Aoifinn Devitt: Our next guest is an original thinker on the LGPS officer circuit and may just be a real-life Ted Lasso. Hear about his passion for football, for supporting the underdog, and for getting to the nuance of sustainable investing, pooling, and today’s investment opportunity set. This podcast is part of a special collaboration between 50 Faces Productions and Crispin Derby Limited. I’m Aoifinn Devitt, and welcome to the 50 Faces podcast, a podcast committed to revealing the richness and diversity of the world of investment by focusing on its people and their stories. I’m joined today by Paul Giliotti, who’s Assistant Director Financial Services at Richmond and Wandsworth Councils.. He’s had a long career in local government and is a frequent participant in discussions around levelling up and LGPS pooling. Welcome, Paul. Thanks for joining me today.
Ted Lasso: Thank you, Aoifinn. Pleasure to be here.
Aoifinn Devitt: Well, let’s start with your background and career journey. Can you tell us where you grew up, your early interests, and how you came to enter the local government arena?
Ted Lasso: Yeah, by all means. So it’s sort of a mixed bag, really, for me. So early years, sort of thing. So I am officially a cockney. I was born in Homerton Hospital, so I can actually put that claim to fame, but family soon moved out to Enfield when we were— well, I was extremely young, and then we moved to Africa. So I spent some time in Zambia in my early sort of years, just, you know, around between 3 and 6. My dad, he was an engineer and he was looking after some of the copper mines out there. So we moved back and then relocated to Hertfordshire, where I spent most of my sort of childhood before then going on to university. As a child, I was pretty much the same as most people, really. It was, we weren’t into necessarily gaming in the same sort of ways as they did nowadays. Biggest frustration for me was I only had a BBC computer, rather than having sort of like the Commodore 64 or Spectrum, which everyone else had. So I think my parents were hoping I’d become a computer programmer, but it wasn’t for me. But so I then started out and ventured into other aspects. So I liked most sports, but was more of an armchair fan really than actually active apart from swimming and hockey. And then that sort that sort of, of tempered off as you get older and you move into different things. But in a working environment, how I ended up going into local government, well, that was pretty much by mistake really, in a way. And it wasn’t really an aspiration or a key aim. At the time I was a financial advisor, but the role meant that you were working long and sociable hours. But I had a daughter about to arrive. And it was more of a, can I find a more of a traditional 9-to-5 type role? I wanted it to try and be somewhere in financial services to a particular section or element of it. And just took really, to be honest with you, the first job that came along, which happened to be Wandsworth Council in their pensions administration team. So like I said, it wasn’t planned. It wasn’t a real ambition or an aim, but that was in year 2000. And I’m still here now.
Aoifinn Devitt: Well, I just want to go back over one or two things there from your childhood. Really interesting to spend time in Zambia. Now, obviously you’re very young, not sure how much of those years were formative years, but did you take anything with you from those years, whether it be memories or what it’s like to live in a, in a very much a frontier market?
Ted Lasso: Like you say, I mean, I was, I think I was 6 by the time I came back, so I don’t really remember too much about it. I remember going to school I went to what’s known as the Wantra Trust School, and for me it was just normal. I mean, you know, we’re in a scenario whereby if you’re thinking about EDI nowadays, the school I went to was very mixed. It was, bearing in mind we are looking at a lot of expats being there, and it was, you could say, you know, it’s coming out really of colonial-type rule, but the community over there was integrated. Like I said, I went to the local state a base school where you had people from European backgrounds and also from the, you know, the local towns. So from my perspective, I went, you know, and grew up in a very much of a different culture to what most people would perceive to be when you’re going out and you’re living in that different lifestyles. So probably take that away in coming out, and basically we’re all the same ultimately, and therefore you should treat people how you’d expect to be treated, and it doesn’t matter what your background is. It’s how you treat others and what you do with your life going forward.
Aoifinn Devitt: And then your name, Gugliotti, is not a common Cockney name, even though you said you may be pure Cockney. Can you give us a little color on where that name came from?
Ted Lasso: Yeah, so, but it’s, it is relatively unique at this present moment in time, bearing in mind both my kids are not in the country at the moment. There’s only 4 of us in the UK. With her name purely spelled the way that it is because it’s an Italian background, but it’s not spelled the same. My grandfather, I think the first documents that he ever had was his army papers when he served in the war for Britain, and the army didn’t know how to spell his name, and they wrote it and spelt it incorrectly. And hence why we managed that with a surname spelled the way that it is.
Aoifinn Devitt: Well, it’s always been a question for me, so thank you for putting that to bed. Looking now forward into the LGPS world, so we came across each other on the LGPS circuit and pensions occupy a lot of your time today. Would you say you have any key investment beliefs, or what’s your approach to pension fund investment broadly?
Ted Lasso: So broadly, it’s separating your own internal philosophies and what you do with your own money to what you do on an institutional basis. We’ve got to remember we’re local government, so the risk appetite for us in general has to be different than what it would be if you’re either in full commercial terms or if you’re investing individually, because we’ve got to protect the public purse. But one way you can protect the public purse is not to be frightened of taking risk, because if we do and all we want to be is ultra-conservative, we’re going to end up costing significantly more. Because there’s only two ways that we’re in a position whereby we can actually pay for the pensions that we’re paying out for. It’s either through contributions or through investment returns. So we’ve got to make sure that we invest wisely, that we try to invest responsibly. And I don’t necessarily mean from an ESG perspective. I mean from a risk appetite in trying to ensure that there isn’t significant amounts of volatility because every 3 years we have to rebase our contribution rate. And one of the challenges that financial directors have is ensuring that they’ve got sufficient amount of contributions to pay for on your payroll, because if you don’t get that right, two impacts will happen. Either you’re going to have to look at your staffing levels or the services will be impacted. So yes, so from what my belief really is saying, it’s a measured growth approach and ensuring that you try to preserve capital as much as you possibly can. But more and more of us are moving in towards negative cash flow positions. So therefore you’ve also got to try and style it in a different way that you’re not just balancing up growth, you’re actually generating sufficient income to basically meet those shortfalls rather than be reliant upon selling assets at an inappropriate time.
Aoifinn Devitt: It’s interesting, many issues there coming up. Would you say that you have— these beliefs have evolved over time? You mentioned tracking your cash flow position, maybe tracking a recognition of the need for more income to flow out of the portfolio. What has that meant in terms of the asset classes you’re prepared to look at?
