83: David Brown – Unlisted Assets and Cook Islands Super

[i3] Institutional Investment Podcast

David Brown is the Chief Investment Officer of the Cook Islands National Superannuation Fund. David is also well known for his involvement in the private asset markets in his previous role as Head of Private Markets for Victorian Funds Management Corporation (VFMC). In this episode, we cover both the unlisted space, his time working with Leo de Bever and the unique set of circumstances when investing for a Pacific pension fund. Enjoy the Show! Overview of Podcast with David Brown: 02:00 Starting out in an intern role at ipac 03:00 Moving to London to work for Standard Life 04:00 Looking into private markets for QIC 05:00 Private market implementation has to be top notch or forget it 06:00 We had a wide variety of clients, including an order of nuns who had a very long investment horizon; until Kingdom come, literally 07:00 Moving to VFMC to build a private markets team with Leo de Bever. 08:00 The private markets program was eventually shut down, probably for political reasons, but I think I earned other people quite a few bonuses 10:00 Private equity has proven to be a powerfully positive part of portfolios but there was a time when we had to make the case for it and boards were very skeptical about it. 11:00 Private equity challenges people who come from an efficient market hypothesis background. It is not a perfect market and it is the alpha of change 15:00 If there is not much you can add to an investment, then it is a commodity and you shouldn’t pay much for it. 16:00 If you are brought up in an efficient market hypothesis framework, then it is very hard for them to think of a market where there are information asymmetries and where the investor is effective change by being present. 18:00 Cultural differences between listed and private market teams and the challenge it poses to total portfolio management. 21:30 The water cooler discussion between listed and private equity specialists breaks down because the experience is so different 22:30 Getting involved in the Pacific region 25:00 My role was really about governance. Even in Australia and New Zealand, the attitude that company directors are part of a special club existed not that long ago 28:00 Revisiting risk in the PNG economic context was difficult 32:30 Taking on the CIO role at the Cook Islands National Superannuation Fund 34:00 If you take the good thinkers on governance – The Thinking Ahead Institute, Keith Ambachtsheer – their thinking was something the Cook Island board very much had 36:00 We have many retirement conferences in Australia trying to figure out what our retirement solution is, whereas the Cook Islands figured this out 20 years ago 37:00 We’ve gone to a reference portfolio approach 40:00 Members demanded options. Have they actually exercised their choice? 41:00 Right now, about 85 per cent of members are in the original defaults, so people have moved 46:00 Getting involved in member education in the Cook Islands 48:00 Sharing insights between island funds 50:00 On the joint venture capital fund 55:00 Do you incorporate ESG? It is often seen as a rich country’s problem