Bonus Interview: Robyn Grew, Man Group CEO

This is an audio transcript of the Unhedged podcast episode: ‘Bonus Interview — Robyn Grew, Man Group CEO’

Ethan Wu
Hey, Unhedged listeners. As you know, it’s a real confusing time in financial markets right now, and, you know, we financial journalists rely on smart insights from the best people in the financial industry. And to that end, our own Katie Martin just had a discussion over at the London FT Weekend Festival with Robyn Grew, chief executive of Man Group. We’re dropping it in this feed for you to listen so you can hear from some of the best in finance. Enjoy.

Katie Martin
OK. Someone has just given me a thumbs-up, so I guess we are off. This is an extremely incongruous situation. I’m sitting in a kitchen. My name is Katie Martin. I’m the markets editor at the Financial Times. I write the Long View column at the weekends, and I also do the Unhedged podcast. I am very, very happy to be joined by Robyn Grew, who is the chief executive of Man Group, which runs a whole bunch of hedge funds. And we’re here to talk about where markets are going. Do you know the answer?

Robyn Grew
Yeah. (Katie laughs) Now, so I’m very good at knowing where markets are going. This, and I learned early on not to forecast these things. (Laughter)

Katie Martin
No. Never ever make predictions. I’ve made this mistake myself. But what we’re hoping to do is talk about why markets are so challenging to read at the moment and what portfolio managers might be able to do about it. So to kick off, Robyn, you’ve had a very varied career, right? Markets are not your bread and butter as such. But nonetheless, anyone can tell you, market’s been a nightmare for the past couple of years, right? They go up when everyone thinks they’re gonna go down. They go down when everyone thinks they’re gonna go up. Why have they been so challenging ever since Covid hit?

Robyn Grew
I guess, listen, let’s be clear: 2010s, then 14 years there, thereabouts, we were in this extraordinary position where, if you were an asset owner — I mean, like an asset owner of pretty much any asset, risk-adjusted, if you wanted, you’d need to have slightly maybe less tech stocks than you might bonds. If you were an asset owner, you held on to it, you made money. The markets went up. You had zero volatility, really. You had no dispersion, really. You had zero inflation. And I think everybody got . . . 

Katie Martin
Everybody whinged at the time and said it was really difficult. But what you’re saying is it was really easy?

Robyn Grew
Yes, yes . . . It was much easier if you’re a beta player at that point, right? And I think that that’s some of what happened. So when we had this inflationary piece, the thing that kind of got out of the bag, and the Fed went, uh-oh, we gotta do something about this. And they did something about it, and they did it aggressively and quickly.

Katie Martin
So inflation got above target and then it got way above target, and the Fed kept saying, it’s OK, don’t panic, this is gonna be fine.

Robyn Grew
It’s gonna be fine. It’s gonna be fine. Until it wasn’t.

Katie Martin
Until it wasn’t.

Robyn Grew
And then they hiked rates. And they hiked those rates in a way that was hard for markets to keep up. And what centrally happened was people went, there’s something that’s changed now. We’re in this, oh my goodness, we’ve got rates and inflation. We’ve got the shock of the rates inflation. What does that normally lead to? That normally ends up in a cash flow and earnings situation, right? So you go from this hurricane of rates into this sort of top-down hurricane of rates and inflationary shock into a bottom-up sort of tornado of sort of earnings and cash flow, except that kinda didn’t happen. And on top of that, if you then layered on some of the geopolitical pieces, so you then have a war that’s waging, which is terrible in and of itself, but affects energy pricing and affects supply chains. And then you look at what happened in China and you look at the equity price and what happened with Covid controls that came out of China. And then you think about the fact that there may be people in this audience — I’m not going to make assertions — that might remember days when interest rates were at 17 per cent and you were paying your mortgage on a 17 per cent basis. But there are a lot of people in the workforce and a lot of people in this audience also who don’t remember that time at all. And so on and so forth. So you have all of these different pieces of the puzzle, which meant that when this change happened, it was really hard for people within the market and to read the market. And then quite frankly, even with reading the market, with all of the data, with all of the economic theory and technical theory that you and I have grown up with didn’t kind of play out perhaps . . . 