Ted Lasso: Yes, substantially different to what I inherited. So part of the reason why I took on this particular role was, like many authorities, we’re going through change, looking to downsize. And we reduced the number of assistant directors that we had. So Bob Claxton, who many people who are listening to this would probably know, did the role on the pension side before me. So we knew that this was going to be a transition point. So I started tracking and working with him for about 6 to 9 months prior to him taking redundancy, early retirement. And during that period was the first time we looked to change because Originally, the portfolio was solely equity and bonds, but we needed to generate more income. So the first change that was made during that period was taking some of the money out of traditional bonds and moving into multi-asset credit to get some additional income. Subsequent to then though, I had to merge two pension funds. One of the first things I was doing was again taking over from the work that Bob had done before, but finishing it off was bringing the two Richmond and Wandsworth together, and that meant that we got additional set of assets that came across because Richmond no longer has a pension fund, so their assets and liabilities transferred to us at Wandsworth, and that meant that we inherited a property portfolio. So that brought with it another good sort of yielding generating assets. But subsequent to that, we’ve also now moved into private debt and infrastructure. And the most recent thing that we’ve done, which is a subset of infrastructure, is energy transition, as we become more and more focused on trying to generate those returns in a more sustainable manner.
Aoifinn Devitt: And how do you see the trade-off between risk and return? Clearly, you’re focused on the negative cash flow, you know you need to generate a return. There might be other groups out there touting de-risking, perhaps because of where funding level maybe has got to. Can you share anything about your funding level and where you currently come down on that risk-reward debate?
Ted Lasso: So we report 116% as our funding level, and the reason why I phrase it in that way is that that’s after we’ve taken 10% off. So when we do our valuation, the top 10% of our assets get moved into an asset shock, a liquidity shock reserve. So that’s one of the things how we protect it. So 10% of assets are not even looked at and considered in calculating our valuation, which means that when we had the big drop in funding post-COVID, when someone said to you, how are we impacted? What strategy changes would you need to make? Is there anything that you’re worried about? The answer for us was no, not on an asset basis, because the fall in value was covered by that 10% that I’d put to one side. So that’s one of the measures that we have. We look at putting some risk protection in. The other one is when we look at our discount rate, we have a prudence level. That we basically put into our model, which allows us then to have that sort of buffer. So that’s one of the sort of styles that we do to allow us some flexibility on volatility on the flip side. So we are still heavily invested in equity, we’re currently 60%, and we’ve still got a reasonable weighting towards equity-like products like infrastructure, purely and simply because people joining today could easily be still requiring a money out of the pension fund in 80 years’ time. So we can’t afford to take too much risk off the table, but it’s how you go about it, how you measure and how you balance it off really with regards to some of the returns. But we don’t go aggressive. So when we looked at private debt, we weren’t looking at double-digit returns when there were people championing them, those sort of numbers and figures. We looked more around the 5 to 7% return level. And also when it came to infrastructure, we focused primarily on brownfield-type investments, secondaries, rather than a real high, long sort of J-curve and greenfield developments, because I was more interested in capital preservation with a small level of return, but yield-generating assets.
Aoifinn Devitt: And looking forward now, what’s on your mind? You mentioned infrastructure. Clearly, that’s a big part of the Levelling Up initiative. What is your positioning or how you think that will evolve, the levelling up suggestions and what that means for how you invest, as well as any sustainability or net zero targets?
Ted Lasso: Yeah, I mean, I think the term levelling up and some of the language that’s been used by government is a distraction because we’re doing it already. 5% allocation to local when local means UK. I’ll be surprised if there are more than a handful of funds that couldn’t already tick those boxes off. If you look about what we’ve got with our property portfolio, with our infrastructure portfolio, and with what we’re now going to be doing with energy transition, you can easily get those sort of numbers. So for me, it isn’t necessarily around playing the game to meet government targets. It’s looking at ultimately what’s best for your individual fund, and some of those things will naturally flow from it. Like I said, we’ve just gone and we’re looking at investing $80 million in energy transition. Two managers, one of them is US-focused, the other one is Northern Europe, but primarily UK. We’re hoping to make an announcement in the next sort of week or so with the first deal that we’ve done. So I’m the cornerstone investor for one of these investments, which is obviously new for us, but it does mean that you get more of an insight as to what’s going on and what assets are being procured. And the one that we’re, like I said, we’re hoping to be able to discuss in more detail in the next week or so is very local. It’s in South UK, and it will help generate not only positive news for the environmental issues, but is also working in affordable housing as well, because it’s to help improvements in that particular area. So all of that was not done based on the Levelling Up agenda.. It’s based on what is right for our fund. And that’s why I say it’s a distraction, because if people get focused on that, they’re looking in the wrong way. You’ve gotta look to generate the right return on the right risk profile for their individual fund. And there’s 80-odd LGPS funds. We’ve all got different short-term targets and then, and doing things in a slightly different way, but we’ve all got the same long-term objective, and that is where the last pensioner in the fund dies, you pay out your last penny. If you’ve done your job right, that’s how it works. You ramp it up whilst know, you, you you’re in the— you’ve got the early stage of a pension, but as it becomes more and more mature, you start paying out more. But if we’ve got loads of money left at the end, well, we’ve been too aggressive. And once we’re on another side, if we haven’t got enough money, we haven’t been aggressive enough with regards to investment strategies or We’ve judged it wrong because we haven’t set our objectives in the right way.
Aoifinn Devitt: We are now going to take a short break to speak with the sponsor of this series about what it is that makes them unique. I sat down with Tom Raber of Alpine Capital. So Alpine Capital has a unique business model that you call reverse inquiry. Can you tell us what reverse inquiry means?
Speaker C: When we were marketing or softly marketing funds, we realized that some institutional investors felt that they were being pushed and every call was the same as the one they just had. And we felt that we had to have another approach to institutional investors. And so we tried to really go behind the scenes and ask them, what exactly are you looking for if you had a dream scenario and you had an opening in your fund? What would you like to have and how would that fund look? And when we got investors to open up and explain to us what they wanted, we then took down all the information we needed and we went out into the market. It’s a pull sale rather than a push sale. You’re actually helping the investor finding something that’s better than they thought they were looking for in the first place.
Aoifinn Devitt: In terms of your client base, so you work with a lot of Scandinavian and Northern European institutions. Is there anything on their mind today?
Speaker C: We opened an office in Stockholm last year. We have Nordic roots. We have obviously Nordic-speaking people in London as well. We’ve covered the region for many years. Yes, we know it very well. What are they looking for? What’s happening up in that part of the world is that they’re a leader in anything that’s ESG. And impact. Some very large institutions have decided not to do anything at all unless it’s completely impact, completely green. Everyone is looking for good, well-performing private equity and private credit funds, and we’re fortunate that we’re working with both of them in both categories. At the moment, we have a very good selection there.
Aoifinn Devitt: And now back to the show. And you mentioned some very interesting words there. You said what’s in the best interest of the fund, and you mentioned the word return a number of times. So clearly, since this— you came at these investments without any diktat or any policy incentive, you can justify these on the basis of return. Have you ever had to have that argument around perhaps any sacrifice of return to generate impact or local impact or to achieve some of your goals, or do you focus on return first and foremost?
