It is more than just the economic return we can deliver in private markets, but also the social value we can attribute to those


instruments. Tom Sumpster, Phoenix Group


One of the most fundamental checks you do is to ensure you have aligned interests with the manager. That is your best protection. Job: One of the key aspects of investing is doing your due dili- gence. You need to know how the manager is positioned to deliver what they say they will, what the opportunity set is and understand the key investment and operational risks. Sumpster: As we represent patient capital, we have to be patient with how we choose our managers. Building relationships is key. Spending time with the individuals who will look after your money is just as important as putting money to work in the first place. You must get it right.


Whilst reading and reviewing a subscription agreement you are hoping never to need to return to it again. If the investment is underperforming, the people relationship comes to the fore. Governance, reporting and how transparent an investment manager is with their investors is important to us. We have seen an uptick in reporting quality which in being far more transparent breeds a healthier relationship. It gives an investment manager better opportunities to demonstrate their skills and attract your capital for a second and third time.


Mattingly: The prize for these managers who get it right, consid- ering the expected growth in private market exposure over the next five to 10 years, is huge. Those who stick to their traditional ways will lose out. Going back to ESG and the conundrum between exclusion and engagement, paradoxically it is easier to engage in the private markets than it is through their liquid counterparts. The other point I would emphasise is the more you become aware of the opportunities and risks, the more you realise it is incredibly complex. For example, wind farms are good from an ESG point of view, but the blades have historically been made from wood which has led to forests in Columbia being deci- mated. And the Democratic Republic of the Congo is virtually the only country in the world which has a cobalt source. The context of all this is riveting, but incredibly complex. You may think you are doing a fantastic job from a societal point of view, but in the short to medium term there are repercussions for forests in Columbia. Humphreys: For smaller entities that access is difficult. The good tend to stay good in private markets and they will charge for it. So, if you are big and have the resources to do some of it


May 2022 portfolio institutional roundtable: Private markets 19


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