The transcript from this week’s, MiB: Lisa Jones, Amundi US, is below.
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VOICE-OVER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio.
RITHOLTZ: This week on the podcast, I have another extra special guest. Her name is Lisa Jones. She’s CEO of Amundi U.S. That’s the American division of French asset management giant Amundi. They could be the largest asset manager that most people are unfamiliar with. They run over $2 trillion, about EUR1.73 trillion. T a lot of money. They’re the second-largest asset manager in Europe after Allianz. They’re one of the top 10 asset managers. They’re just immense. Lisa Jones division is over $100 billion, and she really has a unique perspective on the asset management business.
She’s worked at a number of places, usually switching jobs because her firm was required or she was offered a bigger job at another shop. So, she’s been at places like Eaton Vance, and Pioneer Funds, and — and Morgan Stanley, and MFS. So, she knows all there is to know about all three parts of the industry, the — the — what some people call client-facing, back office, and — and middle part of the office, which is the actual asset management. She is uniquely qualified to discuss what’s going on in the industry, where it’s been and — and where it’s likely to — to end up. I found the conversation to be absolutely fascinating, and I think you will also.
So, with no further ado, my conversation with the Amundi US’s CEO Lisa Jones.
VOICE-OVER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio.
RITHOLTZ: My extra special guest this week is Lisa Jones. She is the CEO of Amundi U.S., the $100 billion U.S. arm of Europe’s second largest asset manager Amundi. Amundi proper manages over $2 trillion in assets. They’re one of the 10 largest asset managers in the world with over 100 million clients in 36 countries, about 4,500 employees.
Lisa Jones, welcome to Bloomberg.
JONES: Thanks, Barry. Thanks for having me here today. How are you?
RITHOLTZ: My pleasure. I’ve been looking forward to chatting with you for a while. I think of Amundi as — as really one of the largest asset managers that a lot of people in — especially in the U.S. haven’t heard of. But before we get to Amundi, let’s talk a little bit about your early career experience. You — you come out of Trinity College with a bachelor’s in Economics, and you started MFS Investment Management. Tell us a little bit about your early experiences in the industry.
JONES: So, you know, I’ve been working for 30 years, so when you say tell me about your early experiences, I’ll make sure we don’t go on for so long. But actually, prior to MFS, I started working at E.F. Hutton. For those of your listeners who remember E.F. Hutton, Trinity is in Hartford, and at that point in time, you went to New York or you went to Boston. And I was from Boston, so I wanted to take a shot at working in New York City. And I started working for E.F. Hutton and worked there for a few years, really worked there through the crisis of 1980. You know, the stock market crash in the late 1980s, and started in customer service of E.F. Hutton for those brokerage accounts where shareholders wanted to call and ask questions and get some answers. It was a great introduction into being in a client-facing role.
And so, from there, I went to work at MFS in Boston. I joined MFS in 1988. I joined MFS as a wholesaler, covering the bank channel. The territory was the northeast and back then, in the bank channel, the northeast was really main down to Virginia. And it was in the early days where beyond bank trust departments, banks were beginning to have licensed investment professionals sit in their lobbies to offer alternatives to banking customers. And that was my first experience working at MFS as a wholesaler.
I then, as the time went on, began to become in-house more in a management role and assumed responsibility for running the bank channel at MFS. And keep in mind, you know, as we think about the world of investing today and talking about low interest rates, this is a period of time when CDs were double-digit, treasuries were double-digit, and so it was quite a different environment for selling investment products in yields at that – at that point in time. So I was at MFS for a total of 16 or so years. I also spent some time on the institutional side running the global institutional business for MFS at that time.
RITHOLTZ: So — so let’s talk a little bit about that global institutional business. Eventually, you end up as global head of distribution at Morgan Stanley’s. What enabled you to climb to the top of that ladder, and how different is institutional and distribution from what people typically think of as individual investing?
JONES: So today I would say that those lines between the two groups are blurring, but let’s go back to the point in time of when I transition from what we would call the kind of retail or the distribution side to the institutional side. Being responsible for running the bank channel, at that time, I was engaged with the Bank Trust departments, and they would be hiring external managers to offer investment solutions to trust clients. And I began working very closely with the portfolio managers and becoming more understanding and involved, and frankly, really intrigued with portfolio construction and portfolio management.