Ted Lasso: No, not at this present moment in time. We’ve got a new committee, so I’m juggling two different councils. So I’ve got Richmond and Wandsworth Council members sit on our committee. I’ve got four political parties that sit on the committee as well, because we’ve got the Lib Dems, we’ve got Conservative, Labour, and the Green Party. But they come at it from an apolitical stance. Now, clearly they’ll have different ideologies and they have different approaches themselves about how it’s best to deliver return. But they come up when they sit at the meetings, they’re really good and they put their politics to one side and they’re thinking ultimately what is the best way forward as a collective that we can deliver. And they try to get a consensus between all 9 because what you don’t want to do is have different factions wanting things to be done in a different manner. We have explained in the past and we’ve sat down and said, look, ultimately the investment regulations do allow you to take non-fiduciary decisions. But if you’re going to do that, there’s clear parameters and rules that you need to follow, and that is that you need to seek advice, you need to ensure that the impact is non-material, and you need to be able to demonstrate that you believe that the members, with a small m, support the approach that you’re looking to take. And so with that in mind, I think the idea of what we’re looking to try and do when we’ve set out our long-term strategy when it comes to ESG. It’s more about getting that ultimate long-term agenda rather than some short-term tokenistic investments.
Aoifinn Devitt: And let’s move on to some other policy initiatives now around pooling. I often ask people to give the industry a grade for various things. If you were to give pooling a grade in terms of its overall objective and purpose, and now how it’s progressing towards that and how it’s been implemented. What are your thoughts on that?
Ted Lasso: Okay, I think most people know my views initially on pooling, that it wasn’t needed. One of the roles I look after in my remit is procurement, and there are plenty of other occasions and how you can set out about driving fees down without the need to set up these beasts in order to deliver it. So I think if we had LGPS share classes and mandated that approach, the fee-driving element could have been done a lot cheaper. But pools can deliver much more than just the fees, and that’s the problem, and that’s the issue, is everyone, whenever you go to these meetings, it’s all about fees, fees, fees. And that’s why I’m saying, if you look at it from a fees perspective, then no, it’s not a success, because ultimately they may well have been able to save some money on it, but the cost of actually setting it up, there was much more economically advantageous ways of delivering fee savings than the way that it’s been contrived. And being forced to mandate us to go down that pathway. Having said that, there is so much more that they can do for us outside of that fee saving, and that is actually— we’ve all got small teams and the government is asking us to do so much more on reporting, especially when it comes to things like TCFD and the ability for the pools to help and support us in that way. That’s where I think they can add some real value and where they need to start around and delivering it. And also potentially for some of those other types of products that you may not necessarily be able to deliver on your own. But even with that latter point, we’ve gone out and done energy transition on our own, and the fee rates and what we’ve been able to achieve, certainly on one of the two funds, I’d be surprised if I was in a pool, I’d have got it any lower than what I’m paying. So overall, I have mixed views. I think it doesn’t help being in the London pool when there are 32 different views. On how you do things, and sometimes their ability to be as dynamic as you need them to be is hindered by the number of voices that they hear and the challenges that they’ve got to contend with. So, I mean, when we— if we’re talking about pooling and the direction of travel that government is seeking for things to go in, focusing on a £50 billion threshold is wrong. Because that’s just trying to look at them thinking size matters, when ultimately it’s more going to be about trying to ensure you’ve got the right philosophy and you’ve got the right approach to actually make proper change. If anything, they should be focusing on the number of partners if they really wanted to constrain things and try and put caps or minimum levels on it. If you think about how we operate between the pools, you’ve got somewhere you can count them on one hand, and then you’ve got 32. Whether you’re going to rationalize, you focus on that, or you have specialisms where you actually get involved in more than one pool and you utilize the skill sets of certain individual groups who can specialize in certain sectors. So I’m not giving you a straight answer on a grade because I don’t think it can really do that for that reason.
Aoifinn Devitt: I think that’s the beauty of this conversation, is that it is nuanced and complicated and multifaceted. It’s not a straight answer, and that’s, I think, some of what we’re now only learning many years after the fact. Before I move on to my diversity question, which appears in every podcast, I want to ask you about the opportunities that you’re seeing in investing, because clearly you are seeing a lot to do and you’ve been doing it without mandates and you’re finding them on your own. What would you say excites you today when you look at the investment opportunity set?
Ted Lasso: To me, it’s energy transition, and I don’t mean renewable infrastructure. There’s too much, and part of the reason why we’ve gone out on a limb on our own rather than going without Paul is the focal point being on generational assets. We know they’re saturated out there, there’s loads of things out there, but there isn’t the ability to try to actually improve the grid. We’re looking at trying to help bring renewable products to areas which are not necessarily going to be able to be fulfilled through your traditional methods. So I think there’s so much opportunity out there, and we have to recognize that oil and gas is not going away in the next 10 to 15 years. The only way we’re going to get people away from a dependency on it is to ensure that there is an appropriate infrastructure up and down the country and around the world. So for me, I think energy transition is something where there’s a lot of opportunity in the next 5 to 10 years.
Aoifinn Devitt: Really interesting. And then speaking of the diversity question, so from your vantage point, what would you say the grade the industry should get in terms of diversity, given that this is a particular focus of this podcast. And this can mean everything from socioeconomic diversity to gender diversity to ethnic diversity. How do you think the industry currently would score if you were to give it a grade?
Ted Lasso: Is there a figure low enough? It’s shocking, really, because ultimately for me, diversity is much broader than physical characteristics. But in general, if you look around, who are the people who are the relationship managers? Who are the people, the portfolio managers? Who are the analysts? Who are the senior managers? How many of them didn’t go to university? And virtually every single person you speak to, I mean, has gone to university. Why is the question. What does it mean? It means you can sit an exam and you can pass and do it. But there’s so many more missed opportunities out there. If we want to ensure that we’ve got a proper diverse environment in the workforce and you’re getting people from all backgrounds and walks of life, we would always alienate people if you focus on gender, on color, or other types of characteristics. If you go down to the root of the problem, education, education, education, take them from the grassroots, bring people along, and allow them to develop and learn and grow themselves. Then people who’ve got the right skill sets should rise to the top. And that’s to me where the big focal point and the focal issue in this industry is poor and shocking, is that we aren’t getting kids at 16 and trying to help them get them on proper apprenticeships. Aviva, Allianz, loads of things around here in London. Why aren’t they setting up studio schools and trying to get people from inner cities to come out and into the industry? It would pay dividends for them in the long term because they would have a good cohort of individuals. Then they can set up— if they want to get people with degrees, they can set them up in their own internal degrees and set their own universities up and do it in that way. So no, so for me, I think it’s shocking, not so much looking at the institutional answers that most people talk about, about gender or race, but more about social economics. I grew up— I was born into a shared house, so we didn’t even have our own kitchen, bathroom, or anything else like that. And it took my dad to really force us out into poverty. So I was lucky enough, first person to go to uni in my family, and I had what most people would say is a probably lower middle class life early on, and then it was proper middle class later as I moved on to uni and plus. But it took a lot for my dad to do it, and most people in that situation would not have had the luck that he had or the dedication that he had to come out because there weren’t opportunities for people. That’s where I think we need to focus on and do more because I don’t see any of it. Everywhere I look, everyone’s gone to university.