Katie Martin
Chuck it in the bin.

Robyn Grew
Basically chuck it in the bin a bit.

Katie Martin
So for my sins, one of the things I do as a financial journalist, as a markets journalist, is I read a lot of research that comes from banks and from investment houses. And pretty much everybody said this year was gonna be a train wreck in stock markets, just like last year was a train wreck in stock markets. Everything was going down. Everyone was negative on the US, everyone was negative on Japan, everyone was negative on everything. What’s happened? You know, US has done great, thanks very much. Global stocks have done great. So why is that? And how much of it is a kind of bit of a mirage?

Robyn Grew
Listen, I think it would be wrong for me to sit here and say all of those great minds who are market specialists were just insane, right? They got it completely wrong. I think there were very compelling and perhaps maybe still are some compelling reasons to be bearish in this market. Tighter financial conditions generally abound, right?

Katie Martin
So it’s harder to borrow.

Robyn Grew
It’s harder to borrow. Lending’s coming in. You’re seeing this, the corporate real estate market figures, little bit frightening.

Katie Martin
Banks falling over in the States.

Robyn Grew
Some of those little banks in the region was falling over. China’s recovery has underwhelmed. You would expect things to be a little tetchy than they are. And I think we have to remember that the seven super tech stocks that are basically propping up the S&P 500 at the moment are doing just that. If you peel them away, the remaining performance since then isn’t feeling quite so good. So the Fed is sitting there looking like it sort of navigated this into this rather extraordinary place of a soft landing, that thing where actually they’ve controlled inflation, right? But they haven’t had to do it in such a devastating way that you’re saying labour markets really on their knees. We’re starting to see the job numbers sounding about right, which means that are we at the last . . . have we got to the top of the rates hikes?

Katie Martin
I mean, that’s a whole debate for another day.

Robyn Grew
Isn’t it?

Katie Martin
Yeah. And every time you think that, OK, that’s the end now — that the Fed has stopped, even the Bank of England might stop soon, the European Central Bank has stopped, or it’s getting towards that point — every time you think you’re getting there, there’s a speech from another senior central banker somewhere who says, oh, wait now, this thing is not back in its box. I just wanna come back to your point about those seven tech stocks that are powering global markets at the moment? You know, from the portfolio managers that you speak to, are they buying this or do they just think it’s ridiculous or are they somewhere in between?

Robyn Grew
I think there’s a bit in between. I think they, like you and I and others, are feeling a bit bruised that all of the technical analysis that would indicate otherwise hasn’t really come about. So I think there’s a sense of we — and I’ll happily say this — we also, at Man, felt like this should be going in one direction, and it hasn’t. And so the skill for an asset manager has to be, at this point, to adapt. I think if you are entrenched, that’s where you’re in trouble. There is no doubt that what is driving that tech piece is the fundamental belief that AI is the biggest thing, the biggest tech development we have experienced potentially ever. And so how is that gonna transform the way that we all do business? So those tech stocks have got something of a secret sauce. Now, is it going to change everything? I think that’s the interesting piece as we talk about technology and I sit here as a firm where a third of the people who work at Man Group are tech people, right? And then on top of that, I have quants. And on top of that, I have data scientists and the like. So we are heavily tech-driven.

Katie Martin
Yeah.

Robyn Grew
But there is something quite extraordinary about AI and ChatGPT, and there’s something that’s quite interesting about how it’s pervading every conversation. You’ll be sitting at your hairdressers’, as I was saying earlier, and my hairdresser is saying, well, how are you going to deal with it when you’ve got a robot cutting your hair? And I’m like, that isn’t gonna happen.

Katie Martin
Yeah.

Robyn Grew
But what is interesting is the transformation that this tool has in it to do stuff better, faster. So you talked about you reading all of that information that banks produce.

Katie Martin
So you’re saying I could get a computer to read all of the sellside research?