And so, as the business at MFS grew, the opportunity for me to transition to the institutional side was presented to me. So, I enjoyed how the PMs put portfolios together, how they thought about risks, how they thought about buy and sell discipline, and the institutional side got me much closer to overall portfolio construction and portfolio management.
And as U.S. asset management firms began to want to go global and enter international markets, my role was expanded into Global Head of Institutional where MFS was in multiple different markets kind of offering our investment solutions and strategies to sovereign wealth funds, central banks, and pension fund investors. And so, that was the opportunity goal from retail to distribution. When you bring those two together, I then — from MFS, I actually went to Eaton Vance to run the Eaton Vance Global Institutional business. And I got a call out of the blue from the former CEO of MFS when I was there, Jeff Shames. Many of your long-time listeners may remember Jeff. And he had taken a role at — at Morgan Stanley Investment Management as an advisor.
And at that time, Morgan Stanley Investment Management was looking for a new role, Global Head of Distribution, which encompass both institutional and retail distribution on a global scale. So, my experience at both MFS and Eaton Vance on the retail and the institutional side gave me the global awareness, the retail and the institutional background, serving multiple different types of clients, and it’s fully wrapped up into that role at MSIM on being Global Head of Distribution.
RITHOLTZ: So how do you make the leap from Morgan Stanley where you’re really on — on what I think a lot of people would perceive as an institutional sell side to Amundi in 2014 where really you’re running the whole shooting match for at least for the U.S. arm, which is, you know, $100 billion is still real money?
JONES: Great question. So, as I’ve worked at different organizations, I became familiar with and really became a student of culture. And when you have the magic of a positive culture and you can bring people together, you can create an environment where people have fun. You — you treat your clients and your employees exceptionally well. And culture is a key aspect of long-term success.
And having observed multiple cultures across the many firms, I knew that I wanted to be a champion of a culture. And it is easier when you have influence over the entire organization rather than when you have only influence over the distribution side, institutional or retail.
And in 2014, prior to being known as Amundi, the firm was Pioneer Investments and …
RITHOLTZ: Ah.
JONES: … Pioneer Investments …
RITHOLTZ: Sure.
JONES: … has been just — I mean, you know, Pioneer, right?
RITHOLTZ: Yes.
JONES: It’s been in the market since 1928, launched one of America’s first mutual funds, and having worked in and around the Boston community in the asset management space for a long time, always had tremendous respect for Pioneer Investments, knew some of the employees that were working at Pioneer Investments. Some of them have worked for me at other organizations, and Pioneer was looking for a U.S. CEO and wanted the profile of the U.S. CEO to be someone that comes from a client-facing background.
RITHOLTZ: Got it.
JONES: And so, the opportunity for me was, one, it was a profile that I had, but number two, because I knew that I had great experience and breadth across multiple firms, working across an organization. And the value, I believe, that I brought to the firm at – you know, at the time and hopefully still today if you talk to my employees is an appreciation for culture and appreciation of working together.
And in particular, for my investment team, having worked at such broad-based asset management firms in the way of investment offerings and product, in essence, I have been part of teams that have launched, sold, retained, defended, closed all types of investment strategies across multiple market cycles to multiple geographies and multiple channels. So, while I’ve never had the opportunity to actually won money, all that’s important around it that is really important to portfolio managers, you know, being investment-led, consistency and repeatability of an investment process, taking a long-term view that was complimentary to the investment team here. And, fortunately, I was given the opportunity to take the role in 2014.
The organization, at that time, Barry, interestingly was up for sale. It was owned by UniCredit Bank, a large Italian-based bank who had acquired Pioneer in the year 2000. So, the employees at Pioneer Investments had exposure and had been familiar with going through an integration and being purchased by a European-based …
RITHOLTZ: Right.
JONES: … financial institution. And in 2017, the transaction closed with Amundi acquiring Pioneer Investments.
RITHOLTZ: Got it. So — so I want to stay with culture, which you — you’ve referenced a couple of times, and ask what was it like trying to maintain that sense of corporate culture, and objectives, and the whole team all pulling in the same direction during the lockdown. During the pandemic when everybody had to work from home and there was a lot of uncertainty as to what was going to happen next and people were genuinely nervous, tell us what you did to maintain that corporate culture.