Aoifinn Devitt: It’s true. The good news is there are a number of programs centered around apprenticeships now, Classroom to Boardroom and other initiatives that are really focused on getting that talent through. And we’ve spoken with Stuart Heathley on this podcast before about some of the initiatives he’s been supporting. So there are changes afoot, but very, very well said. I want to just turn to some personal reflections now. So in our pre-recording chat, I think I may have unearthed a Ted Lasso-like strand to your career. We mentioned you’re not a manager, but you do have a passionate involvement as a volunteer in a local football club that’s not a million miles away from Richmond. So can you just tell us a little bit about that passion?
Ted Lasso: Yeah, no, so it’s Sutton United Football Club. So they are in League Two and I was just talking about, like you said before, our chat with the weekend unfortunately suffering two losses, which has pretty much killed off any lasting chance of us managing to creep into the playoffs. But again, it’s about community, and if you’re talking about a community-based club, so Sutton has only just made it into league football after 130-odd years. I started following them when I moved to the local area in 2010, and most people there that help and support it are all volunteers. So your chairman and a lot of other, the senior sort of people who run the club are someone like myself. I buy a season ticket holder, and I’m a sort of like a volunteer steward looking after the players’ tunnel with some others down there. All our turnstile operators buy season tickets and volunteer, so they miss part of the game, same as me, and you’re sitting and doing it. It’s all for the passion of the game, but also it’s a community-based setup. We only get a few thousand turn up. I was at Bradford this week, and it shows you the disparity between two different sort of levels. You had almost 18,000 people at Bradford, and we’ll get 3,500 on a good day in the same club. Look at Wrexham. If you want the real Ted Lasso and, and looking at where it is in the Hollywood thing, you need to look at that club, and you see— you can see the difference that they can make. Both of the Hollywood investors, I think, have been given freedom of Wrexham today because of the difference that you can make Whereas if you go and you look at what some of our top so-called clubs are doing, there’s not much positive news coming out about it, is there? So that’s why I quite like looking at being down at the lower end. The underdog is much better.
Aoifinn Devitt: Well, 50 Faces is not Hollywood, but let’s see what difference we can make here by attracting some attention to your cause. On the personal reflection section now, when you look back at your career, were there any highs and lows, any low points maybe that you learned lessons from?
Ted Lasso: Well, low points in general, I mean, you never get to the job that you’re in without going for jobs that you never got. So you can always look back in hindsight and think, what pathway could it go and would it be different? But ultimately, I think you shouldn’t have regret and you look at which direction are you going. What changes and issues would I make? Probably none, because I think they all come out in the wash over time. On investment type strategies. We hedge currency, which when you’re juggling and when you’re doing things and when certain politicians make some statements that cause you nightmares earlier on, you do wonder, should we really have a hedging strategy? And that starts a reflection. It’s cost us, we are at a loss if you’re looking at it on a book basis, but why are we doing it? It was more to dampen volatility. And that’s the challenge you got to understand is relook at why you’re doing what you’re doing. And would you do it today? And if the answer to the question is, would you do it today? And if the answer to that is no, then why are you still doing it? And that’s the thing that I always say, if you’re going to have a reflection on what we all know, it’s the same as people don’t ever want to sell at a loss. And the same goes for anything in your life in general, is when you look forward, any going forward and thinking, would I choose what I’m doing now given the choice? And if the answer to that is no, then you ought to take a step back and think, right, okay, should I be doing what I’m doing?
Aoifinn Devitt: It’s a really interesting behavioral observation because of course that is the re-underwriting that we perhaps always should do, but with the sunk cost fallacy and other confirmation biases, et cetera, we are much less likely to do that. But I think having that discipline in an investment portfolio might even be easier than having it in life, certainly. So really good insights there. When you think about any key people who maybe influenced you throughout your career or life, did you have a mentor? You mentioned your dad earlier and how hard he worked. Was there anyone who had an impression on you?
Ted Lasso: I think I’ve been quite lucky in certainly Wandsworth. I had a very good boss who was, again, I think it’s pretty well known to many of your listeners, Chris Buss, who his approach to life is probably not necessarily as measured as what you would want in an investment environment because I think he used to follow the acronym JFDI, but it was more about really working hard, rolling your sleeves up, getting on with it. And he’d always have your back, and he’d always encourage you to go for it. And when I first started going out and being on this sort of scene, you could always be a flower in the corner and just hide away, and you could easily do that for your whole career and not necessarily be part of something like today. And because you always used to feel as though, hang about, what can I really tell anybody else? People out there have got much more knowledge than me, been doing the job a lot longer than me. ‘So I can just stay back in the corner and keep quiet.’ But there, his philosophy was always, ‘No, step up. You know what you’re doing. Speak out. Go for it. What’s the worst that can happen?’ And I think that was really good, really, for me, really, and encouraging that ultimately, get out there and just deliver. But it’s been like that for several different people, really. So I’ve been quite fortunate, which is how I’ve managed to grow from being in a relatively junior sort of role to where I am now.
Aoifinn Devitt: And when you think about any key words of wisdom, advice, or any creed or motto that you live by, maybe thanks to people like that or that you’ve come across on your own, anything that you can share there?
Ted Lasso: Don’t be frightened to fail. Just be frightened not to try is probably the only way to do it, because what’s the worst that can happen? As long as you give 100% in what you’re trying to deliver and do it, but also be open and transparent. With what you’re doing and why you’re doing it. I spent a lot of my career in audit, so I am an auditor by trade more than on the investment side. And so you still have that same sort of logic, which is be open, be transparent, have a good rationale for why you are doing what you’re doing. Things won’t always work out, but at least if you’ve got that approach and you’ve documented it and people understand why you made the call that you made, then most of the time you’ll be supported. It’s when you try and do something rash or you go out there and on a more of a cloak-and-dagger type approach, that’s when you’ll fall down. But most people aren’t out there to trip you up or do anything. Most people want to support you. So just go out there and give your best on that basis.
Aoifinn Devitt: Well, I know at the beginning, Paul, you deflected any comparison to Ted Lasso. You said you’re not a manager, you’re not a coach, but I do see you in the industry as a coach of sorts. You have a deep appreciation for the nuance and complexity of the industry that we work in. You’re dedicated, you’re passionate, you’re humble, and I think the LGPS is truly privileged to have you among its officers. So thank you so much for coming here, for sharing your insights on investment and beyond with us.
Ted Lasso: Thank you for those kind words.
Aoifinn Devitt: I’m Aoifinn Devitt. Thank you for listening to the 50 Faces podcast. If you liked what you heard and would like to tune in to hear more inspiring investors and their personal journeys, Please subscribe on Apple Podcasts, wherever you get your podcasts. This podcast is for informational purposes only and should not be construed as investment advice, and all views are personal and should not be attributed to the organizations and affiliations of the host or any guest.