Robyn Grew
I’m saying that it already can. (Katie laughs) I can already give you that computer. We already have that computer. The difficulty is making sure that what you’re asking the computer to do, what you’re asking the parameters of the search are, what you’re asking the parameters of the data set are you’re interrogating — that’s the skill.

Katie Martin
So, but if you look at US stocks, for example, they’re up in by sort of double digits comfortably so far this year. If you take those seven big tech stocks out of the equation, it’s really not very exciting. There’s just a part of you that says, I just don’t feel comfortable with this. But, you know, do we have to . . . just gotta learn to live with it, right?

Robyn Grew
Yeah, we have to. I think that’s right. And I think, you know, there’s a point here about when you are trying to control, as all central banks are trying to control, this inflationary pace, and by the way, the UK and Europe has . . . is lagging a bit behind the US. We always talk about the Fed. We always talk about the US ‘cause it kinda leads everything. It’s what’s interesting, with our English accent, I’m talking about the Fed. But the truth is that Europe and the UK lags behind and perhaps has some more interesting entrenched inflationary issues that it’s trying to navigate. So let’s not think that if the Fed stops, Europe will or the UK will, for a start. But when we think about having a soft landing, when we talk about this soft landing as opposed to the hard landing, a soft landing doesn’t mean you have tons of growth still. It means you have muted growth. It means you have a muted jobs market, right? It’s that sort of special moment, which if you can pull it off, politicians feel great about central banks, feel great about people, feel great about. The thing about inflation, historically at least, and I’m going to regret saying this, I’m sure, is that it’s one of those things, unless you put it out like a fire, there’s still some embers going.

Katie Martin
Right.

Robyn Grew
It takes a bluster of wind and you’re in the same place as you were. So stamping out inflation is hard and it normally is painful. And whether the central banks have the appetite for it and whether governments have the appetite for it, that’s a harder one to guess. Let’s be clear in the next, what is it, 18 months or a year? Half the world’s population — I’m saying this right? Half the world’s populations, countries, are coming up for election, not least of which the UK and the US. I mean, we are looking at huge political change and that drives behaviours with banks, some with appetites and the emotional will to want to take very tough decisions. So if there is a soft landing, I think that muted growth is kind of OK. It would tend to mean you have better bond performance than you do equities. But remember we also had that horrible shock. I mean, one of the shocks out of 2022 and the start of 2023 was the synchronicity of that. The synchronous behaviour of . . . 

Katie Martin
Bonds and stocks are not supposed to go together. Not like that.

Robyn Grew
They’re not supposed to do that. They’re not supposed to go up together and not supposed to go down together. So we, you know, we are going to see something, even a dispersion, hopefully in the markets. That is something we can navigate, and we should navigate. This is where active of asset management should come to provide institutional investors and retail investors ultimately with solutions to tricky, disperse, volatile markets.

Katie Martin
Yeah. So what are you calling it now? You know, you mentioned at the top of the conversation, there was this long period where bond yields were just kind of falling and falling and falling and equities were doing pretty well. So you’re doing quite well out of your bond portfolio. You do pretty well out of your equities portfolio. Now everything’s kind of gone through a tumble dryer. After that great moderation period, now that you’ve taken charge of Man Group (laughs). Great timing!

Robyn Grew
(Overlapping talk) I mean, add up the maths on how long I’ve been in charge. OK, keep going.

Katie Martin
So are you . . . Do you think we’re just looking at a really long period now where inflation is a kind of ember that’s not going to be easy to put out for a really long time and the growth is going to be a bit soggy. And how would you expect your portfolio managers to navigate around that?

Robyn Grew
I think there’s a . . . It’s a good question and a complex answer perhaps. And as I said, I’m probably . . . It’s sometimes better to observe than it is to forecast. So I say that at the top of what I’m just about to say. I think that there seems to me to be a point where we are gonna be living with some inflation, and we are gonna be living with some interest rates. And I think that what you would expect in that environment is to see some volatility. And so what I think we should be doing is looking at diversified strategies and portfolios. Man Group doesn’t sit on one strategy. We have multiple business engines. We have macro quant. We have equity quant. We have CTAs. We have discretionary business. We have a private markets business. So I’m expecting each of those engines to be, one, doing what it says on the tin a little bit, right? So we offer different strategies. I think the thing that we can do is we can sit down with institutional clients and with sovereign wealth, same with pension funds and annuities. And this is a time when you look at portfolios, and you look at portfolio construction and you say what’s needed.

