What's driving the asset management’s top leaders?
How did today's top asset management executives get where they are, and where do they think the industry is headed?
This year, Money Management Executive recognizes five talented industry leaders who share their stories and their takes on issues that matter to the industry.
The execs discuss the products they're developing and the projects they're leading, how they give back to their communities, where asset management might be in 10 years, and the rewards and challenges they've experienced.
Jeffrey Baccash, global head of ETF solutions at BNP Paribas, tells us about the new app his team is developing, and how he shares his enthusiasm with ambitious industry newcomers.
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"Explaining the benefits and different styles of a full-time versus part-time versus executive program can help people figure out what type of program will help them best achieve their goals," Baccash says.
IndexIQ research director Kelly Ye says firms in the next decade will shift from providing products to solutions. "Products claiming to provide similar investment strategies could diverge in performance, even when they are passive in nature," she says.
Sonal Desai, CIO of Franklin Templeton's fixed-income group, notes concerns she has about the direction of asset management: "Asset managers need to be faster and smarter to make the right bets in a fast-changing external environment, while understanding and leveraging disruptive change."
TrimTabs CEO Bob Shea says, when considering the challenges he's faced throughout his years in the industry, he remembers the lessons he learned from the 2008 financial crisis when he was managing partner of AsiaSource Capital, a multi-strategy hedge fund focused on investments in China.
"Raising money in Europe and the U.S. and investing in China was an incredible experience, and our longer-term goal was to add to our team and diversify our investments throughout Asia," he recalls.
Shea adds, "2008 delivered a massive redemption blow to the still emerging Greater China hedge fund space, with 80% of assets under management leaving the market that year. Returns since inception were positive. However, I made the difficult decision to return capital to investors."
In the end, he says, he learned a valuable lesson that, while investment risk can be managed, the business risk associated with concentrated exposure to a single emerging market is too large.
Read on for more on these executive's stories and their thoughts on the state, and future, of asset management.
Director, Global Head of ETF Solutions, BNP Paribas
In his role as global head of ETF solutions at BNP Paribas, Jeffrey Baccash heads up the firm's smart passive initiative, and has been developing a new global servicing app for fund managers.
He and his team spent a year researching and designing the app. While in the development stage, they saw three key factors as driving the space: ensuring global coverage, including transparency and allowing for digital connection. In the prototype phase, they took feedback he says allowed them to better mold the platform from an asset manager's point of view.
"Our goal is to create a consistent global user experience that allows our clients to easily access their data and quickly analyze what is occurring with their funds," he says.
Baccash has been with BNP Paribas for 15 years, and in that time has been able to observe what kind of strategies work for a variety of teams. The strong teamwork involved in the app creation and other firm projects has been one of the more fulfilling aspects of his job, Baccash says.
"We have members in four different time zones, so being able to work together has to be properly planned for and monitored," he notes. "The thing that gives me the most satisfaction is when the team is performing well and you can see the high level of enthusiasm from each of the individual members who are finding ways to share their experiences and maximizing their talent."
Outside of the firm, Baccash enjoys educating and mentoring young people with an interest in the industry.
"It is important to keep bringing new individuals into financial services, so I enjoy helping people getting started in their careers," he says. "This is more than just helping someone find a position. It is about asking the right questions and sharing your experiences so they can determine what part of the industry is best for them."
Principal, Head of Product Management, Vanguard
Kaitlyn Caughlin has been with Vanguard since taking an internship at the firm in 2006. More than a decade later, she is a principal in charge of monitoring the health of the manager's $5.7 trillion product lineup.
As head of product management in Vanguard's portfolio review department, Caughlin spends her workdays engaging with sophisticated clients, driving the research behind the firm's fund development and leading its talent oversight committee.
"We're responsible for being the steward of our lineup; and with Vanguard at $6.2 trillion in AUM. We take that reasonability really seriously," Caughlin says. "It's our clients' money and it represents their retirement dreams, their dreams to send their kids to college, their emergency savings ... so we really want to make sure we have the right focus."
Without mentors, she says she would not be where she is today. "I had a certain path in mind and a principal at Vanguard told me I could do more," Caughlin says of her mentor Sarah Houston, a 28-year veteran of the firm. If not for the help from Houston, whom she refers to as her "fairy godmother," Caughlin says she would not have thought it possible to attend MIT Sloan or apply for a senior leadership position. "I am trying to pay that back by finding talented individuals with diverse backgrounds, with high potential, and be there in the right moments for them to help them realize and want to strive for more so they can reach their ultimate potential."