Aoifinn Devitt: Our next guest is an original thinker on the LGPS officer circuit and may just be a real-life Ted Lasso. Hear about his passion for football, for supporting the underdog, and for getting to the nuance of sustainable investing, pooling, and today’s investment opportunity set. This podcast is part of a special collaboration between 50 Faces Productions and Crispin Derby Limited. I’m Aoifinn Devitt, and welcome to the 50 Faces podcast, a podcast committed to revealing the richness and diversity of the world of investment by focusing on its people and their stories. I’m joined today by Paul Giliotti, who’s Assistant Director Financial Services at Richmond and Wandsworth Councils.. He’s had a long career in local government and is a frequent participant in discussions around levelling up and LGPS pooling. Welcome, Paul. Thanks for joining me today.
Ted Lasso: Thank you, Aoifinn. Pleasure to be here.
Aoifinn Devitt: Well, let’s start with your background and career journey. Can you tell us where you grew up, your early interests, and how you came to enter the local government arena?
Ted Lasso: Yeah, by all means. So it’s sort of a mixed bag, really, for me. So early years, sort of thing. So I am officially a cockney. I was born in Homerton Hospital, so I can actually put that claim to fame, but family soon moved out to Enfield when we were— well, I was extremely young, and then we moved to Africa. So I spent some time in Zambia in my early sort of years, just, you know, around between 3 and 6. My dad, he was an engineer and he was looking after some of the copper mines out there. So we moved back and then relocated to Hertfordshire, where I spent most of my sort of childhood before then going on to university. As a child, I was pretty much the same as most people, really. It was, we weren’t into necessarily gaming in the same sort of ways as they did nowadays. Biggest frustration for me was I only had a BBC computer, rather than having sort of like the Commodore 64 or Spectrum, which everyone else had. So I think my parents were hoping I’d become a computer programmer, but it wasn’t for me. But so I then started out and ventured into other aspects. So I liked most sports, but was more of an armchair fan really than actually active apart from swimming and hockey. And then that sort that sort of, of tempered off as you get older and you move into different things. But in a working environment, how I ended up going into local government, well, that was pretty much by mistake really, in a way. And it wasn’t really an aspiration or a key aim. At the time I was a financial advisor, but the role meant that you were working long and sociable hours. But I had a daughter about to arrive. And it was more of a, can I find a more of a traditional 9-to-5 type role? I wanted it to try and be somewhere in financial services to a particular section or element of it. And just took really, to be honest with you, the first job that came along, which happened to be Wandsworth Council in their pensions administration team. So like I said, it wasn’t planned. It wasn’t a real ambition or an aim, but that was in year 2000. And I’m still here now.
Aoifinn Devitt: Well, I just want to go back over one or two things there from your childhood. Really interesting to spend time in Zambia. Now, obviously you’re very young, not sure how much of those years were formative years, but did you take anything with you from those years, whether it be memories or what it’s like to live in a, in a very much a frontier market?
Ted Lasso: Like you say, I mean, I was, I think I was 6 by the time I came back, so I don’t really remember too much about it. I remember going to school I went to what’s known as the Wantra Trust School, and for me it was just normal. I mean, you know, we’re in a scenario whereby if you’re thinking about EDI nowadays, the school I went to was very mixed. It was, bearing in mind we are looking at a lot of expats being there, and it was, you could say, you know, it’s coming out really of colonial-type rule, but the community over there was integrated. Like I said, I went to the local state a base school where you had people from European backgrounds and also from the, you know, the local towns. So from my perspective, I went, you know, and grew up in a very much of a different culture to what most people would perceive to be when you’re going out and you’re living in that different lifestyles. So probably take that away in coming out, and basically we’re all the same ultimately, and therefore you should treat people how you’d expect to be treated, and it doesn’t matter what your background is. It’s how you treat others and what you do with your life going forward.
Aoifinn Devitt: And then your name, Gugliotti, is not a common Cockney name, even though you said you may be pure Cockney. Can you give us a little color on where that name came from?
Ted Lasso: Yeah, so, but it’s, it is relatively unique at this present moment in time, bearing in mind both my kids are not in the country at the moment. There’s only 4 of us in the UK. With her name purely spelled the way that it is because it’s an Italian background, but it’s not spelled the same. My grandfather, I think the first documents that he ever had was his army papers when he served in the war for Britain, and the army didn’t know how to spell his name, and they wrote it and spelt it incorrectly. And hence why we managed that with a surname spelled the way that it is.
Aoifinn Devitt: Well, it’s always been a question for me, so thank you for putting that to bed. Looking now forward into the LGPS world, so we came across each other on the LGPS circuit and pensions occupy a lot of your time today. Would you say you have any key investment beliefs, or what’s your approach to pension fund investment broadly?
Ted Lasso: So broadly, it’s separating your own internal philosophies and what you do with your own money to what you do on an institutional basis. We’ve got to remember we’re local government, so the risk appetite for us in general has to be different than what it would be if you’re either in full commercial terms or if you’re investing individually, because we’ve got to protect the public purse. But one way you can protect the public purse is not to be frightened of taking risk, because if we do and all we want to be is ultra-conservative, we’re going to end up costing significantly more. Because there’s only two ways that we’re in a position whereby we can actually pay for the pensions that we’re paying out for. It’s either through contributions or through investment returns. So we’ve got to make sure that we invest wisely, that we try to invest responsibly. And I don’t necessarily mean from an ESG perspective. I mean from a risk appetite in trying to ensure that there isn’t significant amounts of volatility because every 3 years we have to rebase our contribution rate. And one of the challenges that financial directors have is ensuring that they’ve got sufficient amount of contributions to pay for on your payroll, because if you don’t get that right, two impacts will happen. Either you’re going to have to look at your staffing levels or the services will be impacted. So yes, so from what my belief really is saying, it’s a measured growth approach and ensuring that you try to preserve capital as much as you possibly can. But more and more of us are moving in towards negative cash flow positions. So therefore you’ve also got to try and style it in a different way that you’re not just balancing up growth, you’re actually generating sufficient income to basically meet those shortfalls rather than be reliant upon selling assets at an inappropriate time.
Aoifinn Devitt: It’s interesting, many issues there coming up. Would you say that you have— these beliefs have evolved over time? You mentioned tracking your cash flow position, maybe tracking a recognition of the need for more income to flow out of the portfolio. What has that meant in terms of the asset classes you’re prepared to look at?