Katie Martin
Yeah.

Robyn Grew
One of the things that we’ve talked about as well is the denomination effect that’s happened in the market.

Katie Martin
Yeah, let’s unpack that a little bit.

Robyn Grew
OK, here we go. Two, three, four . . . So what, when we had LDI and when we’ve seen a bit of liquidity being stretched in the markets . . . 

Katie Martin
There was that happy moment in UK markets. Was that almost a year ago?

Robyn Grew
Almost a year ago.

Katie Martin
(Gasps) That was fun.

Robyn Grew
That was fun. And so all of a sudden, what you found was people who had an allocation or institutions that had allocations into private equity and relatively passive behaviours suddenly had to liquidate.

Katie Martin
Yeah, they needed money fast.

Robyn Grew
They needed money fast or fast. And ultimately what that meant was they sold, right? They had to. Asset manager, I’m here to provide liquidity. That’s a good thing. It’s not a bad thing. It’s a good thing. That’s what we’re here to do. But what it meant was, is the value of those positions went down. The denomination effect is by nature, the exposure and the allocation to their private portfolio, became larger.

Katie Martin
Yeah, yeah.

Robyn Grew
And as we all know, what you don’t want to be is in a position where you start to sell things you don’t wanna sell.

Katie Martin
Which is in real life how it works.

Robyn Grew
Which is in real life, how it works, unless you start to really actively manage your portfolio. So we talked about the fact that we had this extraordinary period, 10 years, 14 years so of you’re an asset holder, any asset holder, you’re doing fine. Not so much anymore. With dispersion, with volatility, we’ve actually got to think about this. This is where beta isn’t necessarily gonna be your friend, where just watching . . . 

Katie Martin
Just tracking benchmarks doesn’t work anymore, yeah.

Robyn Grew
Doesn’t work. And we actively have to manage your exposure on your . . . the risk you have across your portfolio. There’s been a lot of doom and gloom about private equity, right? There’s certainly . . . 

Katie Martin
Is it finished? Is it all over for private equity?

Robyn Grew
I don’t think so. I think there is a place for private equity. I think there’s certainly a place for certain parts of private equity. Do I think that it’s harder to raise funds at the moment? Certainly some of the houses seem to be finding it tougher and harder to get that business, and partly because there’s a lot of leverage involved in private equity, and that means it comes with costs because back to interest rates, right? But there are certainly opportunities with private equity that I think are quite interesting and exciting. So that corporate real estate piece, right? If middle-market lending is in a place where all of a sudden — what are we talking about — we’re talking trillions, right, of which I think it’s $1.4tn by 2027 are coming up for refinancing the corporate estate market, something around $270bn by the end of this year. A chunk of that potentially sits on those regional banks we were talking about, its balance sheets. How is that gonna work? They are . . . this isn’t just . . . this isn’t bad stuff. It’s just stuff that requires the financial markets and asset managers and other financial service providers to get involved and find that value, something that we’re good at. Skilled asset managers are good at being able to be flexible and dynamic, see those opportunities in traditional assets, but also in private assets.

Katie Martin
What knits that together? The kind of the corporate real estate issues, let’s call them.

Robyn Grew
Challenge.

Katie Martin
Challenges, stemming from the fact that a lot of them are linked to regional banks in the US that are having some difficulties. And the episode in UK markets about a year ago where everything went wrong all at once because government bonds tanked in price. This new environment that we have, where we have inflation and where we have really high interest rates just leaves you a lot less room for error and a lot less room to manoeuvre. And that means the shocks happen, right? So how . . . you’ve spoken about this kind of liquidity management bit where you — it’s important whether you are a big hedge fund manager or whether you are a kind of day-to-day investor to have just cash on hand to pay the bill when your roof caves in.

Robyn Grew
Exactly.

