Robyn Grew, Man Group
Episode 6 of Perspectives, our dedicated series where AIMA, in partnership with KPMG, speak to alternative investment industry leaders from around the world, begins with the new CEO of Man Group, Robyn Grew.
From her beginnings as a barrister to leading the world's largest publicly traded hedge fund, Robyn shares the invaluable insights she gathered on her journey. She emphasises viewing AI as an ally rather than an adversary and passionately labels it the "tech story of forever." While outlining her optimism about the future of the alternative investment industry, Robyn firmly believes in actively championing diversity, equity, and inclusion, highlighting the sector's need to truly "walk the walk."
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5 Lessons from Robyn Grew
The future of the asset management industry, and arguably many others, will be increasingly influenced by technological advancements. “The generational change in the industry, I think is about technology. Truly, I think it's technology and AI, and data in investment management." Robyn is clear that staying ahead requires embracing and integrating technology into every facet of an organisation, from investment strategies to employee development. For this reason, Robyn doesn’t underestimate the power of AI, describing it as, perhaps, the "big tech story of forever." For the alternative investment industry, this is particularly salient. Generative AI, like ChatGPT from OpenAI, is not merely a fleeting trend. Instead, it's a potent tool with the capacity to revolutionize how the industry operates, to “increase research efficiency and help human beings upskill.”
As with any disruptive technology, there are risks associated with AI. Robyn emphasises the importance of AI management and ensuring its responsible use. Asking the right questions, understanding the feedback, and maintaining strict privacy parameters are all crucial steps in this process. Rather than fearing AI's capability to replace human roles, Robyn suggests viewing it as a “co-pilot.” It's a tool that can make us "smarter and better," empowering everyone in the firm to focus on generating alpha. “So long as you keep in mind that you should be using it as a tool, not letting it drive you”, she warns.
Robyn is a vocal advocate for DE&I (Diversity, Equity, & Inclusion). For her, diversity isn't just a buzzword, it is a necessity in every organisation as it provides diverse perspectives that are crucial for innovation and growth. Diversity “makes us better,” Robyn stresses. Despite the challenges, she believes that progress, while slow, is heading in the right direction. Robyn points to the fact that Man Group is now being led by two women, herself, and Anne Wade. Their leadership at Man Group highlights the evolution of an industry traditionally dominated by men. Robyn reminds listeners that there is still work to be done, “we have to walk the walk, we have to talk the talk, and we have to hold ourselves accountable.”
Robyn’s path from barrister to CEO of the world’s largest publicly traded hedge fund, Man Group, was not a part of some grand plan. "Progression of my career has been defined really by a series of phone calls, which is not great careers advice", Robyn recalls. Her openness to opportunities that came her way, even those outside her original career path, enabled her to rise to her current leadership position. It's a powerful reminder that a linear path is not the only path to success.
Robyn acknowledges the challenges of the current financial climate, from potential recessions born out of an interest rate and inflation shock to geopolitical issues such as the war in Ukraine and China’s COVID measures. "Good managers, skilled managers will need to navigate all of these things to help their clients." It is in these turbulent times that active asset management can truly shine, using skill and expertise to navigate complexities and provide solutions to clients.
Read the transcript
Tom Kehoe, AIMA 00:03
Welcome back to The Long-Short. Over the coming few months, we'll be bringing something a little different, the ‘Perspective’ series, in partnership with KPMG. This podcast series will feature conversations with leading CEOs and founders of alternative investment firms from around the world. And today, we're excited to share with you one of a series of conversations we've had with them. Our guests share their visions in a variety of areas, including how to attract and retain top talent in the context of the fierce war for talent, as well as how to navigate the increasingly complex operational scaling challenges and much, much more. The discussions are being led by myself, Tom Kehoe, co-host of AIMA’s The Long-Short podcast, and John Budzyna, Managing Director and US national leader for market development for alternative investments at KPMG. So, sit back, we hope you enjoy the show. Robyn, welcome back to The Long-Short,
Robyn Grew, Man Group 00:58
Thank you for having me.
Tom Kehoe, AIMA 01:01
We are particularly pleased to have you feature on our new spin-off series of interviews with CEOs from across the alternative asset management space. Congratulations on your recent appointment, stepping up at Man Group to become its new CEO.
Robyn Grew, Man Group 01:15
Thank you, thank you, it's early days, but I think this is day seven, officially.
