Alpha Edge Recognition - Portfolio Asset Mix & Strategic Partnership
This year, Allocator Intel is recognizing leaders in the allocator community, acknowledged by their peers, for exceptional leadership in the key areas of portfolio construction in the Alpha Edge Recognition Awards.
Brandon Gill New is nominated for her work in Portfolio Asset Mix & Strategic Partnership in her role as Managing Director & Head of Multi-Strategy Investing and Digital Assets at OPTrust, the $19 billion public pension fund based in Toronto. She is a graduate of Middlebury College, where she studied international economics, and London Business School, where she received her MBA. She has experience with alternatives going back to her work as a Senior Equity Analyst in 2004.
Prior to joining OPTrust in 2018, Brandon spent 10 years at Ontario Teachers’ Pension Plan, where she focused on equities and alternatives, and almost two years at BMO Capital Partners focused on the firm’s $600 million private debt/equity fund. At OPTrust, she has helped build the multi-strategy investment portfolio and grown the team from three to nine people during the COVID-19 pandemic to manage several portfolios across the alternative spectrum.
The following is edited for length and clarity.
Let’s begin with your portfolio and what it looks like today.
What our team covers includes OPTrust’s multi-strategy investment portfolio: We have hedge funds, a credit portfolio that invests across the liquidity spectrum, an emerging markets portfolio, and then also an innovation portfolio, which focuses on strategies and technologies that we think will be transformative for the long term.
What is your take on the effect of the advent of artificial intelligence and decision-making for allocators and asset managers?
We think it’ll be transformative. We have been looking at machine learning and AI in our investment strategies, especially our systematic strategies to manage risk. From an operational perspective and risk perspective, it’ll help us do our jobs better, which in turn, better serves our members.
What have been some of the most significant changes in portfolio construction and opportunities available to you?
In our hedge fund portfolio, we structured a managed account portfolio four years ago, and that’s allowed us to better customize our investments. We have also built out our credit portfolio: We diversified that quite a bit, and we do everything from liquid strategies to private strategies to everything in between, which allows us to be opportunistic as the markets change.
The build-out of the innovation portfolio is very small, and we do our investing methodically, but one of the main benefits is what we are learning from it, allowing us to better understand future trends like AI. Having skin in the game and passing the knowldge along have been very important.
What are some of the factors that influence when you evaluate opportunities in the investment space?
Across OPTrust, maintaining our fully funded status is always our driving force.
Within our portfolio, there are four key areas of focus: We do all external manager investment, and one thing we focus on is making sure any manager we invest in has a proven edge, where the manager is the best in class in its space, investing better than their peers in their respective strategies.
At the same time, we want to make sure they’re good at putting the investments in a portfolio context. They also have to be really good at risk management, which should be integrated into their culture and way of being.
The last point I’d make is alignment: Their fees and structure have to be set up to get the best from the manager, and terms should align with us and have our pensioners’ interests at heart.
What are you focused on in the next 12 to 18 months?
I think it’ll be an interesting time for many strategies, given the volatility and dispersion we’re seeing in the markets. With the hedge fund program, what we’re trying to do is upgrade to better and better managers over time, and we want to make sure we’re leaning slightly into the managers who are running strategies we think are going to do well. One specific area we’re looking at is the relative-value managers in the hedge fund area.
In the credit portfolio, it’s an interesting time. In the private credit space, we think yields are higher and are getting very interesting, so you can get quite good value for your yield, and we’re anticipating that, as well.
In that innovation space, one of the things we’re focused on is AI, and “How is that going to affect the broader investment landscape?”.
What are some of the challenges you anticipate for your team for the next few years?
I’m quite concerned about investor terms. In some cases, we are seeing terms getting increasingly less favorable for investors, and they’re tilting a bit in favor of the managers: We’re seeing higher fees, and more lockups and pass-throughs.
Investors are losing opportunities as a result, and more benefits are going to the managers versus investors; we’re actively engaging with managers on this topic.
What’s your greatest accomplishment?
I’m really proud of how our team has built out our whole program over the course of the last five years. I joined five years ago, and the team has worked hard over the years. When I started, we were in our early stages of building our external manager program and We started out with a simple program:
We had three people on the team; now we have nine people and an extensive and successful external manager program. The pandemic was a disjointed experience, and we had to come together through that.
Our team specifically comes into the office a couple of times a week, and we have external managers come in; we’re in the office quite a bit to meet them, and we enjoy getting the team together.
What do you do in your spare time?
I have two kids, and I spend as much time with them as I possibly can. I love to travel. I have an international background; I love exploring new places and catching up with friends from all over.
I took tennis up this year, and it gives me something totally different and new to focus on.
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