolutely love. Please explain to me what that means for you.
Alexandra McGuigan 30:46
Well, I mean, if you're on a diet, it's not going to work. If you just do it for six weeks, for example, I mean, it tangible example, right?
You need to be consistently, you need to make good choices every day. And that that is an investment in your health, right?
And so you're not going to I mean, I'm a Chartered Alternative Investment Analyst.
So, like a CFA, but for alternative investments, I, even though I've been around a lot of cryptocurrencies and blockchain, I don't understand it, right?
And so even though there's, there's a lot of money that can be made you that there is risk associated with that, with that, so the risk you're taking, you're compensated with this high return, but I didn't understand it.
And I don't understand the market cycles or anything.
So I just didn't invest in that and so I lost the opportunity.
But I also didn't lose my capital, which I wish I could have easily done trying to chase those high returns.
And so I mean, you can do that with a portion of your money, but don't do it with I would, I mean, my personal philosophy is, you can't invest things in trades like that, more than you're willing to lose, because it is a bit of a casino, right?
Whereas your steady investments that you're paying back your mortgage, you're adding to your pension, or you're or you're adding to your savings to invest in a trading account, if you like, if you if you're interested in in companies and stocks.
And so by all means, about how much time you have to do the research, though, right?
And being efficient with your capital and working within whatever system, you have to maximize your, your, your tax, which means that you have the largest amount of money to play with, and then working out what your long-term and short-term strategies are.
So consistently thinking about it, and tweaking it is, is the way to go, in my opinion, and you're not going to I'm not going to get rich tomorrow. But little by little, you keep advancing and you keep compounding on that.
Peter Higgins 33:02
Absolutely. I'm going to switch gears now, if I may have Alexandra, I want to talk about inclusive asset management, okay?
Amongst many things that refers to the practice of recognizing injustices, such as gender pay gap, implementing and hiring procedures that reduce the risk of unconscious bias, when and why did you set up Inclusive Asset Management?
Because for me, it's probably the main reason why I'm speaking to you now, because of the amazing work that you've done previously, that's led to this catalyst for you.
So just share a little bit of that journey and, and what led you to go, we need to make a difference here?
Alexandra McGuigan 33:45
So I'd like to say it was as altruistic as it sounds, but it's not. I think it's just a good investment opportunity, quite frankly.
But in all truth, I've always been involved in philanthropic causes. I was involved in Philanthropy Australia, and went on a study tour with a group of young people to London and Geneva, in 2015, to try and find my cause.
But really, what I found was that actually, it's just gender equality. And I think that there were I actually, I thought I made a post today, but I don't think it actually went but there in Australia with the superannuation gap, this women end up with 42% less superannuation than men because the system is based on a full life work cycle that doesn't take into account people who come in and out of the out of the workforce.
Now, they've made that change now to say that you get superannuation payments for parental leave.
However, if in 1992, when the government of Australia was setting up this amazing system, and it is an amazing system that has, you know, three, three and a half trillion dollars of assets for 26 million people.
I mean, that's extraordinary. But if they had women at the table, when they set that up, then perhaps women wouldn't be that far behind. Because the women would have said, well hold on a second, I have to have kids. So what's going to happen when I'm on maternity leave and, it's not, I'm not trying to give blame to anybody.
What I'm saying is that better outcomes are created when you have diversity at the table, because more perspectives are considered, right, and you can come up with a solution that actually reflects the people in the society, and not just one group of people.
So that's the first thing, that that is really the case in point for diversity at the board level, at the government levels, and also in funds management levels, you will change outcomes, for sure.
Then within financial services, which is sort of my area of expertise, I set up my business when I moved to Singapore in 2018.
And I consult to fund managers, initially, I mean, they're mostly there, they're linked to sustainability outcomes. But as I said, gender equality is my personal interest and I ended up working with a nonprofit called 100 Women In Finance, which is the largest nonprofit for women in financial services.
And they have a vision to change the demographics of the industry, and to get 30% female investment professionals by 2040.