Tom Kehoe, AIMA 01:20
So, Robyn, you're a barrister by training and spent the formative years of your career working in various compliance roles within investment banks and investment management firms. How did you become the CEO of one of the largest publicly traded hedge funds in the world?
Robyn Grew, Man Group 01:39
It's a great question. I don't know if this is reassuring or not, but it certainly wasn't part of some extraordinarily grand plan. In fact, probably at the beginning of my career, as most people will know, I didn't have my sights set on finance as a place to end up as odd. As it may sound, progression of my career has been defined really by a series of phone calls, which is not great careers advice. As you as you said, I started out as a barrister. I was really focusing on a common law version of life. So, criminal defense and some civil cases in some of the higher courts of the land. But I set my sights, I thought maybe I shouldn't be in that area of the bar. Maybe I should be at the commercial bar. And so, I sort of said, well, I know, I'll go into this thing called commerce, I'll do this thing called business. And in doing so, ultimately, I answered a newspaper advertisement when such a thing existed, and found myself at a round-robin interview at Fidelity, and they offered me a job. My idea was, well, I'll get some experience in business, and then I will go back to the commercial bar. But instead, I got a phone call to go an interview for a job at LIFFE, which I got, then when I was at LIFFE, I got a call to go and interview for a job at this investment bank called Lehman Brothers in London, and I got that job. They asked me to go to Tokyo for a couple of years or so. Then they asked me to go to New York and then I joined GLG. And actually, the truth of the matter is, I just never went back, I never went back to the bar, I just got suckered in by this extraordinary area of the world of finance. And, it's such a pleasure to be surrounded by so many smart people and to be at the forefront of so many things that I never really looked back. So, My career has been one of taking opportunities, of looking at something and saying I could help that, or I could fix that. I find myself in the role of CEO because I've just enjoyed being part of this world, I guess, I have learned throughout my entire career being based in different places and in different parts of the financial services world.
Tom Kehoe, AIMA 04:24
Am I right in saying then that you are the first female CEO at Man Group? Man Group goes back over 200 years and in a double coup for Man Group, you've also just appointed your first female Chair.
Robyn Grew, Man Group 04:40
Yes, that's right. Anne Wade will take over at the end of this year, having joined the Man Group board as a non-exec in April 2020. So yep, there you have it. After only a couple of 100 years. Being founded by the Man family, we now are being led by two women. It's a great time for the industry. There is no doubt that Anne and I bring different perspectives. She too came up through the financial services world. I think it's a tremendous honour to be leading a firm that's been around for this long. It's great that we're now reflecting, perhaps, half the population, both in the real world, but also with our clients and with investors, and so on and so forth. So, yep, spot on.
Tom Kehoe, AIMA 05:37
We all at AIMA and KPMG salute Man Group in their efforts to shift the dial on diversity, equity and inclusion. We will touch on that again later. But for the benefit of those who don't know what Man Group is, who you are, it'd be great for you to provide an overview of the firm's strategy, investment strategy.
Robyn Grew, Man Group 06:00
Yeah, sure. So, let me start by saying that Man Group doesn't have one defining investment strategy. We're a firm that's made up of, now, and on the day of this recording, we just closed a deal for our sixth investment engine, which is a middle market lending manager, private credit. So, I'll talk a little bit about that.
But we're made up of six investment engines, all with a slightly different focus, area and discipline, but all belonging to one single operating platform. Those engines are encouraged, in fact, we think it's part and parcel of who we are, to collaborate, cross-pollinate ideas, views, and capabilities. We're a firm that's increasingly focused on providing solutions to clients, and I'll touch on that in a minute.
So, we have two systematic investment engines, Man Numeric and Man AHL. Man Numeric is our fundamental quant manager. It offers long only, an alternative investment strategy, and invests across both equity and credit markets. Man AHL is our more, I guess, traditional quant manager. Its heritage is in CTAs And trend following. As you probably know, over the last 30 or so years become much broader than that. It's now a diversified systematic manager that does everything from multi-strat, trend, alternative trend, to long only and through target risk.
On the discretionary side, there's Man GLG, which is how I joined in effect back in 2009. Man GLG has both alternative and long-only investment strategies, invests across multiple asset classes, traditional discretionary style. Then there's our fund of funds and managed accounts business, Man FRM, which provides an open architecture full-service offering to clients, ranging from some advisory work to customised and commingled portfolio solutions, as well as a technologically advanced managed account platform.
