June 2020

Posted by Anton Murray Consulting on . Posted in 2020

Lewis is a good example of carving a unique path; starting out as a grad fixed income salesman at Salomon Brothers, and transitioning to a career writer with his first novel Liar’s Poker. Lewis also continued with notable works The Big Short and Moneyball, both made into blockbuster films.

Flash Boys, published in 2014, tells the murky story of high-frequency trading and its influence on the numerous public and private exchanges that make up the US listed stock market. It is not so much an exposé, as an account of a couple of ex-traders, developers and technology sales people coming together to try to rewire a trading and market environment that they thought was fundamentally broken.

The story follows a former trader and banking executive Brad Katsuyama who, with some colleagues and a band of diverse personnel, start an alternative stock exchange, the IEX. Their fundamental goal was to remove unfairness from the market and support the underlying needs of actual investors who were at the wrong end of front running and other predatory strategies executed by high-frequency traders. The situation is heightened by the understanding that the high-frequency traders, the investment banks and exchanges themselves are all in on the investor predation together.

The protagonists in Flash Boys took a huge gamble to leave high-paying, good quality jobs to pursue a path that certainly did not hold any guarantee of success. Lewis himself is a good example of a person changing career paths to great personal satisfaction and, of course, commercial success. Much like the characters in Flash Boys, Lewis’ own departure from financial services has the moral undertones that Katsuyama and his colleague’s had in creating IEX to challenge the status quo on Wall Street.

Flash Boys is more about having the fortitude to make change than it is about the seductive power of Wall Street and high-frequency trading. It is a valuable lesson to acknowledge that there is always something better, and it is not always best to do things the way they have always been done. This realisation and commitment to action is hard but it is worthwhile; both Lewis and the IEX team are proof of that.

May 2020

Posted by Anton Murray Consulting on . Posted in 2020

Lately in isolation we have been enjoying the five seasons of Billions, and this month, have put together a review of this entertaining series. The central theme is a battle between District Attorney Chuck Rhoades and Axe Capital hedge fund manager Bobby Axelrod. The main characters are inspired by the real-life journey of ex-US Attorney Preet Bharara and Steven A Cohen of SAC Capital Advisors. Bobby Axelrod is acted by Damian Lewis, a more playboy version of Steve Cohen, and Paul Giamatti plays the role of Chuck Rhoades.

Bahara’s real life as a US Attorney for the Southern District of NY is full of a colourful array of prosecutions across insider trading, public corruption, art fraud and Russian money laundering that doesn’t stray too far from the themes covered in Billions. With the prosecution of SAC, Cohen was forced to close the firm in 2013 and set up a family office called Point72. Since 2018 it has been able to manage external money.

There is high quality acting from both Giamatti and Lewis, with a good supporting cast, especially from the wives of the two leading men. The first few seasons are focused on the tussle between these two as Rhoades attempts to take down Axelrod, and in part we catch a glimpse into Bobby’s affluent lifestyle. Although at risk of self-indulgence, the affluent display of Axelrod’s life is part of the enjoyment in the first few seasons and this display of affluence loses a bit of focus in the later seasons, which is a shame simply because it’s fun to watch Axe spend his money. The main conflict between the two leading guys is entertaining and compelling in the first few seasons, although feel like it drags a bit and becomes implausible as the conflict reignites in season five. As in real life, it’s likely that Axe would simply pay a big fine, then move on to making money with a spin-off fund [as he did with Point72] and Rhoades would move on to other prominent cases like Russian money launderers and terrorists, rather than vehemently pursue Axelrod over many years and seasons. Like watching a 50-hour movie, at times some of the characters become less interesting, although the acting of both Giamatti and Lewis especially carry your interest through the seasons.

There is some implausibility with the character of Wendy Rhoades, Chuck’s wife and Axelrod’s HR and Performance Coach for the firm. It seems improbable that Axe would continue to employ her while she was married to the US DA. And likewise, surely Rhoades would have firmly encouraged her to go find another HR job as he focused completely on taking down the fund. The conflict of interest is so extreme on both sides of the fence, that it borders on improbability. There is clearly some romantic impulse between Wendy Rhoades and Axelrod, and we won’t ruin it for you, but we reckon if the impulse had been consummated earlier in the series, this would have made for a more obvious plot continuance for Chuck to be pursuing Axelrod. Sure, it’s this implied romantic interest and tale of jealousy, envy and revenge that drive Rhoades. In this regard, there is a almost a feel of ancient Greek tragedy to the series with an enduring tale of vengeance, jealousy, rage and envy from both leading men.

In summary, Billions is a really cool insight into the world of a high-flying hedge fund manager in CT and NYC, and the machinations of the district attorney’s office. This is a work of fiction, but close enough to the real life adventures of Bahara and Cohen to be both educational and very entertaining viewing.

April 2020

Posted by Anton Murray Consulting on . Posted in 2020

Never let a good crisis go to waste”, possibly said by Churchill, is a relevant turn of phrase in these challenging times.

Recently the New York Times offered an interesting piece on constructive solitude enjoyed by Thoreau in Walden Pond, Massachusetts. While visiting the country and isolating yourself in a cabin on a lake would be impractical for most, there are some lessons for us to consider in Thoreau’s approach. This virus will be relatively short-lived, though undoubtedly impactful on all of us, but there is real value in constructive isolation.