Now, the number is somewhere about and I did a report on this. It's about 12% and there's lots of other reports, but depending on what asset class you look at, it's between 10 and 12%. And that number seems to be consistent. Where for the last 30 years, so without some specific effort, you're not going to change that number.
But there seems to be that 10% of women who, for whatever reason, choose this industry, and some people will leave and some people will join, but it seems to be consistently around 10%.
And so that's, that's a very small percentage of the number of investors out there.
And so therefore, if you think about outperformance, I mean, it's it is much more difficult to succeed.
If you are a minority, if you are a woman in the room, if you're the young person in the room, if you're black, if you're Chinese, or whatever you are, if you are the minority in that room, even if it's a language barrier thing, it is much more difficult to succeed because everybody else is thinking in this is the way that things are done.
And if you have different needs, it will, it will be more difficult.
So those 10% of women who succeed, I believe, and this, this is also true for likely true for managers from diverse backgrounds, minority backgrounds, we don't have as much data on it. So So I haven't done as much work on it.
But my thesis is, if these women are underrepresented, and they have succeeded to an institutional level, which is three years track record $100 million assets under management and positive performance for three years, then they have succeeded against the odds.
And in order to succeed against the odds, you have to be better than the mean.
So if you filter and you try and find you use a diverse filter, then you can find a subset of managers who have a greater chance of outperforming the market.
And then if you use that, to then pick the best ones, depending on what your mandate is, depending on if you want growth managers, or if you want value managers, or if you want quality manager, whatever you want, you can pick the best out of that category.
And I just think that you are going to get a portfolio that is going to outperform.
So that's why I set it up because I think it's a good idea.
Peter Higgins 39:09
Absolutely. I mean, I was I think I've spoken with very numerous other managers before, female fund managers, and the research reiterates it over and over again that female investors and female fund managers will outperform their male counterparts, you know, and have done historically, the results are out there.
Alexandra McGuigan 39:29
But I think it's important to qualify that and say it is not because they are women that they outperform, but rather, they are exceptional people that you can identify are exceptional investments that you can identify using a diverse filter at this point in time, because there's so few of them. So that's a very important point.
In the future, if we have 30% or 50% women, then I don't think there would be any different because you would have some good women and some bad women and some good male managers and some bad male managers.
But at this point in time, you can use a filter to identify a group of people who have, in my opinion, have a greater possibility of outperforming the market. And that is what institutional investors should be looking for. They're looking for alpha.
Peter Higgins 40:20
Brilliant now, I've just grabbed a piece of research a few days ago, and in the UK, only 12% of the investment trust managers are female.
This is according to the research from the Association of Investment Companies, the AIC, and this figure remains unchanged since 2022, and is in line with the global average of the funds industry according to Citywire data.
However, 41% of infants Investment Trust directorships are held by women up from 36 in March 2022.
My dear friend, Annabel Brodie-Smith, is the Communications Director of the Association of Investment Companies said, and this, this will chime with you, the investment trust industry has made great progress when it comes to gender diversity of the investment trust directors, quotas and targets have helped at the boardroom level with 41% of the investment trusts directors now female, the industry is continuing to address ethnic and other forms of diversity on boards.
But my question is this Alexandra, in your view, what more needs to be done, because there's still a lot of work to be done here?
Alexandra McGuigan 41:31
Well, I think money talks, right? We actually have to get.. I'm not talking about first time fund managers or whatever, what I'm saying is that more institutional capital needs to go to high performance female fund managers who meet all of these requirements.
And if you're an institutional investor, and you're looking at what I would like to see is that we create a database and 100 Women In Finance is doing a good job of this.
They have a database in a platform called Clade.
And in that platform, that they have women and diverse managers, etc, so you can search for those managers.
But what I would love to see is that every mandate that is being given out or where there, where there is an RFP, etc, that, that diverse candidates have to be included in the lineup of people considered right, if there is someone out there who fulfills the minimum criteria, then they have to have someone, at least in the RFP process stage, now, they may not be the best person for the job, they may not be.
But if you're not considered, then you can't get the money. So I think that we have to hold ourselves to a higher standard, in terms of that the money is managed by people who represent the people whose money it ease, right?