Then on the private side, we have Man GPM which focuses on real estate and private credit. This includes impact focused strategies like community housing, or net zero homes, as well as credit risk sharing and direct lending. And as at today, we've acquired and closed on Varagon, Man Varagon, a private credit business based in the US that is focused on middle market lending, and really excited about that addition to the Man family.
But as I said, we really see ourselves as a solutions provider, not a product pusher. And Man Solutions is the kind of the business unit that oversees a lot of that. So, over two thirds of our AUM (Assets Under Management), Tom, is in mandates that are customised in some way. That's what our clients want more and more. The investment outlook is obviously challenging, and we'll talk about that later. But for us, being relevant translates into delivering solutions for our clients, customised solutions, that penetrate and drive through strategy product, structural risk, and liquidity barriers, to solve the specific investment challenges, problems, and issues that an investor faces in their own portfolio.
John Budzyna, KPMG 09:25
So, Robyn, what you've described appears to be a little like a multi-strat business, a quant business, a real estate business, and a private credit business. They're all very different. How do you think about these business lines and their ability to meet investor expectations to deliver returns and preserve capital as well?
Robyn Grew, Man Group 09:45
Yes, in short, and by the way, I'm delighted that you've characterised in that way because I think you're spot on. I think we have such diverse expertise. It's what allows us to be relevant to clients throughout market cycles. The aim here for active managers is to deliver alpha irrespective of the direction of the prevailing market. But obviously different investment cycles lend themselves better to certain types of strategies than they do others. And we have to take into account clients' portfolios as well, they're invested in multiple different places and how do we fit into that. We have enough, I suppose, ingredients in the larder that we can help create a balanced portfolio. So, how do we do that? We form deep relationships with partnerships and partnerships with our clients. Let me do it by way of example, 25 of our largest in-clients invest in an average of over four of our strategies.
That's because we have so many different things, and content, that we can offer them through one platform. It also means that we can build more bespoke impactful solutions, specifically for them. I think, as I said earlier, that's what clients are looking for more and more. We're part of that trusted space to help them navigate markets or issues they're facing. It's incredibly useful to us to have investment experts that think in different ways, it means we can tackle a problem with multiple inputs. So, that's that point I was talking about just slightly earlier about encouraging collaboration, sharing ideas across engines, having our discretionary business be able to leverage insights and techniques from quant, for example. They don't compete with one another, they enrich one another. I think that's what's important to the success of Man, and in turn, the success that we can hopefully bring to our clients.
John Budzyna, KPMG 12:11
And so, what do you see as being the major headwind and tailwind for Man and other market participants to contend with at this moment in time?
Robyn Grew, Man Group 12:21
Listen, despite traditional analysis, meaning that I don't know how many very, very capable economic forecasters have been forecasting recessions for a long time, you know, and, yet they haven't resulted just yet. I think there are definitely headwinds, and I think there are some compelling reasons for people to be bearish out there in tighter financial conditions. We have had an interest and inflation shock last year. Clearly, there's complacency a little bit in the market about the stability of inflation and interest rates more generally. This disruption will hurt traditional assets that were synchronously priced. So, both sets of traditional assets where you'd ordinarily see them, your bonds being cheaper to equities, for example, not the case, that hurt. You saw the stress in the spring around US regional banking, and the data from that showing lending standards tightening, which ordinarily would be a bad sign for growth. You can see stress in the real estate sector. track data is showing that more than $1.4 trillion in the US of corporate real estate loans will mature by 2027. Something like US$270 billion coming due this year. You've got geopolitical issues, the war in Ukraine, obviously another factor adding a layer of difficulty to supply chains and having an impact on energy. China's COVID measures impact its equity markets, which had further reaching implications. COVID has changed the way that markets and sectors operate, you've seen and we are seeing that sort of sense that instead of a crescendo somehow of a recession, we're seeing rolling parts of recession impact at different points. You're seeing parts of manufacturing definitely in recession. But thanks to legislation in the US and Europe, by the way, you're seeing a boost in investment in some domestic energy production with manufacturing in those sectors, think semiconductors for example, the manufacturing of semiconductors being 80% up year-on-year.