Katie Martin
But is there any way of figuring out where the next blow-up is coming from?

Robyn Grew
I think it’s tough. I mean, if I’d . . . maybe I’ll look into a crystal ball and be able to challenge it. What I do think you can start to do is think about concepts that are important.

Katie Martin
Yeah.

Robyn Grew
So rather than . . . so . . . as we’re doing right now, when you think about managing your own personal finances, most of us have some version of the boiler just died.

Katie Martin
Yeah.

Robyn Grew
Or the car just broke. Or you know, I need to do X, Y and Z. That contingency piece is in there. You can’t necessarily predict it. But what we all know is that it’s really handy to have that flexibility. So if liquidity isn’t built into your portfolio, you are gonna restrict your ability to solve an issue or even to take advantage of an opportunity to switch out and be more dynamic. That’s where having a diversified portfolio or having a mixture of asset classes, by having different strategies, where understanding your risk profile, with looking across different regions, with knowing whether you are into emerging markets or whether you think actually China’s . . . read Bloomberg today; has China peaked? These are the things that are about being flexible, dynamic and in some ways people have forgotten that’s the world we were in 10, 15 years ago.

Katie Martin
Yeah.

Robyn Grew
It’s just now we have some different global pieces of the puzzle that are playing out. So do we think AI and ChatGPT is gonna be transformative? Probably. And to what? Do we think that climate matters? Tell you, it matters. It certainly matters to next gen. It matters to my — well, it would matter to my, if he was sensible, son. You know. But do you . . . might the 20-year-olds and under and perhaps the 30-year-olds and under, they care enormously about where their money’s being put to work. Potentially less so — potentially, I’m not saying absolutely — than the person who’s trying to draw their pension today or in five years’ time.

Katie Martin
Yeah. And is climate change mitigation necessarily inflationary as well?

Robyn Grew
Depends. I mean, look at what’s happening with manufacturing. So you’d expect this is another one of those drivers where you would expect manufacturing to be off, right? You’d expect it to be in recession in some format given what’s going on. And yet there are whole parts of the manufacturing world at the moment driven by legislative — I’m glad I said that — legislative changes, not least of which, think America, think Biden, think the IRA, think environmental and semiconductor. That way.

Katie Martin
Think throwing, what was it, 370 billion . . . 

Robyn Grew
Billion.

Katie Martin
 . . . taxpayer dollars at climate change.

Robyn Grew
 . . . at climate change and semiconductors and the production of these things. All of a sudden, those parts of manufacturing, they’re up 80 per cent year on year. That’s extraordinary, right? So is it inflationary or is it opportunity? Is transition part of this? If you are seeing companies that are actively involved in transition, is that a good thing? Do we think the governments are gonna pull back from climate change? I don’t know. But I can tell you that being prepared for that and having content and having discussions around it are really, really important. Because as much as I as a product provider I’m here working with our client base, our clients are working with their, ultimately, their pensioners and savers, and what they want. And by the way, sometimes their states and their sovereign wealths and their governments. And so I didn’t answer that question in the sense of do I know where it’s going to blow up? I don’t. But what I can tell you is you need to be more nimble and dynamic and you need to be operating in diversified portfolios and with asset managers who are going to be working alongside you to understand your risk profile and then find solutions that fit you rather than just saying and here is a product; buy that.

Katie Martin
Yes. That is a different process. And I was wondering, you know, we’ve spoken about this new environment, this new way of thinking about what economies are doing and why markets are going one way where you think you’re going to go the other way. In your new position as CEO, how do you provide some leadership through that? Is it a case of giving people the space to be wrong about stuff?

Robyn Grew
Yeah, absolutely. And, you know, success and failure, the fail fast, whatever those words are that are out in the world, I think it’s absolutely that. And by the way, that’s harder than it sounds because when we all work in an environment where we have a lot of alpha people and they like being right a lot and they find it hard being wrong, and so actually creating cultural environments where failure is part of the success is incredibly important and it’s quite brave. I think to be . . . To fail, you have to be courageous and you have to be able to be self-reflective and you have to know that there’s a safety net in which you can fail.