It's your money, it's so you know, I want to I want to have women managing my money, because they understand that I think differently, or I care about things differently, or I don't know, I just think that they should do that you're going to have different ideas, and it's probably going to mitigate some risks that the men are going to take.
And, and it would be it. This is not about one versus the other one.
But it is about representing the people whose money it is, with the best people possible, right?
So you have the fiduciary responsibility to get the returns.
That's the first thing because if you're cold and hungry, then you don't really care if climate change is happening tomorrow, you want to make sure you have enough money for a blanket and some food.
Right?
So that that is the first and most important thing for that for the pension funds, and for the sovereign wealth funds to make sure that they have enough money to look after the people, right?
But in order to get the most amount of money, then you would probably need to consider what the needs of those people are. And I think that would come like we're coming… here’s my husband.
He's peering into see if we're still we're still talking. He's waiting for his dinner.
But sorry, I lost my trail of thought, but we haven't, we have to get to a point where we're actually making sure that the perspectives of all people are being considered.
And I think that that we're getting to a good place of that. But one thing that I think would be an extremely helpful thing would be if they had that search criteria, where if they could find somebody and they should be able to find somebody because now we have these databases where and women and minority fund managers are actually difficult to find that is part of the problem, right?
Whereas now if we're actually saying, well, there's a list of them, you know, at least make sure that that if you're doing a credit mandate that you look on the diverse database list and see what credit managers are, and if they meet your minimum criteria, then say, say include them in the RFP process.
And if they're not, maybe give them some feedback as to why they're not or when they'll be ready.
And so, so, that's a lot probably to ask for people who were trying to manage money and do the RFPs, and whatever.
But and that's probably a second step.
But I think the first crucial step would be to have some kind of quota and some kind of accountability.
You couldn't find them. But where did you look? Show me where you looked? And have that kind of due diligence or agreement where the board says, you know, prove it, prove that you tried to find them?
Because I tell you what people say a lot of the time, I can't find any good women just come and talk to me, I know them all. If you look on my LinkedIn, they're all on my LinkedIn. So if you need a woman just come to me, I'm the woman's woman.
Peter Higgins 45:55
Brilliant, love that, I love that phrase.
Now, I'm just going to hammer this over a bit more, if I may, because in 2020, the US Securities and Exchange Commission, Chief Gary Gensler said asset management industry is not doing a good job on diversity. Couldn't say any bold than that.
What have been the improvements that you've seen regarding diversity, inclusivity, across the asset management industry in the US, for instance, since that statement in 2020, have there been some improvements?
What have you seen, you know, who can you champion that's doing the work over there?
Alexandra McGuigan 46:30
So look at some amazing people in the US.
I don't spend a lot of time into the in the US personally, to be honest, but there is a group there called IADEI, Institutional Allocators for Diversity, Equity and Inclusion.
They are an amazing group of people, a man named Robert Berry and Stephanie Weston from the Rochester Endowment, were two of the founders.
And also Trinity Wall Street, Sophia Tsai, who I've had the pleasure of speaking with on a panel, they are part of a group, this group that leads 400 institutional allocators who are really looking to put their money where their mouth is, and to allocate to more diverse fund managers.
So they on IADEI, website, if you're a diverse manager, you can sign up to that.
And you can add all of your fund information and they have pitchers, so every second month, they have a pitch. And they invite mostly it's private markets, but they but anybody can put their information in, I believe.
And so that's the first thing. So getting all of the information in one place, where institutions can then go and search for what they're looking for is key.
Organisations like 100 Women In Finance are doing amazing things. There is a group called sorry, there's Girls Who in Invest the UK as a group, but then there's another group in the in the US.
I can't remember the name off the top of my head. It's just escaped me for the moment, but it's a group that that really is trying to build the next group of young female investors.
So there's lots of different programs that are happening at different levels of the process.
Now we need to we need to build the pipeline, but we also need to get existing money to existing managers, because once that happens, then more women will actually stay in the industry to be honest, because, you know, I mean, even if, I mean, as much as I advocate for this, even sometimes I'm like, maybe it's, maybe I should just give up, but then when you just can't, you got to be consistent.
