James Walsh

James Walsh joined Albourne Partners in 2012, after shuttering Cayuga Capital Partners, a fundamental global macro hedge fund based in London that he founded. In a way, his move to Albourne was a return to a career trajectory he began decades earlier on the allocator side. Walsh was previously with Hermes Pension Management and was the chief investment officer for Cornell University. Now, he uses those years of expertise to work with Albourne’s advisory clients, finding new and innovative ways to build portfolios and meet investment goals.

In an interview with CIO, Walsh says he was drawn to Albourne in part because it is the last fully non-discretionary consultant and focused on being conflict-free. His work at Albourne is about aligning with clients rather than being in competition with them. He says that helps to set Albourne apart and also makes it easier to find solutions that can be meaningful for investors.

An Alt Viewpoint

According to Walsh, as the asset management industry has evolved, so too has the way investors understand the role of certain strategies. “One of the big changes is the degree to which we work with clients across all alternatives,” Walsh explains. Investors are more focused on creating resilient portfolios and with that comes a willingness to explore a broader range of strategies and asset classes—especially those that can provide uncorrelated returns.

Walsh’s first-hand experience on the buyside helps him think through how best to incorporate those strategies against his client’s investment objectives. In practice, that means expanding the diligence process.

“Operational due diligence has become much more significant on the private markets side,” Walsh says. “There has been a significant shift in how people think about private markets due diligence and how much more important ESG is to investors.” As more investors examine investing strategies for sustainability and improved governance, they’ve come to expect the same practices from the managers they invest in. Walsh helps his clients take a deeper dive into the business practices of asset managers, seeing how their disclosures and sustainability practices stack up.

Alongside this work, Walsh and his team are also spending more time modeling portfolios in an effort to ensure that they are positioned well in the event of a downturn. “There is a greater focus on scenario analysis than there has been in the past both because of the length of the cycle and because hedging has become more expensive and its outcomes less certain,” Walsh

explains. While investors are more willing to explore alternatives, they’re also more discerning about which strategies they think will work—or at least work well enough to be worth their accelerated fees. There is a growing recognition that drivers of alpha in the market have shifted over the past decade and not all strategies have weathered those changes equally.

Putting Technology to Work

The growth of FinTech is helping Walsh and his team work with investors to get their arms around changes in the market. Albourne has spent $300 million on technology improvements over the past two decades and Walsh expects that pace will continue. He says that technology is the future of asset management in that it can benefit everyone in different ways. Managers and consultants are able to improve their business operations and investors are able to get better information overall.

“It’s absolutely essential to process in data in such a way that clients can both make timely decisions and present it in ways that are easily conveyed to stakeholders,” Walsh says, adding that firms that are positioned to lead in the future will be able to help clients by providing a strong technological platform that can be used both as an extension of staff and as a means of leveraging their own investment capabilities. —

By Bailey McCann