JONES: It’s been one of the greatest challenges in learning, I think, for anyone who’s in a position of leadership that we’ve experienced over the last 18 or 20 months. And if you recall, in March of 2020, you know, we all went home to work remotely, we had put out messages that we expect to be back in the office in 30 days. So, when we went remote, I didn’t give it any thought other than let’s stay in contact with everyone. Let’s continue to have our meetings. And the 30 went to 60, went to 90, went to 18 months later. Immediately, you had to kind of shift stage light.
And what I ended up really bringing into the — bringing into this kind of leadership during a COVID environment is my communication skills. And so, I adapted my ability to walk the halls and be with people to putting together a series of programs on how do I remain connected and how do we be transparent and how do we communicate. So, in the first several weeks, I sent out a daily email message to the organization. And it was as simple as go out for a walk and get some fresh air or here’s a final that we put participated in virtually or here’s what’s going on in the investment department, or here’s the news from our I.T. department as we’ve all gone remotely. And people were positively responding to those daily email messages.
And if the days and weeks went on, the daily notes became too tactical, and we needed to shift a bit more strategically. So, I implemented both a weekly all-Americas conference call with everyone dialing in, and it was 30 minutes because we were — we were all starting to experience kind of a burnout fatigue with the multiple Zoom calls that you’re on.
RITHOLTZ: Right, Zoom fatigue. Yeah, for sure.
JONES: Zoom fatigue, right? And I also launched Weekly Coffees with Lisa. It was every Thursday from 10 to 10:45. And I limited the group to eight or 10 people. Sign up. Let’s watch your cat, you know, one o’clock your — your keyboard. Let’s listen to the kids screaming in the background. Let’s talk about what it’s like to work remotely.
And so, culture for me during that pandemic was best supported by being present and the new ways that we had to be present. And we continued that really through still to this day. Well, many of us are back in the office still on a voluntary basis. My weekly calls right now every two weeks. In fact, later on today, we’re doing a virtual town hall. It’s all employees, but we’ve had to adapt our communication skills that we’ve developed as leaders into new ways.
(COMMERCIAL BREAK)
RITHOLTZ: I think it was the Washington Post that had a column this week that workers are — are putting on clothes and going back to the office only to spend all day on Zoom calls. How do you avoid those circumstances or are you guys going to continue to be a little bit hybrid where people come into the office partly and work from home partly?
JONES: So, we have rolled out a We’re All Coming Back into the Office on October 18. Our offices have been opened since June on a voluntary basis, and we’re seeing more and more people come into our offices, in particular, Boston and Durham, North Carolina. And what we really talked about to your point is it doesn’t make sense if we’re all commuting an hour to come into the office to be on a Zoom call because what we know is productivity is super good working in remote locations.
So, what we’ve tried to challenge ourselves with is that the home office remains as a place of productivity. And the physical office at 60 State Street remains the place for collaboration. So, as we go to a hybrid model and we’re asking people to come back three days a week, any three days that you want, but we’re asking the department heads to make sure that you’re scheduling and hosting your team meetings all on one day where you’re asking all employees to come back into the office of your team. So, you can have that team meeting and you can have that collaboration because the Zoom calls work when everyone is remote.
It gets more challenging when some are remote and some are sitting around a table. You — you end up getting a very different meeting dynamic that is not all that productive. So, we’ve thought about that, and that’s the way that we’re going to try to ensure that you’re not sitting all by yourself on Zoom calls because, frankly, you could do that from home.
RITHOLTZ: Quite, quite interesting. Tell us a little bit about your role. What do you do as CEO of Amundi U.S.?
JONES: So as CEO of Amundi U.S., Barry, and also I bring in Canada and Latin America as heads of those regions as well. So, we have offices that I’m responsible for from Montreal, Toronto, Boston, Durham, North Carolina, Miami, Mexico City and Santiago, Chile, so all up and down the Americas perimeter.