So, there is some really strange and difficult and different times. The environment has changed really beyond recognition for some people. We are in an interesting political environment. You know, I was reading the other day, I think it's something like half the population of the world will be in countries where there will be elections, where there'll be political change over the next year/18 months, of which the US and UK are part of that. Working patterns have changed and that's having an impact on real estate.
The bottom line is that these things are very difficult different spaces for us to all navigate, and how to manage that change. What I think is clear is we are in an interest rate inflationary environment, we are going to see, I think volatility, and with volatility, we probably are going to see dispersion. And quite frankly, that's where we as active asset managers should be stepping in. Good managers, skilled managers will need to navigate all of these things to help their clients. That's what we should do, we should be leaning in and helping but it's not straightforward.
Tom Kehoe, AIMA 16:17
So, this is now the time for active asset management to step up.
With that in mind, and we've already talked about the fact that the Man Group business counts for give or take US$150 billion in assets under management, across the six core business lines that you've described. How do you think about generating Alpha opportunities, given that you've just described the challenge that investors have right now, and being able to get returns, particularly in the environment that we have where interest rates are 5%+? How do you think about generating alpha? And also, as you look to grow the business, which is like you said, a US$150 billion business, to what extent do you think alpha then is scalable?
Robyn Grew, Man Group 17:06
Great question. How do we think about it? I think we're always seeking out alpha sources. But I should probably start by saying that we're a business that focuses on that first and foremost, alpha generation, risk-adjusted alpha capture. But we would never grow a business at the expense of alpha generation as well, we have stripped capacity constraints in a number of strategies to prevent alpha decay, we have discipline is what I suppose on trying to say. The good thing is that we don't think we have to scale back. We think alpha, if it's done right, is scalable. We have a single operating and very sophisticated tech platform. That means we can generate and deliver alpha and portfolio solutions at scale for some of the world's largest investors. We can execute larger volumes, and trade a huge number of markets, let's say over 800, I think was my last count, and trade basically 24/7, because we have made an investment in our capabilities, not just in alpha capture, but in the ability to scale through the organization.
We will continue to look for ways to add new alpha sources, whether by bringing in new teams or investment capabilities, that are complementary to that that we do today. We will do that organically through innovation through seeding strategies, or we will do so in an inorganic format like we have just done today with Varagon.
For us, this is about continuing to move forward, to continue to innovate, to continue to push ourselves to be better, and to find more sources more effectively, and to not decay alpha and not to give alpha away through our own processes. That's what's key to us. And to be able to talk to clients, like I said before, in not just being about a single product push, but about being a provider of solutions to portfolio challenges that our clients face.
John Budzyna, KPMG 19:27
We can't have alpha without having the very, very best people. How does Man (Group) think about fostering, retaining and hiring the best talent for the firm?
Robyn Grew, Man Group 19:37
Like other firms, we spend a lot of time thinking about talent, because it's our most important asset. The combination of talent and tech have been the recurring theme for us over the last few years. We really do spend a lot of time on this. It matters to us. So, what do we think that we have to do? You have to be invested in building a world-class culture, and you don't build it once, you build it every day. If you build the right culture, you can hire great people. You hire the best people who can work in your firm together for really, the single purpose of servicing your clients to be the best you can be.
Our culture is very much focused on collaboration, open architecture is the way that our tech folk will talk about it. We talk about that in the way that we operate generally across the firm. We want people to speak up. Why? Because I think and we all think that ideas come from everywhere in our organisation, not just from me, or from the executive committee of the firm. So, collaboration, and speaking up are critical for us. Making people feel welcome, valued, heard. Being respected is an important tenant for us. We don't set each other to compete with one another, we set people together to make us better.
Nothing replaces performance. So, a drive for performance is a necessity, it's what is important to us. And we come in every single day to ensure that we return value to our clients. We use everything at within our capability to empower people, and that's the technology piece. We have over 600 quants and technologists, technology is part of the DNA of the organization. We want everyone to be thinking about how tech can make them better at what they do. That isn't just within our quant space. This is every part of the organization. We have our own develop program, our own program where we skill people up in Python, and that is from HR and legal as much as it is trading and portfolio management. You can't have great people unless you’re prepared to pay them. So that's for sure. Let's give that as a given. But you've also got to ensure that you're supporting people through their lives, and that goes to your benefits but it goes to your culture of flexing. People are at different stages and need different things at different points in their own growth and development. So, we invest in people from a talent perspective, we want to ensure that we grow people, that we nurture them, that we ensure that they can be the very best they can be in our organisation. That's both in how we think about their well-being benefits, community networks, flexible working, but it goes to values. It's about charitable giving, it's about volunteering days, and it's about career growth and opportunities. So, that investment in how you develop as an individual and as a person and your core skills. So, we do that.