Over the past decade at Vanguard, Caughlin has held roles in product strategy, flagship services, corporate strategy — where she was a key advocate for the launch of the firm's retail direct offering in the U.K. — business development and at Vanguard's center for excellence.
Today, Caughlin is studying for the CFA Level II Exam and says she is more excited than ever about the future of the industry.
"I don't think there's ever been a better time to be an investor than right now," she says. "Whether you take the cost compression that's occurring or the increased transparency, investors are getting a better deal."
CIO of Fixed Income, Franklin Templeton Investments
After nearly a decade of working in various roles at Franklin Templeton, Sonal Desai was named CIO of the fixed-income group. In this role, she oversees areas including corporate credit, emerging markets debt, and municipal and local fixed-income strategies and teams.
Desai drives the fixed-income group's adoption of an active quant approach, which aims to combine quantitative and data science insights with macroeconomic research and fundamental security analysis.
"The active fundamental versus quant debate is a false dichotomy," she says. "At Franklin Templeton fixed income, we bring the two approaches together. This collaboration between economists, analysts, data scientists and portfolio managers - pushing and challenging each other and creating a virtuous loop between quantitative and fundamental analysis - is the future of fixed-income investing, and what I am most excited about."
Within the firm, Desai belongs to Women@FTI, an employee-led group with a focus on networking, recruiting and mentoring. She works to promote gender diversity in the industry, and participated in a Morningstar roundtable on the topic in 2017.
As for challenges she has faced in her career, she says taking over the fixed-income group meant working hard to gain her new team's trust and confidence.
"I reorganized the platform and worked at bringing fundamental analysis and data science together," she says. "I focused on being totally transparent and direct with the team, explaining what I wanted to change and why, what I thought we could and should do better. I encouraged everyone to speak up and I listened.
"Our transformation is now well under way, and I am extremely proud of how the fixed-income group has risen to the challenge," she adds.
CEO, TrimTabs Asset Management
Bob Shea kicked off 2020 by starting a new job as CEO of TrimTabs Asset Management. He came from J.A. Forlines Group, which he co-founded in 2009 and for which he was most recently president and co-chief CIO.
Since joining TrimTabs, Shea has focused on internal and external communications initiatives to help the marketplace understand the firm's free-cash-flow investing strategy, which underpins their two actively managed ETFs. He also aims to educate the public on the impact of applying a quantamental approach to portfolio management.
"As early adopters of this process, we've employed this methodology into our products since 2011," he says, "showing how combining technology and data with experienced forward-looking portfolio managers can together add value to sector allocation and stock selection."
Educating others on his areas of expertise has long been a focus for Shea, as he has mentored many young industry professionals over the years,. He also spent 10 years on Nasdaq's Quality of Markets committee, which focuses on market transparency and efficiency.
Looking ahead, one of his larger concerns is that too many people in the industry believe active management strategies will soon be dead.
While he concedes that many active managers have spent years underperforming or "hugging benchmarks" and inviting the current disruption, he says, "I firmly believe there is room for innovative active strategies that generate alpha at a competitive price."
He also sees ESG as an important focus for managers and investors. "The coming decade is when many years of talk and abstract theorizing about climate change will turn into action" he notes, "and investors who dismiss ESG as a box-ticking exercise will find themselves blindsided."
Director of Research, IndexIQ
When Kelly Ye joined IndexIQ in 2015, the firm was transitioning from a standalone operation to a New York Life subsidiary. Her quantitative background, which includes a role as head quant on the credit investment team at Goldman Sachs, has propelled her research of new fund ideas and identification of unique approaches to ETF strategies.
"I'm excited about the ways in which proven approaches from the hedge fund-style liquid alternative category are being refined and ported to other alternative investment categories," she says.
Ye also focuses on educating investors on diversification, and how to incorporate different investment strategies.
"Retail investors still lack the tools necessary to allow them to access diversified sources of returns comparable to those that are available to institutional and high-net-worth investors," she says. "This is something we work to solve."
Along with working to help investors understand diversification, she aims to promote diversity in asset management.
"Growing up in China and being a woman in this industry provides me with a perspective that I would not have otherwise, and a chance to use my voice to help spur advancement in the space," she notes.
She's a member of two New York Life employee resource groups: the Asian Network Group and the Women's Initiative-Investments. She is also part of the Speakers' Bureau with Women in ETFs. Additionally, she serves on the board of CFA Society New York, and aims to recruit female members and speakers. As of today, 50% of the board members are women.
"I'm fortunate to work for a company that embraces diversity among its core values," Ye says. "I'm also very fortunate to have a number of senior leaders coming from similarly diverse backgrounds to look up to and learn from."