Got to go, otherwise, what are you going to do?
Can't do anything so, so consistency, is it but there, there are some really, there have been a huge amount of changes in the last couple of years, certainly, with those organisations.
Peter Higgins 49:04
No, I love the fact that you've continued to actually push and push and also, you've been a passionate advocate for upskilling.
And continuing your your development, you speak various languages, you've done various different courses, and all the rest of it.
But I want to just for the moment just for you to share this wonderful journey that you had with CAIA, and how that's that came about.
And again, you just saw an opportunity to go, I'm going go for that. You know, and I think that's such an inspiring lesson for all women and others out there to go. Never doubt yourself, always back yourself, you know, and go for it.
Alexandra McGuigan 49:39
Yeah, so that was actually quite funny. I was at a conference and David George, who was the CIO at the Future Fund or the deputy CIO. Anyway, he was he was very Senior at the Future Fund, which is Australia's sovereign wealth fund. And I knew he was the chapter executive for CAIA, and I like studying and I like education, etc.
So I said, oh, you know, I'm thinking of doing it and he was like, oh, you should do it, you should do it.
And I was like, oh, okay. All right. So I applied for a scholarship with, with 100 Women In Finance, and I won the scholarship. And I was like, oh, well, now I really have to do.
And then so I, yeah, I won the scholarship.
So I had to do it and so I did.
And I just found it to be absolutely fascinating, and the most relevant education that I'd ever had, because it was just so focused on exactly what I was doing.
And so, I mean, I've had the great privilege of privilege of traveling with some, some just the most amazing portfolio managers and, you know, spending time with people managing $18 billion, and stuff like that, and sitting on planes and in taxis, and I mean, the education and if you're curious and you ask questions is quite exceptional.
But the CAIA really filled in in the gaps for me, and I'm still heavily involved.
I'm Chapter Executive in Singapore, I promote a speaker I'm speaking at the university, one of the universities here in a couple of weeks on sustainability and private markets, etc.
So it's just the other thing, in order to your point about, you can just do it. I actually, years ago, I stuffed up a presentation that I was doing. And I've always used to do acting and training and stuff like that.
And I've always prided myself on being quite quite a good public speaker. And I just completely bombed this presentation that I had to do. And after that, I was like, You're too cocky, you have to practice. And so after that, I made a decision that every time I was asked to speak, if I could do it, I had to say yes. Because you know, some of the time, there's only 10 people in the room, some of the time, there's 20.
But the more you practice, and the more you get comfortable with being uncomfortable. The more confident you are, the more the more you start to learn about your narrative, what you want to talk about you don't.
So you practicing all the time, right? And doing so in in low stakes environments, means that when you actually have to present at a big conference that your work wants you to present to or whatever, you have the confidence to speak with that. So that's another, I would say that you just got to go for it. And if you win the scholarship, you definitely have to do it.
And if you tell someone like the CIO at the Future Fund, that you're going to try to do it, then you better try.
So you got to you got to follow through, I would say but certainly if, and that's why we're talking today.
Certainly if someone gives you an opportunity to speak then then you, you almost certainly have to say yes, because that will help you to develop your skills.
And I mean, at the moment, well, I mean, you're going to post this afterwards, but right now, it's just you and me talking. So it's kind of it's a nice environment.
Peter Higgins 53:01
You’ve done absolutely phenomenally well.
I truly believe you were an you're an amazing articulate intelligent, inspiring individual, Alexandra.
And so I think now is probably a really good time for us to talk about your achievements, what you're most proud of, and just, you know, in the fact that you're continuing to blaze the trail for diversity, and inclusivity across the asset management industry.
So just please share with us some of the, you know, some of the recognitions and gongs that you've got?
Alexandra McGuigan 53:29
Well, I'm going to have to, I remember someone asking, I asked someone that question once in an interview, and I said, you know, what's your most proud achievement? And he said, being a father. And at the time, I was like, oh, come on, that's so lame.
I'm a mother of two boys.
And married to a very egalitarian Scandinavian man.
And so teaching our children and boys that women work and that women are valued in the same way as boys, I think is probably my most important work.
