The New Frontier Investors (eBook)

Jagdeep Singh Bachher is Chief Investment Officer of the University of California’s pension, endowment, short-term, and total return investment pools. Previously he was Executive Vice President, Venture and Innovation, and Deputy CIO at AIMCo. He is also chairman emeritus of the Institutional Investors Roundtable, a global organization representing long-term investors such as sovereign wealth funds and pension funds worth collectively over $11 Trillion. In 2012 he was named in the Global Top Forty Under Forty Chief Investment Officers of aiCIO Magazine. He also serves on the World Economic Forum's Global Agenda Council on the Future of Investing. He holds a BASc in mechanical engineering and an MASc and PhD in management sciences from the University of Waterloo.Adam D. Dixon is Reader in Economic Geography at the University of Bristol. He is also a non-resident research affiliate at Stanford University’s Global Projects Center, the European Centre for Corporate Engagement at Maastricht University in the Netherlands, and IE Business School’s Sovereign Investment Lab in Madrid. His research focuses on financial globalization and the political economy of institutional investors, particularly sovereign wealth funds and pension funds. He is the author of The New Geography of Capitalism: Firms, Finance, and Society (Oxford University Press 2014) and co-author with Gordon L. Clark and Ashby H. B. Monk of Sovereign Wealth Funds: Legitimacy, Governance, and Global Power (Princeton University Press, 2013). In addition to his scholarship, Dr Dixon has worked with a range of international organizations and NGOs, such as the OECD, the Asian Development Bank, the Center for Global Development, and the Pacific Pension Institute. He holds a D.Phil. in economic geography from the University of Oxford, a Diplôme (Master) de l’Institut d’Etudes Politiques de Paris in finance, and a BA in international affairs from The George Washington University.  Dr Ashby H. B. Monk is the Executive and Research Director of the Stanford Global Projects Center. He is also a Senior Research Associate at the University of Oxford and a Senior Advisor to the Chief Investment Officer of the University of California. Dr Monk has a strong track record of academic and industry publications. He was named by aiCIO magazine as one of the most influential academics in the institutional investing world. His research and writing has been featured in The Economist, New York Times, Wall Street Journal, Financial Times, Institutional Investor, Reuters, Forbes, and on National Public Radio among a variety of other media. His current research focus is on the design and governance of institutional investors, with particular specialization on pension and sovereign wealth funds. He received his Doctorate in Economic Geography at Oxford University and holds a Master's in International Economics from the Université de Paris 1 Panthéon Sorbonne and a Bachelor's in Economics from Princeton University.

Dedication 6
Preface 8
Acknowledgements 14
Contents 16
List of Figures 20
List of Tables 22
List of Boxs 24
1: The Foundations of Capitalism: Beneficiary Asset Managers 25
Pension Fund Capitalism 26
Sovereign Fund Capitalism 29
The Geography of Finance 31
Large Frontier Cities 34
Centres of Global Finance 35
Small Cities on the Distant Frontier 35
Small Cities on the Frontier 36
Conclusions 37
2: Unleashing Innovation Through Better Governance 39
What’s Your Mission? 41
What Do You Believe In? 42
What Is Your Comparative Advantage? 43
How Do You Develop Investment Beliefs? 44
Limit Focus 45
Alignment with Organizational Objectives 46
Understanding Influences 46
Social Versus Internal Logic as Bases 46
Mobilization 47
Investing in Governance 48
Conclusions 51
3: Unleashing Innovation Through People 53
Why Is it Hard to Find the Right People? 54
Green, Grey, Grounded 55
Tomorrow’s Strategy: ‘Moneyball’ 58
Conclusions 61
4: Unleashing Innovation Through Collaboration 62
The Benefits and Challenges of Collaboration 63
The Cleantech Syndicate 65
Motivation 65
Structure 67
Responsibilities 67
Investments 67
Implementation 68
A Path Forward 70
Setting Up Co-investment Vehicles and Platforms 71
The Alliance 71
The Syndicate 72
The Seed 73
The Choice 73
Conclusions 74
5: Unleashing Locational Advantage 76
The Goals of Geographic Expansion 78
International Financial Centres 78
Non-financial Centres 81
The Challenges of Geographic Expansion 82
International Finance Centres 82
Non-financial Centres 83
Geographic Expansion: Key Lessons 84
Governance and Culture 84
Alignment with Fund Strategy 85
Setting Goals 85
Staffing 86
Politics 86
Scalability 87
Conclusions 87
6: The Valley of Opportunity: Bringing Innovation to Venture Capital 89
The Valley of Death 91
The Valley of Opportunity 95
The Innovation Alliance 96
Success Factors 98
Lessons Learned 98
Principles 99
Policies 101
Conclusions 101
7: Does Transparency Restrict Innovation Among Long-term Investors? 103
Threatening the Status Quo? 106
Transparency and Long-term Investing 109
Aspects of Transparency 113
Two Views of Transparency 116
Conclusions 117
8: Catalyzing Development in a Short-term World 119
Sovereign Fund Solutions 122
Macroeconomic Stability 122
Productive Efficiency 124
Distributive Justice 128
A Basic Typology 129
People and Organizational Design 130
Two Views of Finance 132
Intersecting Politics 133
Principles, Policies and Pitfalls 134
Principles of Governance 135
Policies of Management 136
Pitfalls to Avoid 137
Conclusions 138
9: Ten Pillars for Centennial Outperformance 140
The Pillars of Our Future Success 143
Pillar 1: Less Is More 143
Pillar 2: Risk Rules Everything 144
Pillar 3: Concentration 145
Pillar 4: Creativity Pays Dividends 147
Pillar 5: Putting Information into Action 148
Pillar 6: A Committed Team 149
Pillar 7: The UC Advantage 150
Pillar 8: Execution and Alignment 151
Pillar 9: Leveraging Technology 152
Pillar 10: Centennial Performance 153
Final Thoughts 154
Bibliography 156
Index 162