Ted Lasso: Yes, substantially different to what I inherited. So part of the reason why I took on this particular role was, like many authorities, we’re going through change, looking to downsize. And we reduced the number of assistant directors that we had. So Bob Claxton, who many people who are listening to this would probably know, did the role on the pension side before me. So we knew that this was going to be a transition point. So I started tracking and working with him for about 6 to 9 months prior to him taking redundancy, early retirement. And during that period was the first time we looked to change because Originally, the portfolio was solely equity and bonds, but we needed to generate more income. So the first change that was made during that period was taking some of the money out of traditional bonds and moving into multi-asset credit to get some additional income. Subsequent to then though, I had to merge two pension funds. One of the first things I was doing was again taking over from the work that Bob had done before, but finishing it off was bringing the two Richmond and Wandsworth together, and that meant that we got additional set of assets that came across because Richmond no longer has a pension fund, so their assets and liabilities transferred to us at Wandsworth, and that meant that we inherited a property portfolio. So that brought with it another good sort of yielding generating assets. But subsequent to that, we’ve also now moved into private debt and infrastructure. And the most recent thing that we’ve done, which is a subset of infrastructure, is energy transition, as we become more and more focused on trying to generate those returns in a more sustainable manner.
Aoifinn Devitt: And how do you see the trade-off between risk and return? Clearly, you’re focused on the negative cash flow, you know you need to generate a return. There might be other groups out there touting de-risking, perhaps because of where funding level maybe has got to. Can you share anything about your funding level and where you currently come down on that risk-reward debate?
Ted Lasso: So we report 116% as our funding level, and the reason why I phrase it in that way is that that’s after we’ve taken 10% off. So when we do our valuation, the top 10% of our assets get moved into an asset shock, a liquidity shock reserve. So that’s one of the things how we protect it. So 10% of assets are not even looked at and considered in calculating our valuation, which means that when we had the big drop in funding post-COVID, when someone said to you, how are we impacted? What strategy changes would you need to make? Is there anything that you’re worried about? The answer for us was no, not on an asset basis, because the fall in value was covered by that 10% that I’d put to one side. So that’s one of the measures that we have. We look at putting some risk protection in. The other one is when we look at our discount rate, we have a prudence level. That we basically put into our model, which allows us then to have that sort of buffer. So that’s one of the sort of styles that we do to allow us some flexibility on volatility on the flip side. So we are still heavily invested in equity, we’re currently 60%, and we’ve still got a reasonable weighting towards equity-like products like infrastructure, purely and simply because people joining today could easily be still requiring a money out of the pension fund in 80 years’ time. So we can’t afford to take too much risk off the table, but it’s how you go about it, how you measure and how you balance it off really with regards to some of the returns. But we don’t go aggressive. So when we looked at private debt, we weren’t looking at double-digit returns when there were people championing them, those sort of numbers and figures. We looked more around the 5 to 7% return level. And also when it came to infrastructure, we focused primarily on brownfield-type investments, secondaries, rather than a real high, long sort of J-curve and greenfield developments, because I was more interested in capital preservation with a small level of return, but yield-generating assets.
Aoifinn Devitt: And looking forward now, what’s on your mind? You mentioned infrastructure. Clearly, that’s a big part of the Levelling Up initiative. What is your positioning or how you think that will evolve, the levelling up suggestions and what that means for how you invest, as well as any sustainability or net zero targets?
Ted Lasso: Yeah, I mean, I think the term levelling up and some of the language that’s been used by government is a distraction because we’re doing it already. 5% allocation to local when local means UK. I’ll be surprised if there are more than a handful of funds that couldn’t already tick those boxes off. If you look about what we’ve got with our property portfolio, with our infrastructure portfolio, and with what we’re now going to be doing with energy transition, you can easily get those sort of numbers. So for me, it isn’t necessarily around playing the game to meet government targets. It’s looking at ultimately what’s best for your individual fund, and some of those things will naturally flow from it. Like I said, we’ve just gone and we’re looking at investing $80 million in energy transition. Two managers, one of them is US-focused, the other one is Northern Europe, but primarily UK. We’re hoping to make an announcement in the next sort of week or so with the first deal that we’ve done. So I’m the cornerstone investor for one of these investments, which is obviously new for us, but it does mean that you get more of an insight as to what’s going on and what assets are being procured. And the one that we’re, like I said, we’re hoping to be able to discuss in more detail in the next week or so is very local. It’s in South UK, and it will help generate not only positive news for the environmental issues, but is also working in affordable housing as well, because it’s to help improvements in that particular area. So all of that was not done based on the Levelling Up agenda.. It’s based on what is right for our fund. And that’s why I say it’s a distraction, because if people get focused on that, they’re looking in the wrong way. You’ve gotta look to generate the right return on the right risk profile for their individual fund. And there’s 80-odd LGPS funds. We’ve all got different short-term targets and then, and doing things in a slightly different way, but we’ve all got the same long-term objective, and that is where the last pensioner in the fund dies, you pay out your last penny. If you’ve done your job right, that’s how it works. You ramp it up whilst know, you, you you’re in the— you’ve got the early stage of a pension, but as it becomes more and more mature, you start paying out more. But if we’ve got loads of money left at the end, well, we’ve been too aggressive. And once we’re on another side, if we haven’t got enough money, we haven’t been aggressive enough with regards to investment strategies or We’ve judged it wrong because we haven’t set our objectives in the right way.
Aoifinn Devitt: We are now going to take a short break to speak with the sponsor of this series about what it is that makes them unique. I sat down with Tom Raber of Alpine Capital. So Alpine Capital has a unique business model that you call reverse inquiry. Can you tell us what reverse inquiry means?
Speaker C: When we were marketing or softly marketing funds, we realized that some institutional investors felt that they were being pushed and every call was the same as the one they just had. And we felt that we had to have another approach to institutional investors. And so we tried to really go behind the scenes and ask them, what exactly are you looking for if you had a dream scenario and you had an opening in your fund? What would you like to have and how would that fund look? And when we got investors to open up and explain to us what they wanted, we then took down all the information we needed and we went out into the market. It’s a pull sale rather than a push sale. You’re actually helping the investor finding something that’s better than they thought they were looking for in the first place.
Aoifinn Devitt: In terms of your client base, so you work with a lot of Scandinavian and Northern European institutions. Is there anything on their mind today?
Speaker C: We opened an office in Stockholm last year. We have Nordic roots. We have obviously Nordic-speaking people in London as well. We’ve covered the region for many years. Yes, we know it very well. What are they looking for? What’s happening up in that part of the world is that they’re a leader in anything that’s ESG. And impact. Some very large institutions have decided not to do anything at all unless it’s completely impact, completely green. Everyone is looking for good, well-performing private equity and private credit funds, and we’re fortunate that we’re working with both of them in both categories. At the moment, we have a very good selection there.
Aoifinn Devitt: And now back to the show. And you mentioned some very interesting words there. You said what’s in the best interest of the fund, and you mentioned the word return a number of times. So clearly, since this— you came at these investments without any diktat or any policy incentive, you can justify these on the basis of return. Have you ever had to have that argument around perhaps any sacrifice of return to generate impact or local impact or to achieve some of your goals, or do you focus on return first and foremost?