In terms of achievements, I obviously raising multiple billions of dollars is a huge achievement. I remember once I was I set myself a goal to raise a billion dollars for one of the fund managers.
And at the time, I mean, I had really had no idea what that would have entailed.
And someone was saying why, like, why are you why would you do a billion dollars and I was like, well, it has so many zeros like I don't even know how much money that is.
Seems like a reasonable target at all. And so then I just kind of chipped away at it and and I got there and then the fund manager. This was actually quite funny.
I went into the office in London for the first time and they introduced me as the billion dollar girl.
And so that was, that was quite the achievement raising my first billion dollars, I mean, raising your first tickets at all is is very exciting, but raising a billion dollars and then and then multiples after that, but, and then also championing the women's cause, and helping to promote that.
I mean, as I told you, I, I give my money to other female investors and other investors, because I believe that they're excellent.
And I think it's really good that it just would be the easiest trade in the world.
Like institutional investors, they give a lot of money to do a lot of tricky stuff.
Whereas if you could just find some highly skilled managers who continue to give you returns on a consistent basis, that should be what you're looking for. So come and talk to me.
Peter Higgins 55:54
Absolutely, I am is where it's all happening.
Now, I'm conscious of that I’ve had you on here for a little while, and your husband's waiting for you.
So I'm going to try and squeeze in two more questions if I may.
I'm a big believer in a person being true to their authentic self, which clearly you are Alexandra and not trying to conform to industry stereotypes in order to to fit in or to be successful.
Please, can you share with us, one of your most nonconformist success stories that you've met? Or have seen in the asset management industry in recent years?
Alexandra McGuigan 56:53
Yeah. So I mean, I don't know why I didn't even jump at that question immediately.
Because for the last two and a half years, I've been building a product called The Woman Fund for an Institutional Investor based in Singapore.
And what we see as the main problem for female and probably diverse fund managers is that not that they have, they have less networks that they get less money when they start, right, so so that makes it difficult for them to grow.
And then if you have, if you have sub $100 million, you're not really considered institutional quality, because these guys are so big. And these guys are so small, right?
So it's impossible for these guys to access the alpha of these guys, even though they're very good.
Because it costs them money, eventually, there's a break-even point where they can say the minimum amount of money that I can invest to get value out of that investment, is $100 million, or $200 million.
So what we see is that even though there's 10, or 12%, female fund managers out there, it's 10 times more difficult for them to raise assets.
So women are minority fund managers, men, women and minority owned fund managers in the US. So it's not quite apples for apples, but they manage less than 1% of the total assets in the USA.
Now, what the reason for that is, I don't think that it's all about unconscious bias, necessarily, but they get filtered out of the allocation process, because they are disproportionately in this emerging managers, no man's land, let's call it right.
And so you can find in this area of the sub $500 million fund managers, you can find some very, very high quality managers that have proven track records that have good pedigree that have low correlation to other strategies, all of these nice, wonderful things.
But the only thing that makes them emerging is their assets under management, right.
And so so what you can do, and what we've tried to develop is a vehicle to enable these guys to access the alpha of these guys, but rather than a fund of fund, which was sort of the historical way to do it, which people don't like, because it's expensive, because it's illiquid.
It's not transparent, all of this kind of stuff.
What we've decided to do was create a fund of mandates. And so that is a vehicle where these guys can put money into a fund they can put in their $200 million, $100 million, whatever they want to put in.
And what we have is essentially six segregated managed accounts of have female high performance female fund managers who manage a portion of that capital but within this vehicle already, so the most of the money is safe.
It never leaves it never leaves the custody account. It's risk managed because there is an additional layer of trading pre and post trade compliance. It's cheap, because we don't have to. We just have one fee for the fund that is shared between the underlying managers and this manager.
And it's fully transparent and fully liquid.
So I think that we've made something that is quite unique and quite amazing that it would be as far as I know, the first fund in the world that that has been created like this, there are institutional investors who, who have individual mandates like this. But they don't, there is not a fund vehicle as yet.
So, so that's what I've been working on.
It is the thing that other people have said to me, why hasn't anybody else done this? And I tell you, it's because it's been a lot of hard work.