Katie Martin
Yeah.

Robyn Grew
But you cannot be innovative if you can’t let people fail.

Katie Martin
Yeah.

Robyn Grew
And so absolutely, it’s one of my key tenets in there. Cultures that are collaborative, cultures that allow people to fail, cultures that are innovative. I sit around — and I hope my executive team isn’t gonna get cross with me by saying this, but I don’t think they will — the next best idea at Man Group is unlikely to come from me . . . It’s unlikely to come potentially from my executive committee. It is gonna come from somebody within the organisation. Making sure I hear them and it gets to us so we can action it, that’s critical.

Katie Martin
And is there a sort of sense of almost like forcing people to listen to the other side of the argument because, you know, there’s this thing in markets where it’s kind of cool to be bearish and it’s kind of cool to say, you know, it’s really uncool to say, yeah, I think markets are just kind of gonna float . . . 

Robyn Grew
It’s gonna be great!

Katie Martin
So the next couple of years it’s going to be fine. It’s much cooler to be able to say, you know, I think there’s a big disaster coming of some description or other. But how do you make sure that conversation actually happens? The bulls are forced to listen to the bears and vice versa?

Robyn Grew
I cheat a little bit because I have Man Group. And as I said, we don’t have one fund. So I have a group of people across two quant engines, a discretionary engine, a private markets engine, a solutions engine, fund-of-funds engine. The debate is rich. How about I put it that way? There’s an intellectual debate and rigour and fun in that. That’s where this . . . there’s a point where you talk about . . . I can talk about the cultures of different parts of my business. We have an overarching culture, that collaboration, that collegiality, that fail piece, that investment in technology, dynamic clients and what the centre of what we have to do. But when I think about my quant teams and I think about my discretionary teams, a very good colleague of mine once said, you see, the thing is, Robyn, that discretionary lot, they were the lot at the back of the bus and the quant lot, they were the ones in the front of the bus.

Katie Martin
So they’re a bit . . . they’re both so . . . and I say this affectionately . . . 

Robyn Grew
I know you do.

Katie Martin
Nerds, but they’re different kinds of nerds.

Robyn Grew
Different types of nerds, though. And then you have people like me, and I’m a completely different type of nerd again, so that’s the strength of difference, the strengths of coming from different perspectives, incredibly important. The discretionary teams, they don’t say I don’t want anything to do with technology. They love us giving them the technology that makes them smarter and better. Those banking reports, that ability to say, hang on a second, don’t treat a bank stock the same as an insurance stock. You’re holding on for too long. Let us show you how you can improve performance. Every day of the week, they’re gonna . . . they grab a hold of that stuff. But fundamentally, they’re doing something that is different from quants. There are quant models that we use where we’re asset agnostic, doesn’t matter which particular bond or which particular equity you might have. It’s within a sector. They’re not going to get that within a fundamental equity investor sitting in a discretionary . . . 

Katie Martin
No, a stock picker somewhere doesn’t speak that language.

Robyn Grew
Doesn’t do that.

Katie Martin
Yeah.

Robyn Grew
So put them in a room together, that’s more fun.

Katie Martin
Yeah. Because it just is incredibly challenging when the economy sort of refuses to do what you think it should be doing or . . . 

Robyn Grew
Yeah, so when governments put way more stimulus in than they say they’re going to, or where you see that there is a political issue in the way or a geopolitical issue that’s driving the behaviours in some formats, which means it doesn’t do what a market economist thinks it should do.

Katie Martin
Yeah.

Robyn Grew
But that’s what makes so . . . quite frankly, that’s what we’re here to do. And that is why we are here. To throw as many smart people and as much content at the problem to find as best answers as we can and not to feel so wedded to them that we can never change. That dynamic flexibility and the fact that, quite frankly, we learn from our clients, too. We don’t sit there and on a very high stool, which I’m perilously close to falling off of.

