This week, we speak with Matthew Kadnar of Grantham, Mayo, & van Otterloo, where he is a member of the firm’s asset allocation team. Prior to joining GMO in 2004, he was an investment specialist and consultant relations manager at Putnam Investments. But the big transition for Kadnar was shifting from being an attorney — he was in-house counsel for LPL Financial Services — to becoming a CFA charterholder.
He discusses various strategies GMO has developed over the years: “Five Real, Cheap low-quality (vs cheap high-quality), and Benchmark Free Investing. Their success has led GMO to now manage over $70 billion dollars.
Kadnar explains the challenges of active management, noting that only people who love it should be participating as portfolio managers. Although it has the appearance of being “quite glamorous,” it can be at times humbling and soul crushing. For managers who are not doing well, it is a miserable existence. But to those who love it, and can persevere despite the challenges, it is a joy.
You can stream/download the full conversation, including the podcast extras on iTunes, Bloomberg, Overcast, and Soundcloud. Our earlier podcasts can all be found on iTunes, Soundcloud, Overcast and Bloomberg.
Next week, we chat with Annie Duke, who won the World Series of Poker in 2004, and at one point, was the winningest female poker player in history. She is the author of Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts.
Matt Kadnar’s Recommended Books
Expected Returns: An Investor’s Guide to Harvesting Market Rewards by Antti Ilmanen
The Great Depression: A Diary by Benjamin Roth