Ted Lasso: No, not at this present moment in time. We’ve got a new committee, so I’m juggling two different councils. So I’ve got Richmond and Wandsworth Council members sit on our committee. I’ve got four political parties that sit on the committee as well, because we’ve got the Lib Dems, we’ve got Conservative, Labour, and the Green Party. But they come at it from an apolitical stance. Now, clearly they’ll have different ideologies and they have different approaches themselves about how it’s best to deliver return. But they come up when they sit at the meetings, they’re really good and they put their politics to one side and they’re thinking ultimately what is the best way forward as a collective that we can deliver. And they try to get a consensus between all 9 because what you don’t want to do is have different factions wanting things to be done in a different manner. We have explained in the past and we’ve sat down and said, look, ultimately the investment regulations do allow you to take non-fiduciary decisions. But if you’re going to do that, there’s clear parameters and rules that you need to follow, and that is that you need to seek advice, you need to ensure that the impact is non-material, and you need to be able to demonstrate that you believe that the members, with a small m, support the approach that you’re looking to take. And so with that in mind, I think the idea of what we’re looking to try and do when we’ve set out our long-term strategy when it comes to ESG. It’s more about getting that ultimate long-term agenda rather than some short-term tokenistic investments.
Aoifinn Devitt: And let’s move on to some other policy initiatives now around pooling. I often ask people to give the industry a grade for various things. If you were to give pooling a grade in terms of its overall objective and purpose, and now how it’s progressing towards that and how it’s been implemented. What are your thoughts on that?
Ted Lasso: Okay, I think most people know my views initially on pooling, that it wasn’t needed. One of the roles I look after in my remit is procurement, and there are plenty of other occasions and how you can set out about driving fees down without the need to set up these beasts in order to deliver it. So I think if we had LGPS share classes and mandated that approach, the fee-driving element could have been done a lot cheaper. But pools can deliver much more than just the fees, and that’s the problem, and that’s the issue, is everyone, whenever you go to these meetings, it’s all about fees, fees, fees. And that’s why I’m saying, if you look at it from a fees perspective, then no, it’s not a success, because ultimately they may well have been able to save some money on it, but the cost of actually setting it up, there was much more economically advantageous ways of delivering fee savings than the way that it’s been contrived. And being forced to mandate us to go down that pathway. Having said that, there is so much more that they can do for us outside of that fee saving, and that is actually— we’ve all got small teams and the government is asking us to do so much more on reporting, especially when it comes to things like TCFD and the ability for the pools to help and support us in that way. That’s where I think they can add some real value and where they need to start around and delivering it. And also potentially for some of those other types of products that you may not necessarily be able to deliver on your own. But even with that latter point, we’ve gone out and done energy transition on our own, and the fee rates and what we’ve been able to achieve, certainly on one of the two funds, I’d be surprised if I was in a pool, I’d have got it any lower than what I’m paying. So overall, I have mixed views. I think it doesn’t help being in the London pool when there are 32 different views. On how you do things, and sometimes their ability to be as dynamic as you need them to be is hindered by the number of voices that they hear and the challenges that they’ve got to contend with. So, I mean, when we— if we’re talking about pooling and the direction of travel that government is seeking for things to go in, focusing on a £50 billion threshold is wrong. Because that’s just trying to look at them thinking size matters, when ultimately it’s more going to be about trying to ensure you’ve got the right philosophy and you’ve got the right approach to actually make proper change. If anything, they should be focusing on the number of partners if they really wanted to constrain things and try and put caps or minimum levels on it. If you think about how we operate between the pools, you’ve got somewhere you can count them on one hand, and then you’ve got 32. Whether you’re going to rationalize, you focus on that, or you have specialisms where you actually get involved in more than one pool and you utilize the skill sets of certain individual groups who can specialize in certain sectors. So I’m not giving you a straight answer on a grade because I don’t think it can really do that for that reason.
Aoifinn Devitt: I think that’s the beauty of this conversation, is that it is nuanced and complicated and multifaceted. It’s not a straight answer, and that’s, I think, some of what we’re now only learning many years after the fact. Before I move on to my diversity question, which appears in every podcast, I want to ask you about the opportunities that you’re seeing in investing, because clearly you are seeing a lot to do and you’ve been doing it without mandates and you’re finding them on your own. What would you say excites you today when you look at the investment opportunity set?
Ted Lasso: To me, it’s energy transition, and I don’t mean renewable infrastructure. There’s too much, and part of the reason why we’ve gone out on a limb on our own rather than going without Paul is the focal point being on generational assets. We know they’re saturated out there, there’s loads of things out there, but there isn’t the ability to try to actually improve the grid. We’re looking at trying to help bring renewable products to areas which are not necessarily going to be able to be fulfilled through your traditional methods. So I think there’s so much opportunity out there, and we have to recognize that oil and gas is not going away in the next 10 to 15 years. The only way we’re going to get people away from a dependency on it is to ensure that there is an appropriate infrastructure up and down the country and around the world. So for me, I think energy transition is something where there’s a lot of opportunity in the next 5 to 10 years.
Aoifinn Devitt: Really interesting. And then speaking of the diversity question, so from your vantage point, what would you say the grade the industry should get in terms of diversity, given that this is a particular focus of this podcast. And this can mean everything from socioeconomic diversity to gender diversity to ethnic diversity. How do you think the industry currently would score if you were to give it a grade?
Ted Lasso: Is there a figure low enough? It’s shocking, really, because ultimately for me, diversity is much broader than physical characteristics. But in general, if you look around, who are the people who are the relationship managers? Who are the people, the portfolio managers? Who are the analysts? Who are the senior managers? How many of them didn’t go to university? And virtually every single person you speak to, I mean, has gone to university. Why is the question. What does it mean? It means you can sit an exam and you can pass and do it. But there’s so many more missed opportunities out there. If we want to ensure that we’ve got a proper diverse environment in the workforce and you’re getting people from all backgrounds and walks of life, we would always alienate people if you focus on gender, on color, or other types of characteristics. If you go down to the root of the problem, education, education, education, take them from the grassroots, bring people along, and allow them to develop and learn and grow themselves. Then people who’ve got the right skill sets should rise to the top. And that’s to me where the big focal point and the focal issue in this industry is poor and shocking, is that we aren’t getting kids at 16 and trying to help them get them on proper apprenticeships. Aviva, Allianz, loads of things around here in London. Why aren’t they setting up studio schools and trying to get people from inner cities to come out and into the industry? It would pay dividends for them in the long term because they would have a good cohort of individuals. Then they can set up— if they want to get people with degrees, they can set them up in their own internal degrees and set their own universities up and do it in that way. So no, so for me, I think it’s shocking, not so much looking at the institutional answers that most people talk about, about gender or race, but more about social economics. I grew up— I was born into a shared house, so we didn’t even have our own kitchen, bathroom, or anything else like that. And it took my dad to really force us out into poverty. So I was lucky enough, first person to go to uni in my family, and I had what most people would say is a probably lower middle class life early on, and then it was proper middle class later as I moved on to uni and plus. But it took a lot for my dad to do it, and most people in that situation would not have had the luck that he had or the dedication that he had to come out because there weren’t opportunities for people. That’s where I think we need to focus on and do more because I don’t see any of it. Everywhere I look, everyone’s gone to university.
