Episode 7: Skill vs luck – a new way of assessing performance

We are joined by the three hosts of the “Oh No You Didn’t!” podcast to explore three “pub debate” topics for both the music industry and the investment industry: 1) Were things really better “back in the day”? 2) Is the gap between amateurs and professionals narrower than before? 3) Are there too many people involved in the industry?

How do you solve a multi-layered problem like sustainability? With so many connected parts, addressing one aspect at a time can result in your earlier good work coming undone. Drawing strategic inspiration from the Rubik’s Cube, Monique talks about the use of organisational processes and how solutions can be socialised across the industry with systems-level thinking. Just as it is satisfying when all the coloured squares line up, she describes how investors and organisations can see satisfying and lasting progress despite fast-changing sustainability needs.

Marisa and Tim introduce the Fundamental Attribution Framework developed by the TAI, which breaks down manager performance into elements that are based on skill (and hence repeatable) and those that are largely outside of the manager’s control. The underlying calculations are being released as open source code for free access by all industry participants.

Going beyond the usual headlines around digital assets, we discuss the wide-ranging uses of crypto-currencies (wider access to banking facilities, international remittances) and crypto-tokens (ticketing, royalties, decentralised finance). What are the things to think about from an investment perspective?

Dany Lemay, Head of Investments Montreal, talks about his long involvement in competitive short track speed skating. How has this experience shaped him as a finance professional, and what parallels can be drawn - in terms of risk taking and dealing with uncertainty - between skating and investing?

Sarah Hopkins and Arun Singhal talk about index investing, and the emergence of smart beta strategies that blur the line between active and passive approaches. We also discuss a new index incorporating the Climate Transition Value-at-Risk (CTVaR) metric to increase exposure to the predicted “winners” in a transition to a greener economy.

We examine the tension between our heart (our personal and professional values) and our head (hard-nosed finance and economics) when it comes to making investment decisions, and how their interaction is driving the key investment themes for 2022 and beyond.

Eleanor Huish, Abbie Knight, Harry Keay, Josh Naylor (Investment Consultants at Willis Towers Watson) are all based in our Reigate, UK, office. They are amongst the “rising stars” of our investment practice, each with around 5 years of investing consulting experience, working with both advisory and fiduciary clients. They’re always up for a laugh and super brave for taking part in our quiz!

An excerpt from Nicolette DiMaggio’s book Stock Explore. Elle learns about her first stock with the help of Sam the magical owl. Later on her journey, Elle will go on to acquire five investment superpowers.

An excerpt from Will Rainey’s book Grandpa’s Fortune Fables. Gail tells her new friend Boris one of her Grandpa’s stories to help him understand that earning money is not solely about working hard.