We also think about how we attract people into this organisation. There are lots and lots of very, very smart people there. But we look for something that's different. We want to have that hunger, that interest, that knowledge, that thirst for growth, high performers transcend disciplines. That's the truth of it. So, we hire with a view to long term investment, we hire with a view to seeing people grow through their careers at the firm. That's a pleasure. That's something that the management team here enjoy seeing, we enjoy that. Ultimately, we want difference. It is about having people in an organisation that can challenge one another and have different perspectives. That can come from a different background, a different culture, a different gender, just difference. It's about enriching the team. That's incredibly important to us. So, when you think about it as a package, we attack it from many different angles because people are multifaceted, and so is the firm. But we put an effort on this front every single day. This is not something we think about passively at all.
Tom Kehoe, AIMA 24:35
Let me put this question to you. In recent weeks, we have seen several comments from the banking and asset management industry, calling for staff to return to the office and work from home less. So, you just talked about that life-work balance and the importance of that life-work balance. What are your views then? Do you feel that pressure building to have staff return more to the office? Is there an optimum working approach?
Robyn Grew, Man Group 25:11
It's a great question. I think that we approach it in a way that is nuanced. For us, we did our best guess at what we thought it would be like to return post-COVID. We did alright, like a lot of people. What we are certainly seeing is that some areas benefit enormously from having more contact time in an office. We see some areas that quite frankly, are operating really, really well with a more agile approach.
I think there's a danger in having a single approach to these things. We have seen the benefits of agility. We've also seen the downsides of people not being in an office working together. Interestingly, generationally, where people might have guessed that younger generations, newer generations into our industry would love the agility. In fact, we saw something quite different from that. Likewise, we saw some areas saying that they missed enormously being back creating and hearing from one another in a quant space. And we have facilitated people coming back into an office more than perhaps we might have guessed they'd have wanted to.
We also opened our eyes, though, to the ability to hire differently. So, COVID gave us capabilities to go into different markets and different spaces and hire different people. I don't want to give that up. Because it makes us better at what we do. So, I kind of think about this way, we spend a lot of money, and a lot of time and a lot of energy, hiring really smart, capable individuals. We empower them to do the best job they can, we skill them up, we provide them with the tools they need to be better, every single day at what they do. I also have a trust in those employees, and certainly in my management team, to then make the assessments about the best ways to work. And so, for me, a top-down single answer to this is wrong. The right answer to this is having an organisation full of highly qualified and excellent people who are driven to the single goals of putting our clients at the centre of what we do and seeking out alpha and providing value, skilling people to do that, and trusting them that they know how to do that in the best way possible. And so, I think at the moment, we're doing our very best at navigating that. But if people are asking or thinking I'm going to come down with a single view that everybody must be in the office five days a week. That's not where I'm at.
Tom Kehoe, AIMA 28:11
Refreshing. So, let's reflect a little bit on the hiring that you've mentioned, and the recent experience in being able to draw on not just our industry, but other industries. So, what then does an ideal junior analyst look like to you? Where does Man look for these candidates? Is it inside the industry, outside the industry? I guess it's both, but how difficult is it to secure them given all the competing interests that are out there?
Robyn Grew, Man Group 28:42
Actually, we have not too much difficulty in finding junior talent. I think that we look for personal attributes alongside obviously these highly qualified (candidates). I do worry sometimes that were I to be interviewed now or had to qualify for my own roles, I might not make it. So, maybe there's something about recognising that we're interested in both traditional disciplines or qualifications that might get you through the door, but also in the non-traditional as well.