Not to diminish those directly impacted by this virus either economically or physically, but reframing this period of isolation as an opportunity for renewal or regeneration can be powerful. Consider these short months of social distancing as a valuable time to spend with your kids, improve your health, learn a language or reconnect with your parents. Regarding these odd times as either a burden or an opportunity for personal development, could just be a difference of perspective. Many young children spending countless beautiful days in close connection with their parents will probably look back on this time with fondness. Opting for a positive outlook during isolation is a choice we can all make.

Initially it feels natural to exercise often, perhaps compulsively, to burn off excess energy from being cooped-up indoors for extended periods. Although beyond exercise, this is an exceptional time for forced mental and spiritual isolation. A government-mandated time for you to, perhaps, reflect on what’s important in your life. An opportunity to read, meditate and dream more than we are all accustomed to. Maybe an ideal time to finally put some creativity in your life to pick up that paint brush, typewriter, journal or instrument that you haven’t touched in years.

From a staffing perspective, perhaps now is an ideal time to review your hiring plans for the next few years. Potentially relook at oft-neglected strategic plans, org charts and team development. For your career, now may be a good time to update your CV and your LinkedIn profile, to prepare for a new career direction after the virus passes. Notably, many of our exceptional clients across the region are continuing to interview and hire, to build teams now and plan for growth in the future.

Take care, and enjoy some constructive isolation in your own way.

Please call or email our team if we can offer you any support to help hire for your team, or connect you with that next step in your career.

February 2020: The Rise of Investment Data

Posted by Anton Murray Consulting on . Posted in 2020

Over the past few years we have seen an increasing focus on investment data analytics from asset owners and managers. This investment spans hiring, with major firms increasingly seeking out data specialists, quant analysts and middle office staff with an analytics focus, as well as direct investment in software and datasets. Bloomberg forecasts that spending on alternate datasets such as these will reach $1.7 billion in 2020. The focus on investment data is gaining prominence in strategy too, with McKinsey offering an insight to explore the advance in analytics in asset management.

Increasing interaction between performance, risk, analytics and investment teams has led to the creation of new investment functions, and new ideas of how traditional asset management and allocation takes place. New areas of innovative such as artificial intelligence and machine learning have been particularly impactful on investment analysts tasked with quickly assessing and digesting a huge volume of information. Effectively capturing and synthesising investment data into a form that integrates neatly into existing investment or asset allocation strategy frees up time for more in depth, informed analysis, creating a substantial competitive advantage for investment firms that are able to harness the power of big data analysis. Further, internal data analysis is also allowing asset managers to structure their teams more effectively, assess their client base at a granular level and mitigate bias in investment decisions. Now it is de rigueur for investment firms to use increasingly advanced analysis of investment datasets, such as QMA​, a US based investment quant firm, who have developed methods that allow them to effectively assess the ESG aspects of companies that do not disclose their practices, a game changer in emerging market equities. Furthermore we are noticing a heightened interest from asset owners to analyse data more directly to potentially replicate investment performance within their in-house investment teams.

With this increased investment in data comes another growth area for the industry: data governance. We have seen a noticeable increase in data governance hires, from the creation of executive positions such as Chief Data Officers, to the growth of data governance teams within both risk and middle office functions.

The emergence of data as a major influence in asset management has clearly changed the landscape on a micro level, but it is also leading to macro changes and creating new opportunities for businesses to diversify. Notably, Future Fund and BNP Paribas have established a data service arrangement to jointly develop new products, creating tailored solutions for the sovereign wealth fund. The rise of investment data has resulted in increased influence from vendors and service providers, enabling the analysis of investment data. Firms such as BlackRock have seen huge success with Aladdin, with other prominent players including FactSet, Ortec and GoldenSource, with traditional data providers such as Bloomberg hustling to remain competitive and relevant.

The rise of investment data will be a space to watch, and we look forward to supporting our clients and candidates in this rapidly evolving growth area within asset management.

January 2020: ETFs – Growing by the Trillions

Posted by Anton Murray Consulting on . Posted in 2020

ETFs are continuing their surge forward and are now a multi-trillion dollar market. Their simplicity has added to their popularity, particularly amongst retail investors looking to diversify their portfolios or getting exposure to markets and asset classes that previously proved hard to access.

Much of their popularity can also be associated with the cost and barriers to investment of managed funds, as well as the general underperformance of active asset managers. ETFs generally provide investors with exposure to track market indexes or a general theme, asset class or region. The number of millennials using ETFs has increased from 19 per cent to 29 per cent since 2013. But they are not without their critics with Michael Burry of The Big Short fame comparing them to the GFC bubble of asset backed CDOs.

Further regulatory scrutiny has arisen around active ETFs where fund managers aim to outperform benchmarks as opposed to replicating their performance. There is already tension around the relationship between the market price and net asset value (NAV) of ETFs given that they are traded on market but are valued based on the underlying NAV. Index tracking ETFs employ external market makers to maintain the price and market for the ETF. ASIC has recently blocked the addition of new active ETFs onto the ASX as it reviews the situation due to the fact that active ETFs internalise the market-making process and do not disclose their full underlying portfolio holdings out of fear of revealing their portfolio intellectual property.

With the regulatory review ongoing, it remains uncertain how exactly the active ETF space will be affected. Active ETF providers are already required to post delayed portfolio holdings, however there is the potential for providers using internal market-making practices to expand spreads and thus increase the size of performance fees. This mismatch in fund manager incentive and lack of transparency provides the potential for abuse. This issue is all the more important with retail investors using ETFs at higher rates and with easier access, the potential for more uninformed investors to lose out if something goes awry has increased. ETF providers are also generally active marketers and educators, and this will continue to be important in their growing size in the investment industry as well as in the eyes of the regulators.

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