From a U.S. perspective, we are a sole organization of all the infrastructure you would expect for a large asset management firm — portfolio management trading, legal, compliance, I.T., marketing, distribution, et cetera. So, my responsibility is across all of those aspects — the front, middle and back office — as we distribute our investment solutions here throughout the Americas. But we also, if you will, export our investment capabilities outside of the Americas and as a member of the Global Executive Committee of Amundi I worked very closely with the other countries and regions whose clients are interested in U.S. dollar-denominated product.
RITHOLTZ: So — so let’s talk a little bit about the global giant that is Amundi with over $2 trillion in asset. You know, when I — when I look at the company and I researched what they do, there really isn’t an area of the investment world that Amundi doesn’t touch upon. So let me ask you some — some broad questions about that starting with what are you hearing from investors today, be they U.S. or international? What — what sort of questions are investors asking?
JONES: I’m going to answer that in two ways. One, strategically, clients today are interested in working with firms where they can develop a partnership with, kind of a go-to asset management firm if you have a challenge with pension funding or you’re distributing through financial advisors and you want to work with a handful of companies that can help you solve a problem. So, one, clients want to position with firms in a partnership way.
Second, clients are truly interested in problem-solving. We’re in a persistently low rate environment. So how do I seek yield on a global basis, on a local basis? How do I save for retirement? How do I say for all of those longer-term aspects?
Clients are also wanting transparency from their asset management partners. We’re — we’re all very good as human beings of sharing very good news, but when we have bad news to share, I think that that’s what distinguishes some funds from others, and we try to be extremely transparent and timely with all the information that we’re sharing with clients.
And more specifically over the last few years, with the growth of ESG, whether it’s internationally or here in the United States, our clients, retail and institutional, are asking many questions about ESG, and net zero, and climate change. And we’re hoping to position ourselves as a trusted advisor with those clients.
RITHOLTZ: So, let’s talk a little bit about ESG because there’s some really interesting things. First, I’ve been hearing for decades, literally decades that this is the next big thing in asset management. And while it certainly has captured a lot of mindshare, I don’t get the sense that it’s captured all that much in terms of capital flows.
And — and you see surveys of the next generation was going to inherit wealth, either women as — as the inheritors from the spouse or their kids, everybody says they like the idea of ESG investing, and everybody says they want to put their money to work that way, but it hasn’t really shown up dramatically anyway in the capital flows. What — what are your thoughts on that?
JONES: So, I share similar perspectives with you, one, having been in this business for a long period of time five years ago when ESG kind of really, I would say in a more pronounced way, became topical. I immediately thought back to my earlier days on the institutional side when socially-responsible investing on behalf of …
RITHOLTZ: Right.
JONES: … certain endowments or charitable organizations were prevalent. And many, not all, many had disappointing experiences from an investment return perspective, and they did so because some were completely eliminating, all sectors or all, you know, certain financial institutions. And so, that lack of exposure or that exclusionary approach created certain disappointing return. So, I immediately thought of that — that environment that I grew up in.
The big question started to say, can I have good investment performance while also pursuing a path like ESG investing? And many of those conversations, while they still exist, I do believe that what we have seen over the last few years, in particular, from U.S. and I can comment from outside of the United States that investing for the long-term and investing your money to over the long-term, you — you grow your wealth for retirement, you’re saving for college. For many, that is a primary concern, and that will always drive some capital flows.
Increasingly, what we’re finding and from a fundamental investment perspective, but as you consider investing in a particular company, whether it’s on the equity of the debt side, as you consider all risks that can be involved — cash flow risk, change of company management, investment in, you know, R&D for certain sectors, many of the risks that we have always considered and increasingly are considering are some of those E, S and G risks — environmental, disaster or governance issue. So, integrating those considerations into an investment process is very good risk management.
Now you come to the point about kind of millennials, kind of our kids’ generations. And we do find — and the science and the statistics support that — that certain generations are very interested in doing well for the planet, investing with a purpose, investing with intentionality. And what we’re experiencing and, in fact, at Amundi, you know, we’re considering this ourselves is in launching particular investment solutions that are impact-oriented.