We are interested in people who's who are hungry, talented, interested, different. We look for direct knowledge, and transferable knowledge, we're looking for the long-term investment in people. It's not about achieving a return from an employee necessarily day one. It's seeing people enter and growing them. What are the raw ingredients? It's a hard thing to set specific requirements, you don't tick the boxes. But we value recruiting individuals who bring different worldviews and experiences and backgrounds. We want that reflected. There are a ton of great young candidates, there's a ton of energised individuals out there. We see a lot. We’re very lucky in some ways that we see a lot. But it's important that they have the additional bits, that bit that is beyond the tick box exercise. It's something that's energy, resilience, difference, challenge, a willingness to flex. And perhaps people who understand that the journey here, the experience is as important, as you know, the title or this or the that, that you sometimes get. The people who succeed at Man are the people who throw themselves in to doing more than. Whatever that more than looks like. So, there you go, I hope that helps.
Interlude - 31:14
KPMG is a global professional services firm, providing audit tax and advisory services to many of the world's leading alternative investment management firms to address the specific challenges and opportunities unique to alternative investments. KPMG has dedicated practitioners focusing on hedge fund, private equity, and real estate organizations. Our professionals devote their time to provide innovative and strategic solutions to alternative investment managers in areas ranging from strategy to operational and compliance functions. Through the knowledge of industry leading practices and customized technology systems. They provide advice and support that deliver value to these organizations and their investors. For more information, please visit kpmg.com.
John Budzyna, KPMG 32:04
We're starting to see the old hedge fund generation retire with some of the leading industry personalities stepping down or announcing their attention to do so over the past year. Arguably, Man Group's successes are in its continued evolution over the past 200 years. Are we approaching a generational change for the industry?
Robyn Grew, Man Group 32:25
Listen, as you say, a lot of the industry has been dominated by these very large, successful private hedge fund houses. They've historically been very reliant on a single investment manager or, you know, quite small teams. I'm not sure it's a new thing. I think it's been happening for a while, (George) Soros, (Andrew) Robertson, you know, a few of those. Succession plans have been something that hedge funds have always really had to deal with. I think really, the generational change in the industry, I think is about technology. Truly, I think it's technology and AI, and data in investment management. What I can see for sure is that the days of managing your alpha by picking up a phone and navigating a spreadsheet are gone, right. That's the stuff that's gone for good. That's a huge change. So, turning to the point around succession, we are prudent, we're a listed business, we have real succession planning. I think before I actually officially took the role (CEO of Man Group) on the 1st of September, I was already having discussions with the board about my succession planning. It's almost the number one thing that we talked about, and I think it's incredibly important. We are a business that is not about me, it's not about the current CEO, it's about being a custodian in some ways, and making sure that I grow this business, and it is around, if it can be for the next 240 odd years that it's been in existence. That does feel different. But we are committed to being part of generation after generation.
We sit here, I sit here, with a firm that is tech-driven. I talked about the numbers earlier. This is a firm that is more than invested in. It's been using AI for 14 years. We can talk about ChatGPT later, I'm sure but this is something we embrace. This is that generational change that is embedded within an organisation like Man Group. And so, from my perspective, we look different and we feel like our clients in some ways, you know, that intergenerational piece that I match the maturity profile of pension funds, annuities, endowments, that are having to think about returning value to their clients today, or indeed, thinking about my son's retirement in 40/50 years from now. So, Man matches that. That's the difference in pulling out some of those questions is, I think you've got generational change with tech. You've got intergenerational maturity or maturation duration, in the way that a firm like Man Group operates, which is different from perhaps those single-owner hedge funds that have been such an extraordinary part of the development of the industry.
Tom Kehoe, AIMA 35:47
So, let's pivot then and talk about the megatrends. You've mentioned it already, which is AI, and if I can get your thoughts on, particularly generative AI, which really seems to have been over the past year the most disruptive trend. Everybody's talking about it. There's paranoia and excitement about it in equal measure. But how do you think then ChatGPT, OpenAI, and generative AI can benefit the alternative investment industry?
Robyn Grew, Man Group 36:21
For sure, it's the big tech story of the year, perhaps it's the big tech story of forever? You know, it's that big. It is, I think, for us anyway. We think it has major potential, specifically to increase research efficiency and to help human beings upskill. It's a little early really to speak about its investment impact. We should think about risk, there are definitely risks out there. Do I think it ruins investing? Do I worry that it's going to somehow replace quant? I don't think so. I think the successful use of disruptive technology like this is dependent on great AI-management. It's a tool, right? So asking the right questions, pointing it at the right data sources, being able to clearly explain how it's being integrated into your investment research, understanding what it's giving you back, and being able to critically assess its value. Ensuring proper privacy parameters in place are all of those things that are about effective, responsible use of this powerful tool. I think is important.