Aoifinn Devitt: It’s true. The good news is there are a number of programs centered around apprenticeships now, Classroom to Boardroom and other initiatives that are really focused on getting that talent through. And we’ve spoken with Stuart Heathley on this podcast before about some of the initiatives he’s been supporting. So there are changes afoot, but very, very well said. I want to just turn to some personal reflections now. So in our pre-recording chat, I think I may have unearthed a Ted Lasso-like strand to your career. We mentioned you’re not a manager, but you do have a passionate involvement as a volunteer in a local football club that’s not a million miles away from Richmond. So can you just tell us a little bit about that passion?
Ted Lasso: Yeah, no, so it’s Sutton United Football Club. So they are in League Two and I was just talking about, like you said before, our chat with the weekend unfortunately suffering two losses, which has pretty much killed off any lasting chance of us managing to creep into the playoffs. But again, it’s about community, and if you’re talking about a community-based club, so Sutton has only just made it into league football after 130-odd years. I started following them when I moved to the local area in 2010, and most people there that help and support it are all volunteers. So your chairman and a lot of other, the senior sort of people who run the club are someone like myself. I buy a season ticket holder, and I’m a sort of like a volunteer steward looking after the players’ tunnel with some others down there. All our turnstile operators buy season tickets and volunteer, so they miss part of the game, same as me, and you’re sitting and doing it. It’s all for the passion of the game, but also it’s a community-based setup. We only get a few thousand turn up. I was at Bradford this week, and it shows you the disparity between two different sort of levels. You had almost 18,000 people at Bradford, and we’ll get 3,500 on a good day in the same club. Look at Wrexham. If you want the real Ted Lasso and, and looking at where it is in the Hollywood thing, you need to look at that club, and you see— you can see the difference that they can make. Both of the Hollywood investors, I think, have been given freedom of Wrexham today because of the difference that you can make Whereas if you go and you look at what some of our top so-called clubs are doing, there’s not much positive news coming out about it, is there? So that’s why I quite like looking at being down at the lower end. The underdog is much better.
Aoifinn Devitt: Well, 50 Faces is not Hollywood, but let’s see what difference we can make here by attracting some attention to your cause. On the personal reflection section now, when you look back at your career, were there any highs and lows, any low points maybe that you learned lessons from?
Ted Lasso: Well, low points in general, I mean, you never get to the job that you’re in without going for jobs that you never got. So you can always look back in hindsight and think, what pathway could it go and would it be different? But ultimately, I think you shouldn’t have regret and you look at which direction are you going. What changes and issues would I make? Probably none, because I think they all come out in the wash over time. On investment type strategies. We hedge currency, which when you’re juggling and when you’re doing things and when certain politicians make some statements that cause you nightmares earlier on, you do wonder, should we really have a hedging strategy? And that starts a reflection. It’s cost us, we are at a loss if you’re looking at it on a book basis, but why are we doing it? It was more to dampen volatility. And that’s the challenge you got to understand is relook at why you’re doing what you’re doing. And would you do it today? And if the answer to the question is, would you do it today? And if the answer to that is no, then why are you still doing it? And that’s the thing that I always say, if you’re going to have a reflection on what we all know, it’s the same as people don’t ever want to sell at a loss. And the same goes for anything in your life in general, is when you look forward, any going forward and thinking, would I choose what I’m doing now given the choice? And if the answer to that is no, then you ought to take a step back and think, right, okay, should I be doing what I’m doing?
Aoifinn Devitt: It’s a really interesting behavioral observation because of course that is the re-underwriting that we perhaps always should do, but with the sunk cost fallacy and other confirmation biases, et cetera, we are much less likely to do that. But I think having that discipline in an investment portfolio might even be easier than having it in life, certainly. So really good insights there. When you think about any key people who maybe influenced you throughout your career or life, did you have a mentor? You mentioned your dad earlier and how hard he worked. Was there anyone who had an impression on you?
Ted Lasso: I think I’ve been quite lucky in certainly Wandsworth. I had a very good boss who was, again, I think it’s pretty well known to many of your listeners, Chris Buss, who his approach to life is probably not necessarily as measured as what you would want in an investment environment because I think he used to follow the acronym JFDI, but it was more about really working hard, rolling your sleeves up, getting on with it. And he’d always have your back, and he’d always encourage you to go for it. And when I first started going out and being on this sort of scene, you could always be a flower in the corner and just hide away, and you could easily do that for your whole career and not necessarily be part of something like today. And because you always used to feel as though, hang about, what can I really tell anybody else? People out there have got much more knowledge than me, been doing the job a lot longer than me. ‘So I can just stay back in the corner and keep quiet.’ But there, his philosophy was always, ‘No, step up. You know what you’re doing. Speak out. Go for it. What’s the worst that can happen?’ And I think that was really good, really, for me, really, and encouraging that ultimately, get out there and just deliver. But it’s been like that for several different people, really. So I’ve been quite fortunate, which is how I’ve managed to grow from being in a relatively junior sort of role to where I am now.
Aoifinn Devitt: And when you think about any key words of wisdom, advice, or any creed or motto that you live by, maybe thanks to people like that or that you’ve come across on your own, anything that you can share there?
Ted Lasso: Don’t be frightened to fail. Just be frightened not to try is probably the only way to do it, because what’s the worst that can happen? As long as you give 100% in what you’re trying to deliver and do it, but also be open and transparent. With what you’re doing and why you’re doing it. I spent a lot of my career in audit, so I am an auditor by trade more than on the investment side. And so you still have that same sort of logic, which is be open, be transparent, have a good rationale for why you are doing what you’re doing. Things won’t always work out, but at least if you’ve got that approach and you’ve documented it and people understand why you made the call that you made, then most of the time you’ll be supported. It’s when you try and do something rash or you go out there and on a more of a cloak-and-dagger type approach, that’s when you’ll fall down. But most people aren’t out there to trip you up or do anything. Most people want to support you. So just go out there and give your best on that basis.
Aoifinn Devitt: Well, I know at the beginning, Paul, you deflected any comparison to Ted Lasso. You said you’re not a manager, you’re not a coach, but I do see you in the industry as a coach of sorts. You have a deep appreciation for the nuance and complexity of the industry that we work in. You’re dedicated, you’re passionate, you’re humble, and I think the LGPS is truly privileged to have you among its officers. So thank you so much for coming here, for sharing your insights on investment and beyond with us.
Ted Lasso: Thank you for those kind words.
Aoifinn Devitt: I’m Aoifinn Devitt. Thank you for listening to the 50 Faces podcast. If you liked what you heard and would like to tune in to hear more inspiring investors and their personal journeys, Please subscribe on Apple Podcasts, wherever you get your podcasts. This podcast is for informational purposes only and should not be construed as investment advice, and all views are personal and should not be attributed to the organizations and affiliations of the host or any guest.
