40: Frontier Advisor's Fiona Trafford-Walker - Manager Selection and Value Investing

Fiona Trafford-Walker is one of the world's most respected asset consultants. Trafford-Walker is a founding member of Frontier Advisors and has advised many of Australia's largest pension funds on their investment strategy. Currently, she is a Director and member of the Investment Committee at Frontier, but has announced to leave the company on 6 December 2019 to focus on her directorships. She is a Non-Executive Director at the Link Group, Prospa Group and the Victorian Funds Management Corporation and a member of the Investment Committee at the Walter and Eliza Hall Institute. Trafford-Walker was named as one of the Top 10 global asset consultants by CIO Magazine from 2013 to 2016 inclusive. She was also announced as a winner in The AFR and Westpac 100 Women of Influence Awards for 2016 in the Board/management category. In this podcast, we look back on her 25 years with Frontier, her career as an asset consultant and discuss a variety of topics, including manager selection, asset allocation and the changing landscape pension funds face today. Overview Fiona Trafford-Walker podcast: 2:30 I'm an accidental asset consultant 4:30 You're named as one of the most influential asset consultants in the industry. What makes a good asset consultant? 5:35 You have to be willing to collaborate 7:00 Technical skills are very important, but equally important is time in the markets 7:30 The changing role of asset consultants over the years 9:30 As asset consultants have increased their senior staff, have conversations become more focused on strategy? 10:30 There is still the need to have a blend of specialist and generalist skills 11:50 Are we already heading to having a panel of asset consultants? 13:00 Is there a good balance between the time spend on manager research and that on asset allocation? 14:30 What type of data should inform changes in asset allocation? 16:00 There is not much you can do about geopolitical risk; predicting what politicians are going to do next is pretty hard. 16:30 But trade wars are a real thing that have an effect on markets 18:00 Are the struggles of active managers, particularly value managers, structural or cyclical? 19:00 There seems to be a need to tweak the value process to allow for the new capital-light business models. But at what stage do you get style drift? 21:30 Frontier Advisors took the decision to build a platform with all their research on it, quite a brave step in an era where softcopies get distributed easily. 26:00 You spent some time arguing for lower fees in the industry. Are we at the right level? 27:30 The real change has been the internalisation of asset management by some funds. 29:00 Can internalisation refocus asset management on the long term? 30:00 Bottom draw mandates 31:00 To what extent should asset owners engage with the companies they invest in? You are on a number of boards and see both sides? 33:00 Governance certainly has changed as asset owners realise they are the beneficial owners 35:00 To what degree can you divest from companies as a fiduciary? 38:00 The challenge of developing retirement products 41:00 At the moment, the willingness to do things together [as funds] isn't there. 42:00 What is next in store for you? 44:00 What issues come up in mentoring new asset consultants?