Peak Assets: Institutional Investors at Davos

(January 16, 2014) — Of the 2,633 people attending the World Economic Forum in Davos next week, a select 15 of them are collectively responsible for several trillion dollars.

Just 0.5% of the guest list are institutional investors—and almost half of them are based outside the largest western economies.

Bader M. Al Sa’ad, managing director at the Kuwait Investment Authority, who made the trip last year, will be joined by his Middle Eastern neighbour Abdullatif A. Al Othman, governor and chairman of the board for the Saudi Arabian General Investment Authority—his debut appearance at Davos.

Another first-timer Shahmar Movsumov, CEO of the State Oil Fund of the Republic of Azerbaijan, will be joined by his deputy Israfil Mammadov at the high-altitude event.

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Invites to Asian nations include Singapore’s GIC, who is sending Group President Lim Siong-Guan, Korea’s National Pension Service, represented by Chairman and CEO Choi Kwang, and the China Investment Corporation, for which President and Vice-Chairman Gao Xiqing will make the trip to Europe.

US investors are fairly lightly represented by just Theresa Whitmarsh, executive director at the Washington State Investment Board and Paul Eckley, senior vice-president for investments at State Farm Insurance Companies.

However, various foundations, including Ford, Rockefeller, and Gates, have representatives on the guest list, but they feature in a project-driven rather than investment capacity.

The mountain resort will also host Canada’s largest investors, Mark Wiseman, president and CEO of the Canada Pension Plan Investment Board and Michael Sabia, president and CEO of the Caisse de dépot et placement du Québec, who are both repeat guests from last year.

Europe’s collection of investment professionals includes Norway’s Yngve Slyngstad, CEO, Norges Bank Investment Management, the UK’s Danny Truell, CIO of the Wellcome Trust and newcomer Torben Moger Pedersen, CEO of PensionDanmark.

Big-hitters from asset management to appear at the rest include Bridgewater’s founder and CIO Ray Dalio and the firm’s CEO Greg Jensen, Third Point CEO Daniel Loeb, and Deborah Boedicker, managing director of Strategic Investment Group.

Another note-worthy attendee will be Anthony Scaramucci, founder of SkyBridge Capital and its Las Vegas alternatives conference.

The forum will bring together 196 academics, 288 government officials, 48 representatives from international organizations, and 2,101 private sector attendees. Only 15% of expected attendees are women—a drop from 17% last year.

(January 15, 2014) — An asset management firm’s success largely depends on its structure, particularly employee ownership and management, according to Margolis/Kass Advisors.

“While good sales skills and pre-existing relationships are unquestionably beneficial, they only work if top-down company issues are successfully addressed first,” said Janie Kass, the firm’s managing director.

One of the most significant factors in developing a strong structural framework is allocating ownership. The consulting firm found giving ownership to employees would encourage them to “work for the common good. Employee ownership—or a structure containing a strong incentive program to benefit the firm’s growth long-term—encourages behavior to maximize the value of the firm; it aids in retention and influences individual actions.”

However, this decision would affect firms differently, especially by size. Kass said boutique firms often provide investors with transparency, independence, and greater attention to long-term goals, especially with greater employee ownerships.

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Bigger firms such as insurance companies, banks, and capital firms, on the other hand, would have access to resources to help “accelerate growth,” Kass said.

When a firm is considering partnership with a larger firm—or a private equity firm—it should ensure investment returns and targets are met, as such goals could be lost as the bigger firm attempt to boost its stake value.

Margolis/Kass Advisors also emphasized that ownership should spread to various employees and not be exclusive to a handful of firm members.

“Extreme and firm-threatening events may be rare, but ownership concentrated in just a few hands can lead to less dramatic, but nonetheless damaging, inattention by team members on the key goal of meeting client expectations,” Kass said.

With such a structure in place, proper creation of senior management group would follow, said the consultant, increasing transparency in management: “This creates a functional balance which is essential for a firm to succeed and includes the key elements of success; firm oversight, investment results, client retention and growth, and the operations essential for a firm to function successfully.”