Invest like an open
DB scheme
Our viewpoint
6 May 2021
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In the first of our "Invest like a..." mini series, show hosts Dan Mikulskis and Mary Spencer welcome Richard Williams, CIO of RailPen, onto the show to have a conversation about investing like an open DB scheme.
Richard started his career at LCP, which was colloquially known by his flatmate (who was also a trainee actuary) as Lane Clark and Paychecks!
We discuss
Good investing is about identifying your edge, nurturing and protecting it. RailPen edges:
- A true long-term horizon. They hold high returning but volatile assets. This gives managers (including internally managed assets) some security that they won’t be sacked on short-term performance.
- Governance process enables the team to be nimble but also to be a good counterparty: they know what they want, they won’t lead managers on, they are good for their money and are a long-term partner. This all means they are more likely to be presented with illiquid asset opportunities from managers, or offered lower prices. Is this the way to truly benefit from the illiquidity premium?
- They have a willingness to be different, eg be a willing partner with managers who have short track records.
- They have a great team: they are helped by the hybrid approach RailPen takes with some assets managed in-house. It is very important to have all stakeholders aligned on longer-term objectives.
But even if you have a lot of edges, investing is still hard!
There is great importance of the role of a mentor – and learning from junior as well as senior colleagues.
Decisions are best made in groups, but small groups. This generally avoids funds managed by solo investment managers, but also big groups are unwieldy for making big decisions.
One thing for listeners to take away
Be grateful for how fortunate we all are to work in this industry and in such an interesting area.
Most underappreciated thing
Part of the skill is to keep things simple – but that’s not easy. There are so many temptations to do the wrong thing.
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Each LCP investment uncut podcast is for information and marketing purposes only and does not constitute any form of investment or financial advice or a financial promotion (under the Financial Services and Markets Act 2000). All views expressed by the podcast hosts and guests are purely their own opinions and do not represent those of LCP, its clients or affiliates. Our podcast listeners should always seek independent financial or legal advice before making any financial or investment decisions. Please refer to the Legal Notices section on the LCP website for further information.