It has extraordinary capabilities. It will enable, I think human capabilities, our skills, we can find more sources potentially of alpha, we can point it at more data, we can point it at new sources and assess them quicker, faster. But we can also use it to co-pilot coding, we can enable ourselves to be smarter and better. By the way, from every technologist and everyone I talked to at Man Group who can't wait can't stop using ChatGPT because they just enjoy it too much. But that sense of being able to be smarter and better at what we do, so that everyone in this firm can focus on proper alpha generation in every part of the organization, that's really, really exciting.
So, I think over the next two or three years, we're going to probably expect large language model technology to change the way we interact in pretty much every space and in every place. But that's a good thing. And I think it's a good thing, so long as you keep in mind that you should be using it as a tool, not letting it drive you.
Tom Kehoe, AIMA 39:03
Yeah, humans are not quite being replaced by robots. We're not quite at that stage yet. I read recently that you've launched ManGPT. Can you talk us through how you think about using that proprietary GPT? How you're leveraging it across Man Group?
Robyn Grew, Man Group 39:26
Yes, for sure. Let me take a step back from it. We've been investing heavily in technology for many years now in the realm of US$100 million per year, for many years, and that we think is key to our competitive advantage. It's hard for others to catch up when you've been investing significantly for many, many years.
I think the other piece is we've been investing not just within the front office, that quant piece, but actually, we've been investing throughout the organisation, right? So, back to providing scale, that scale comes because you build in your middle office, you build in your back office, you build in your capability of doubling your trading, and not feeling the pain of it. So, first and foremost, the background here is about a huge investment in technology. We are well known for quant investing. But tech, therefore, goes beyond that. That's reflected in data science, it's reflected in trading, it's reflected in execution. It's reflected in discretionary business where we are able to analyse discretionary trading or investing and say, where could we do better, where are the holes in that theory and apply that to it.
If you think about the number of reports that our sell-side colleagues produce, and the ability to interrogate. I could not get to all of those reports and read them personally, being able to put technology to work there, to be able to search those reports for key terms, key things. We do that today. It's extraordinarily enabling. So, we see technology more broadly, and AI specifically, as a fundamental tool and capability for innovation. That's something that our ManGPT allows people to play within quite a safe environment in place, perhaps play is the wrong word, but to put it to work, to explore its capability in a place where we have control over the data and control around the output. That's important.
We look to align, in essence, the latest technology with our underlying philosophies. It's about saying that the application of technology should enhance and complement what we do, not allow the technology to drive it the other way round, as it were. I think that's what's important. So, we think it has the power to grow revenue. It has the ability to make our people more productive, more effective, and more engaged. That's exciting for us.
Tom Kehoe, AIMA 42:36
Robyn, would be remiss of me not to mention this, but anyone who knows you will be aware of the work you do to raise awareness about DE&I (Diversity, Equity & Inclusion) issues across the alternative investment industry, not least, by chairing AIMA DE&I steering committee. you last spoke to us on The Long-Short in March 2022, and if I may quote you, you said at the time that you were cautiously optimistic about the direction of travel and that the industry should hold itself accountable with challenging, but achievable empirical targets, much like hedge funds do for any other aspect of the business, and this is about DE&I. Since then, I think it's fair to say that ESG and by extension, DE&I has become slightly less dominant, given all the prevailing market conditions out there. So, the question I ask you is, do you feel that the alternative investment industry is still maintaining that trajectory? Certainly, in the case of Man Group, we salute you, as I say, but do you think the wider industry is maintaining its trajectory and improving diversity and welcoming talent from all corners? Is there anything that you would like to do now in your new role as CEO to contribute to this movement?
Robyn Grew, Man Group 43:56
This is a challenge, it continues to be a challenge. Our industry and more broadly financial services just shouldn't lose focus on this. I've said before as well, that one of the things about diversity, equity and inclusion is the need for resilience. You need to keep going, you can't stop. We're going to have downtimes, we're going to have periods where other things dominate. But we just cannot lose focus on the importance of having differences in our industry. It makes us better. So, do I think the trajectory is heading in the right direction? Yeah, do I think it's slow progress? Yes. Do I think that more people are talking about equity and inclusion differences than I've ever seen before? Is it part of our staple conversation? Is it part of pretty much everybody's agenda on the street? Who wants to progress and innovate? Yes. I have seen way more collaboration than I've ever seen across the sell side. And the buy side, I see far more accountability.