A lot of work to figure out how to do it and what just took me like two minutes to articulate to you took two years to figure out and how we would do it in a in a vehicle and legally, and then actually set it up.
And it's been lawyers and administrators and tax people in all of the best of the best. And I have to say the service providers that I've worked with are second to none.
So, so yeah, so that would be the unconventional thing.
Sometimes it's hard to get people across the line with an idea, but this is, I mean, it was interesting, we didn't use any sustainability criteria to identify the underlying managers, because we just wanted it to be about the financial returns.
But actually, when we did, we used a group called Mata and amazing Danish FinTech, I would give them a plug as well. They did the analysis for us to to do the sustainability work.
And when, when we basically you put the portfolio in and it spits out like 150 page report.
And I mean, when I went through it with the co-founder and COO Emil, he was like this is like quite incredible, because you usually have to give up one thing to get another but the performance and it is I have to say it's it's bad, what's not backtested. It's a paper portfolio of the aggregated funds, but it is their real performance like they have actually invested and made this money.
But we aggregated it with their data. But it outperforms the market it outperformed the MSCI World ESG index.
And it outperforms on CO2 emissions and sustainable development goal alignment.
So not only does it seem that these men and fund managers outperform the market, but they do so more sustainably. So maybe if we invest with women, not only can we get better, better returns, but we can also save the world while we're doing it.
Peter Higgins 1:02:40
Fantastic. I love that story, that's my next question. I've got a question in there now is when does it launch? And how do I sign up?
Alexandra McGuigan 1:02:50
Imminently send, send inquiries this way, send inquiries this way!
Peter Higgins 1:02:56
I most certainly will. Fantastic, no, you'll have to come back on once it's launched or has been running for a year we'll have to come back on we'll have to do just to talk about the fund.
And obviously we'll have a name for it them. But by then as well to tell us about.
Alexandra McGuigan 1:03:12
I will introduce you to all of my underlying managers because they are all exceptional.
And they all do things in very different ways.
So I'll give you I'll give you some amazing female investors to talk to.
Peter Higgins 1:03:24
Brilliant, thank you ever so much for that now I'm conscious of the time so I'm going to ask you one final question as I do, thank you for indulging me with us.
Right, so to all those female undergrads studying and considering a career in asset management in the asset management industry, what are your impassioned words and guidance to them? On this eve of International Women's Day, Alexandra?
Alexandra McGuigan 1:03:52
I think explore all at works. First of all study maths, have to keep studying maths because it will give you opportunity.
And you don't have to do maths in your day to day job.
But having those finance economics skills, make sure you have a broad set of skills.
So you can really find out what it is that you want to do with your life because you know, life's not fun if you're not enjoying your work.
And that's for sure.
So I would definitely encourage that if you are interested in investing and knowing about different organisations I can I can give a list to you Peter of different organisations in different regions that that students might like to reach out to help them find opportunities, mentor opportunities, all that kind of stuff.
And I just say just go for it. There's never been a better time to be a woman in finance and there are infinite people looking for talented, hardworking individuals. So if you want to work hard and are interested in the field then there is limitless opportunity for you.
Peter Higgins 1:05:05
Fantastic. I love the phrasing that you've put there for that and I'm not feel there's going to be another you know, Alexandra McGuigan take 2, in another 10/15 years going, because I listened to that interview.
I was inspired. So thank you ever so much for joining me today.
Ladies and gentleman, women's diversity inclusivity champion, Alexandra McGuigan, again, the CEO and founder of Inclusive Asset Management has been your guest on this podcast today.
Thank you ever so much for joining me and Alexandra. Enjoy the rest of your week and a fantastic International Women's Day tomorrow.
Alexandra McGuigan 1:05:46
Thank you so much for having me.
Peter Higgins 1:05:47
Take care. God bless you.
London South East 1:05:50
Thank you for taking the time to listen to investing matters. Be sure to check out the London South East website for free tools and info to research your next investment. You can also join in the conversation on our social media channels. And don't forget to subscribe to our YouTube channel for more content, including our CEO interviews. Catch you next time.