Katie Martin
We’re both quite short people and we’ve got very tall stools. (Overlapping talk)

Robyn Grew
And we don’t sit there and proclaim, here is the answer. This is a collaboration. Getting great minds together. There is nothing really more, I think more important than we don’t forget our roles in this. We never walk in to our organisations, I never walk into my firm and we never walk in, I don’t have anybody, I think, who’s ever said this any other way at Man Group, we know that we are the custodians of people’s savings and pensions.

Katie Martin
It’s other people’s money.

Robyn Grew
It’s other people’s money. And we are there . . . 

Katie Martin
It’s a bit scary, though, isn’t it?

Robyn Grew
It’s a huge responsibility. And maybe that’s why I don’t sleep. But that sense of if we lose . . . the day we lose connection with that, we won’t be as good. The day that we lose connection with the fact that all we’re supposed to do everyday is work our very hardest and apply everything we have to solving that problem. So the $100 or £100 that somebody gave me at the beginning of this gets returned with 100 plus something. That’s my job. And we don’t lose, we don’t lose a connection with that. Because if we do, then it’s just numbers. It’s just silly numbers.

Katie Martin
Yeah. But do you feel like the new era that we have in front of us, you know, it’s easy to look back at markets in the past and think that they were very challenging, but it was a much easier environment. It was much more kind of speculative, right? The past couple of years where I’ve done the FT Weekend Festival, I’ve been talking about crypto, largely telling people I thought it was a terrible idea. But no, but still it was something that people wanted to know about as a potential investment destination. The froth, a lot of that froth, a lot of the froth’s come out of private equity, a lot of the froth has come out of crypto, you know, you still have some parts of the stock market that have sort of frothy elements, but we do seem to be in a much more sort of sensible environment. Money has a cost. It’s not just any old company can rock up to the bond markets now and borrow for the right thing.

Robyn Grew
Right, exactly right.

Katie Martin
How does how does that change how portfolio managers think? You know, you have to expect that, sure, this company that I’ve invested in, it could actually go bust or it could default on this bond that I’ve bought.

Robyn Grew
It’s much more about back to really understanding what you’re invested in. Or if it’s strategic, if it’s a quant piece, do you understand that sectorial exposure? And I think it is that. I think we are seeing more and more data. I think this is a data-rich space. Some might say there’s more data than lots of people can deal with. And so sifting through that is where some of the tools that we’re talking about become extraordinarily valuable. I think that when we talk about ChatGPT, I can’t you, know, the question that comes to me is, are you worried about quant? You know, is it going to take over quant investing?

Katie Martin
Yeah.

Robyn Grew
I don’t think that’s the case at all. I have at least half the firm whose can’t get hold of enough of AI machine learning where the concept of partner coding effectively where you can throw something at ChatGPT, and it has its first go-round for your worst nightmare. Write this article and then I’ll edit it. Right? It’s never gonna happen. So the reality of having the ability to go out into data sets and get through them and to them quicker, faster, better. But we also are well aware of the risks of that. So if you ask ChatGPT too many questions, it will try and give you answers. You should be careful about what you do there, right? You’ve got to know what you’re asking, and you then have to take responsibility for what it returns to you. Otherwise it just becomes a law of the lowest common denominator of ChatGPT summarising ChatGPT. But there is enormous opportunity therefore to take data sets and interrogate them quickly. That’s valuable. There’s a lot of data and not all of it is useful. Not all data is created equal.

Katie Martin
No.

Robyn Grew
So does it put more and more focus on organisations like mine to be smarter, better . . . 

Katie Martin
 . . . to understand the companies better? Yeah.

Robyn Grew
 . . . and to understand the markets better and to understand the impacts. But you say that as I look at, you know, that’s where you get to things being theoretical or not being rules, right? But you’re absolutely right. It’s about that sense of being committed. And so I, I know if I talk to people, if your fund managers are not investing in tech, if they’re not investing in the tools that are gonna make them successful and competitive and give them those edges, I think that’s a problem. We spend a lot of money on tech and have done. And by the way, we don’t just spend it on the fancy stuff, that quant stuff, the modelling stuff, the data stuff. We spend it on the stuff that ensures that we don’t degrade alpha, but we don’t give away . . . 