When people are walking through your offices from institutional clients asking what's your diversity look like? Where's your inclusion? What are your initiatives? I have far more conversations than I ever did before with the next generation on what diversity looks like. I see more benefits and wellbeing packages and policies being introduced to firms that reflect the importance of difference and diversity. I see more and more capability around neurodiversity, and those people with disability having been considered in our offices and their access. So, I think the conversations are more real. I think there is more willingness. I think there's more knowledge, I think we are better at having more informed conversations. I think all of those things are true. And yet progress is still slow. And that is because it's an ugly issue. And it's hard to change something like this overnight. But we are investing in the next generations. We are all talking at schools. And we are, I hope, becoming a place where people can feel that their values are reflected in our organisations. I think we've got to continue to have this at the forefront of our conversations.
So, slow progress, cautiously optimistic. I'm very stubborn on this, Tom, I got to tell you, I'm not giving up. I'm not giving up. I am relentless. I think we have to, we have to walk the walk, we have to talk the talk, and we have to hold ourselves accountable. I don't feel like I'm doing enough and that we are doing enough as an industry. That feels uncomfortable. I'm surrounded by some of the smartest people in the world. In this industry. I cannot believe that we can't crack this. We crack really difficult issues and problems. We come together to do a tremendous job. We are responsible and the custodians for millions and millions of pensioners, we do difficult things. We can do better here, and we should.
John Budzyna, KPMG 47:56
So. Robyn, we've asked everyone on a scale of 1 to 5 and 5 being the most optimistic. How optimistic are you about the hedge fund industry over the coming 5 years when you are thinking about delivering for your clients? What do you see as the biggest industry opportunities or the biggest tailwinds for hedge funds and alternative investments over the coming five years?
Robyn Grew, Man Group 48:19
I suppose this question goes right to the beginning of our conversation, I'm very optimistic or does that make that a 5, something like that, I’m very optimistic. Let's do a 5 It's a definite 4 or 5 but let's go 5 right. The reason I say that is because we have to rise to this challenge. Investors have never needed more diversifying sources of risk-adjusted returns as they do today. They are facing economic markets and a macro environment that is different from that that we've seen for a very long time. This is challenging, we have different themes than we've ever had to navigate before. We've got to find sources and work harder to produce outperformance in a way that we, again, haven't had to or haven't been able to or whatever those right words are. But that's what we need to be as an active investment manager. It's our job, quite frankly. And it's hard. We have risk-free rates in cash that we have to beat. If you're getting 4% or 5% risk-free, where do we fit in that? How do we do better than that?
We have tighter liquidity potentially in some spaces. We have geopolitical issues. We have volatility, we have dispersion. We have to manage through those times. And so, we have idiosyncratic risks. We have structural changes, so we have to help our clients here, we have to be part of the solution. So, in some ways, in the last 10 years or so, I think this is the most exciting time for active investment managers to step in and help. That's what we're here to do. So, I am positive. I think it's an incredibly important time for the alt(ernative investment) space, and the asset management space more broadly.
I diversification is going to be key, I think being able to understand your client needs is going to be key. I think being able to understand portfolio risk correlation risks, liquidity risks, and exposure risk is going to be key. I think you're seeing a denomination effect between passive and private equity. And we're seeing a slowdown in the ability of some of the private equity funds to raise new funds. We're seeing that, not surprisingly, I think liquid alts, which have suffered from lack of money in the last few years. This is the time where I think liquid alts are going to be an important part of institutional portfolios.
Tom Kehoe, AIMA 51:16
Robyn, many thanks again for joining us today and sharing your fascinating insights with our listeners, we eagerly anticipate what's going to happen next among Man Group under your stewardship.
Robyn Grew, Man Group 51:28
Me too, in some ways, I guess, for me, I think there's just huge opportunity ahead. I've been privileged to work with Luke Ellis and Manny before him. I've been part of the management team here at Man Group. We are and have a great firm here. I'm lucky to benefit from having some extraordinary people to work with, not just my executive committee, but so many people within the organisation. So, it's a privilege to be in the spot I'm in. I take the responsibility tremendously seriously. I think the opportunity ahead of us as an industry, and as a firm is quite extraordinary. So, I hope I do everyone proud in this one.