To see this article in digital magazine format, click here.
Mega-Fund Men
Daniel MacDonald, 44
Portfolio Manager (Alternative Investments), Ontario Teachers' Pension Plan
MacDonald is the quintessential Canadian. First, his name. Is there a more Canadian name than Daniel MacDonald? No, no there is not. Second, MacDonald, who now resides in the Canadian Gotham of Toronto, grew up 10 hours north of the city—"As far north as the road goes," he says.Third—perhaps less obvious, but no less Canadian—MacDonald is a rising star at one of the world's most sophisticated pension investment complexes, the Ontario Teachers' Pension Plan.
The fund is much lauded across the board, but perhaps its most commonly cited accomplishments—its early move into alternatives in 1996, and its more recent move toward direct alternative investing in 2008—stem from the Alternative Investments group. "In 1996, the group went into hedge funds via funds of funds, getting a head-start on its peers," MacDonald, who has been with the fund since 2000, says. "For the next 12 years, we partnered with them, got knowledge transfer, adopted best practices, and built an in-house team." Post-2008, however, the public fund took another step. "We were one of the early pension adopters of the direct approach. But instead of just firing all the funds of funds, we switched some of them to advisory relationships—for the purpose of knowledge transfer and origination/sourcing." They also pushed hard for managed accounts. "The reason we did that is when you invest in a hedge fund, you're taking on investment risk and operational risk but you're only getting rewarded on investment risk," MacDonald says. "However, when you invest via a managed account, you mitigate 90-95% of the operational risk." So perhaps we can add a fourth quintessentially Canadian trait to MacDonald's list: robust risk management.
Mega-Fund Men: These five are achieving the near impossible: Standing out at the world's largest—and often most staffed—funds. They don't come from tiny plans of four people. No, they are being noticed within organizations that can reach into the thousands. This is also, you may have noticed, the most international of groups. Canada, Korea, Denmark, and the Netherlands are all represented here. With talent like this, it should be no surprise that any mention of the world's "best" asset owners will always include more than one of these countries.