Katie Martin
You don’t eat away at returns.

Robyn Grew
That’s right.

Katie Martin
Yeah.

Robyn Grew
And that’s all the way through your organisation. So it is about making sure your lawyers are coding. And they do. And it’s remarkable to see a lawyer code. I’m one of those who has never thought that would happen in my lifetime. But it’s as important in your ops, your middle office areas, your risk areas that they are as equipped as any other part of your firm. So this is moving, and it’s moving quickly. My personal view is you got to drive to be at the front of that. You cannot sit still.

Katie Martin
Yeah. But just going back to kind of asset class performance. If you, you know, think about the people in these little kitchen tents, you know, who’ve got the kind of savings. I know you’re not here to kind of give investment advice, but it sounds like the thing that everyone has to expect, whether you are a professional investor or whether you’re a have-a-go investor or whether you’re just like a normal human who’s got a pension account is that you have to expect that it’s going to be a much more rocky road now than it was previously.

Robyn Grew
Absolutely.

Katie Martin
I mean, that’s sort of psychologically a bit difficult, isn’t it just to think? Because when you look at the screen and you see, well, my pension pot that was worth X last time I looked at the screen is now worth like 20 per cent less than that. This is quite painful. And by the way, to get back up to that, it’s not another 20 per cent that you need to go up; it’s an awful lot more.

Robyn Grew
That’s exactly right.

Katie Martin
So, you know, how do ordinary people deal with that? How do they remain committed to financial markets, or should they remain committed to financial markets?

Robyn Grew
It’s a great question. Should they be committed to financial markets? I think that financial markets have an extraordinary barometer on what is going on in the world. We talked about today, not just about bonds and equities. We’ve talked about real estate. We’ve talked about the different things . . . manufacturing. These are incredibly important parts of our economy, and the way to look at them and get to them is through financial products. How do you keep your nerve when equities go down? You keep your nerve. I think the retail piece about you sell low, buy high is be with people who look after you and advise you and make sure that you are holding them accountable. Understand what your pension is doing. Understand where it’s invested. Understand how much of it’s in cash. Understand whether you’d be better in a long-term bond or whether in a CD, if you’re in the US. Think about it, and think about it post-tax.

Katie Martin
Yeah.

Robyn Grew
Right? Because that’s the other element of this. That these are . . . every single part of the economy is being impacted like this. You’re starting to see, we saw headline news three days ago about again, a lender in the UK cutting mortgage rates, again. Right? So what does that mean for house prices generally? Most people, house prices in the UK, you just hold on, right? You just hold on. So what am I suggesting? One, I’m not giving any investment advice. But what I am saying is, if you care about markets, you care about your investments, know them. Know what they mean. Hold people accountable. Talk to people and understand whether if something goes down, actually, it’s OK for the minute. Have you got a diversified portfolio? Are you very concentrated? How are they looking after your money? What’s getting put to work? And are you happy with that?

Katie Martin
Yeah. But the glorious thing about what markets have done over the past few months is that actually you can afford to do . . . 

Katie Martin and Robyn Grew
Not much.

Katie Martin
You can buy a nice government bond for like . . . 

Katie Martin and Robyn Grew
Four-and-a-half per cent.

Katie Martin
 . . . yield. You don’t need to faff around with like meme stocks and crypto and AI stocks or anything else.

Robyn Grew
That’s exactly right. I know I’m not gonna get drawn on crypto, but the, you know, that’s exactly right. The problem with it is the minute is that same liquidity piece. So how much are you managing your own portfolio for that moment when or if you need liquidity? So is it about it all being good, all being bad? No, it’s about — I have, that diversification word I keep on saying.

Katie Martin
Yeah, yeah.

Robyn Grew
But diversification I think is key. Understanding your liquidity needs — that’s kind of key, too, on a personal level.

Katie Martin
Please wish Robyn luck when she properly takes on the job on Monday. Thank you for your time. (Applause)

Robyn Grew
Thank you. Thank you, Katie.

Katie Martin
Thank you.

Robyn Grew
You’re welcome.

Katie Martin
Thank you very much.