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Ingka Investments
Samuel Rundle, Head of Financial Markets Investments, Ingka Investments, and Tarek Chouman, Global Head of the Aladdin Client Business, discuss the importance of transparency in achieving portfolio diversification and managing risk. They also explore the topic of sustainable investing and the potential impact of AI on the financial industry.
Samuel Rundle, Head of Financial Markets Investments, Ingka Investments, and Tarek Chouman, Global Head of the Aladdin Client Business, discuss the importance of transparency in diversification—while managing risk. They also explore the topic of sustainable investing and the potential impact of AI on the financial industry.
[TAREK CHOUMAN]
Samuel, you are responsible for Financial Markets at Inkga Investments, right?
[SAMUEL RUNDLE]
So, yes, I am responsible for Financial Markets Investment portfolio within Ingka Investments. And Ingka Investments is the investment unit within Ingka Group.
We have the ambition and the directive to invest according to the value creation goals within Ingka. And they are better homes, better lives, better planet and better company.
[TAREK CHOUMAN]
It's been a complicated environment in the last few months, few years, a lot has happened. So, tell me a little bit how have you been able to navigate and how technology has helped you in navigating those complicated times?
[SAMUEL RUNDLE]
It's been an interesting journey over the last few years, hasn't it? And in this era, we have also changed our mandate significantly over the last few years. We've gone from a quite a strict bond portfolio to a much more diversified portfolio. And that has required a bit of rethinking when it comes to our system requirements and support systems. So, there's been that opportunity for improving the way we are working, and not probably in only the tools that are providing support for the risk and the performance that we are looking at on a daily basis, but also from processes, how we as an organization work in execution, on settling and also compliance and governance issues. So, in this difficult environment, we have been on this journey of change also, which has been super interesting.
[TAREK CHOUMAN]
Digital and technology in general is beyond its value, intrinsic value is also a strong contributor to the efficiency of investment strategies in general. Given how you embarked on your digital journey, how did this digital transformation impact your investment strategy? In which way and how did you benefit from it?
[SAMUEL RUNDLE]
I think critical for us was to create more transparency. That was what the whole transformation was about, and that transformation has added value in that we actually can base investment decisions and strategies on facts. We can go back and look at the performance attribution. We get input on risks. We can look across portfolios to actually identify risks that we didn't know were there before.
So that transparency has been super important for us. Also on the execution part, we have gone on board with electronic execution, probably a bit late, but we are there now. And that gives us a better picture of how we are performing also, when it comes to execution and settling.
[TAREK CHOUMAN]
Transparency is important, I hear you, but ensuring that transparency is there, it requires that you are working across the firm alongside unified workflows, a common set of data. How did you look at this? Because otherwise transparency is complicated to achieve.
[SAMUEL RUNDLE]
I think when we went into the transformation and the journey we'd been on, it was, ensuring that we would also change our processes. We were not afraid to change our process in working from front office, risk and control to back office. That was a part of the idea with us transforming, also, to take on sort of a market standard where you're working. And that is probably a bit more challenging to be on that journey, because that requires a different mindset with the co-workers, getting them on board, and empowering them to actually see the opportunity for a change also in the way you're working.
[TAREK CHOUMAN]
Absolutely, well, it requires boldness and courage. Maybe shifting gears a little bit, I remember from the first time we've met, sustainability has always been a theme that was important to you as a firm. How did you manage this concept? How did you, beyond the words, how did you translate it into actions within your investment strategy?
[SAMUEL RUNDLE]
We are part of Ingka Group. We are an investment unit of Ingka Group. So of course, sustainability is a critical part. It's in our values. It's in our value creation goals. And being a purpose-led company it was natural for us to be on board with the quite strict rules when it comes to ESG requirements. We've approached it in developing our mandate and policies in a way that it is ongoing work. It never stops because we have the ambition to be better and better.
[TAREK CHOUMAN]
Well, this is definitely very interesting, but beyond the sustainability angle, multiple asset classes have emerged in the previous years. Private markets are definitely high on the agenda of many CIOs, whether it is private credit, private infrastructure, let alone private equity. How did you integrate private investments in your portfolios and the way you are looking at things, while keeping the sustainability aspect, globally speaking, diversifying your portfolio and steering it towards private markets, was it something that you were able to achieve?
[SAMUEL RUNDLE]
Yeah, the private market is where we are active is mainly in funds, it could be a bit in the debt market also. It's quite a new part of what we're doing and when we are entering into this space, a key requirement was of course, system support also in this area to create transparency, to look through the different structures.
When we are investing in fund, we want to see through the fund structure, see the underlying assets and see how they are correlated with our liquid assets. So trying to integrate the private and the public assets, that was a key requirement on our digital transformation.
It's tough and it's not easy and it requires a lot of system support that we probably have not thought about. We did not know that was so tough to do, but I think we are getting there and we are on a good journey and it definitely helps us create a better value and a better composition of our portfolio of these assets.
So it's a key requirement that we can actually see all assets, no matter if they're public or private, and from the same perspective when it comes to risk and performance. And especially as we are a small team, we are very much dependent on that system support.
[TAREK CHOUMAN]
And you have those constraints that you've mentioned, sustainability that you need to be able to perpetuate even through those asset classes, plus the transparency aspect that you've mentioned earlier. It makes it, I understand the additional constraint it adds to your team's bandwidth. So do you think that, and beyond the hype, technologies like AI could be of use to teams like yours who have a lot to cover in terms of asset classes, in terms of internal and external constraints, in terms of regulatory pressure. How do you think AI can provide you with additional global capability to execute against your own constraints?
[SAMUEL RUNDLE]
AI, for me, is a challenging topic. It's definitely a topic that everybody has to be looking at at the moment and we see how it's impacting the pricing and financial markets. I think it's definitely going to change our way of working, looking forward. The tools are available and it's about embracing them, having co-workers that really have the interest and knowledge to use these tools.
Is it going to change the financial industry? Yes, in many areas it is. I think it's going to change the ability to make an assessment about complex investments. Financial markets are built around a lot of data, a lot of complex relationships, there AI is probably a natural fit to how it helps us in decision making.
So, so I think that is quite straightforward. The one topic I'm thinking about is financial markets is also about behavior. It's about investors with different mandates, different perspectives, different views. How does that all come together? I think it's fascinating to start thinking about how AI is going to probably change the industry as such and how do we navigate in such an area.
But when it comes to the current situation and where we are today, I think it's all about the co-workers, it's all about having support to us also. We are a small team, as I said, and there we are very much dependent on getting the inspiration and getting the support on any development in this area.
[TAREK CHOUMAN]
Samuel, a lot is happening, and a lot is going on. It's very easy to become pessimistic when you see what's happening around us in the world. Being optimistic is also something that would allow us to continue building and growing. So, what makes you feel optimistic and what excites you about the upcoming years?
[SAMUEL RUNDLE]
Yeah, I'm super excited to be able to continue to delivering on being a responsible investor. For me this is the passion I would have looking forward.