EVESTMENT INSTITUTIONAL INVESTMENT INTELLIGENCE CONFERENCE

Transcription

1 EVESTMENT INSTITUTIONAL INVESTMENT INTELLIGENCE CONFERENCE 2018

2 Competitive Intelligence Through Public Plan Data Debbie Gregory Head of Market Intelligence, evestment Russ Elliott Solutions Specialist, evestment

3 AGENDA Why Public Fund Intelligence Matters Understanding Trends Where Are Mandates Going? Board Room Discussions Sourcing Opportunities Consultant Thinking Portfolio Changes Identifying & Winning Opportunities Qualifying Developing Story Fees Matter Nurturing Relationships

4 Why Public Fund Intelligence Matters

5 Building Trust with Public Plan IQ Data MYTH: Public Funds are not a focus for our firm, so any associated content is not relevant for my firm or my role. REALITY: Over 50% of the content within the Public domain is authored by either a Consultant or a Manager.

6 Building Trust with Public Plan IQ Data The data below represents the 15 largest Global Consultant Firms (as of 2Q16 P&I) and the respective client base by Geography and Market Segment to whom they advise: Client Segments Client Base Outside North America Consultant PPIQ Content Public Funds Corporate Healthcare/Not-for-Profit Private (Taft-Hartley 529/DC E&F Insurance EMEA Asia Mercer Y x x x x x x x x Aon Hewitt Y x x x x x x x x Russell Investments Y x x x x x x x Cambridge Associates Y x x x x x x x Callan Associates Y x x x x x Willis Towers Watson Y x x x x x x x x Nomura Securities N RVK Y x x x x x x Pension Consulting Alliance Y x x x x Wilshire Associates Y x x x x x x x NEPC Y x x x x x x x x Meketa Investment Group Y x x x x x x x Pavilion Advisory Group Y x x x x x x x x x x Rocaton Investment Advisors N PPCmetrics N Client Segments Consultant PPIQ Content Public Funds Corporate Healthcare/Not-for-Profit Private (Taft-Hartley 529/DC E&F Insurance Hymans Robertson Y x x Allenbridge Y x x x x x Barnett Waddingham Y x x x Jardine Lloyd Thompson Y x x x NEW (UK Focus)

7 Understanding Trends

8 Understanding Trends: Where are the mandates going? Public Markets Strategies Under Consideration 2016 Equity Strategy # of Funds Emerging Markets 31 International Equity 24 US Small Cap 16 Beta Strategies 15 International Small Cap 10 Fixed Income # of Funds Emerging Markets 15 US Core 11 US Short Duration 9 US Core Plus 8 US High Yield Equity Strategy # of Funds Global Equity 15 US Small Cap 14 International Equity 13 Emerging Markets 12 International Small Cap 12 Fixed Income # of Funds US Core 14 Emerging Markets 11 US Core Plus 8 US Short Duration 8 US High Yield 7

9 Understanding Trends: Board Room Discussions

10 Sourcing Opportunities: Consultant Thinking

11 How are consultants advising their clients?

12 Emerging Market Debt

13 How are consultants advising their clients? Ohio PERS, December 2017 Fresno City, January 2018

14 How are consultants advising their clients? Rhode Island, January 2018

15 How are consultants advising their clients? LA City, February 2018

16 Sourcing Opportunities: Portfolio Changes

17 Sourcing Opportunities

18 By the time the RFP comes out, it s already too late.

19 Earlier Identification: Monitoring Proposed Asset Allocation Changes

20 Earlier Identification: Monitoring Structural Changes

21 Identifying & Winning Opportunities: Quantifying

22 Louisiana Teachers Considers SCG Search July 6, 2017

23 Louisiana Teachers Incumbent Manager Performance

24 SCG Manager Louisiana Teachers Incumbent Manager Fees

25 Louisiana Teachers Incumbent Contract Expiring, Potential Replacement

26 Evaluating Managers

27 Louisiana Teachers How They Evaluated the RFP Respondents

28 Louisiana Teachers Why RFP Respondents didn t make the short list

29 Louisiana Teachers Key Decision Factors

30 Louisiana Teachers How the Finalists Tell Their Story

31 Consultants Evaluate Managers Differently

32 How are consultants evaluating managers?

33 How are consultants evaluating managers?

34 How are consultants evaluating managers?

35 How are consultants evaluating managers?

36 Fees Matter

37 Fee Compression

38 Fee Compression

39 Fee Compression

40 Fee Compression

41 Louisiana Teachers US Small Cap Growth: Management Fees (Negotiated) Incumbent Manager Stated Fees Incumbent Manager Actual Fees VS Based on mandate size, represents a 6% discount!

42 US Large Cap Growth: Management Fees (Negotiated) Incumbent stated Fees Actual VS Annual Fee on all Assets: Based on mandate size, represents a 46% discount! 42

43 US Large Cap Growth: Flat Management Fees (Quoted) SA: Basis Pt. 10mm SA: Basis Pt. 25mm SA: Basis Pt. 50mm SA: Basis Pt. 75mm SA: Basis Pt. 100mm SA: Basis Pt. 200mm SA: Basis Pt. 500mm Data as of Q for Segregated Account, source evestment Analytics, evestment universe: US Large Cap Growth, # of observations: 631

44 Of the 33 observations within the US Large Cap Growth manager universe, 28 (or 85%) discounted off their standard published fees.

45 US Large Cap Growth Discount Analysis 0% % Discount off Stated Fees 0-10% 10-20% 20-30% 30-40% 40-50% >50% Avg Discount (off Standard Published Fees): 17.9% Count Data as of 10/5/17 for Fee Disclosures US Large Cap Growth fee disclosures in PPIQ # of observations: 33 (excludes performance based fee arrangements)

46 US Large Cap Growth: Management Fees (Standard) Mgmt Fees (%) Data as of 10/5/17, source: PPIQ, # of observation: 33 Mandate Size ($m)

47 US Large Cap Growth: Management Fees (Negotiated) Mgmt Fees (%) Managers/ strategies that did not discount Mandate Size ($m) Data as of 10/5/17, source: PPIQ, # of observation: 33 47

48 Nurture Your Relationships

49 Tracking Your Clients

50 Monitor Your Relationships How does the performance of the mandate that you have with a client stack up in the context of their broad portfolio?

51 Monitor Your Relationships What implications will these changes have for existing managers?

52 Monitoring Watch Lists

53 Monitoring Watch Lists

54 Potential Implications of a Consultant Change

55 Potential Implications of a Consultant Change

56 Potential Implications of a Consultant Change

57 Take Action

58 Provide Thought Leadership and Market Insights Be A Source of Value Add

59 Provide Thought Leadership and Market Insights Be A Source of Value Add

60 Provide Thought Leadership and Market Insights Be A Source of Value Add

61 What can you do Monday? If you d like to dig deeper or see some examples relevant to you, please visit the Public Plan IQ kiosk located in the hall Complimentary access If you are a Public Plan IQ client, set up alerts