So upfront, if someone is interested in net zero or decarbonizing of footprint or investing for clean water, but those investment objectives are clear and stated right upfront so that there’s no confusion. We’re all eagerly anticipating and I would say welcoming further regulation and clarity for both companies and asset management firms around these definitions of terms because there’s still some great confusion that — that does exist. And we know that the change of administration with the Biden administration much — you know, that administration is much more friendly towards ESG investing or climate change and some regulation that’s coming out.
From a European perspective, and this is we’re being based in Paris France, is of great interest to our clients in the United States because Europe has been forward thinking, forward looking, and well ahead of other regions when it comes to ESG investing. And when our institutional clients or retail clients in the U.S. are — are interested in a conversation or a different perspective, being based in Paris — you know, you got the Paris Accord, you have climate change …
RITHOLTZ: Right, right.
JONES: … you have all of that, it’s a — it’s a unique lens. So, you’re right, there’s so much talk about it.
There are some pretty considerable flows on a global basis. So, of our EUR1.7 trillion that you mentioned, EUR800 billion is in kind of ESG-type allocation, whether it’s …
RITHOLTZ: Really? Almost half. That’s amazing.
JONES: … deliberate or (inaudible), it’s considerable. It is.
RITHOLTZ: Yeah. I’m not — I’m not surprised by that because, A, it seems like Europe is — is far more ahead of the curve in terms of legislation. But that almost doesn’t matter because if the generational surveys are accurate, and the millennials and their ilk are really going to put their money where their mouths are, this is going to happen organically anyway.
There will be beyond just — just using ESG as a risk factor. It appears that there’s going to be a lot of money moving in that direction. It may take a couple of decades, but that’s what we’re likely to see as money moves from the boomers to the Gen X, Gen Y, and — and millennials.
JONES: I agree with you, yes. So — so let’s stick with the concept of — of the international perspective. You mentioned you’re headquartered — the parent company is headquartered in Paris. Generally speaking, overseas markets, be they developed or emerging, tend to be either cheaper or much cheaper than the U.S. lately. What are your thoughts about valuations globally?
RITHOLTZ: So, on a global perspective, you know, let’s kind of stay at a — at a top line level for a moment. You know, the — the pandemic in the environment that we’ve been in over the last 18 to 20 months or so has been a positive for active management. So, in the United States — States, we’re all about active management. That’s what we do. And prior to the pandemic, you saw, you know, five or six companies, in particular, from a U.S. perspective that was really driving the returns of the S&P 500 and making it so difficult for active managers to really compete and outperform.
And what the pandemic has introduced over the last many months or so is more breadth across where we’re seeing companies kind of contribute to the overall growth and the earnings. So, whether it’s the state home boom and the things that we were buying when we weren’t going into stores, you know, the breadth of the marketplace expanded. And so, unlike prior to the pandemic when you had five stocks, I think, returning 55, 56 percent in 2019, you have a broader suite. So active management and selecting those companies that are attractive in this broader breadth is appropriate both on a European basis, as well as from a U.S. perspective.
What we’ve also seen first half of the year to kind of the second half of the year is that there was great enthusiasm about the economy’s reopening. In the United States and in Europe, the emerging market is a little bit further behind because the pace by which vaccinations were occurring was …
RITHOLTZ: Sure.
JONES: … left behind than in the developed markets as we know. And then all of a sudden, the Delta variant kind of started to pop-up. And the exuberance in May and June started to fall a little bit away in the months of kind of July, and August, and September as we’ve been experienced over the last several months or so.
So what we do expect on a global basis is what we are seeing as a bit of reflation in the United States as a result of more vaccinations kind of a wider market contribution, and we have the whole growth to value rotation, which we started to see earlier in the year slow down a little bit, but our view is that we are going to see a bit more of that growth to value rotation. And that happened to support more positive views from a European perspective given the underlying economy and some of the companies, so growth to value rotation, the positivity rates.
I was in Paris most recently, and I was super impressed with how the pandemic, the vaccinations, the masking, the walking about was really administered there. And I think that the economies are really quickly rebounding as well.
So, in this environment, we are positive on equities. We have to be careful evaluations, active management, and selecting those companies that are at an appropriate valuation that can benefit from this cycle of where we are, and we’re still quite positive on over the long-term.
RITHOLTZ: And — and it’s worth mentioning in the beginning of the vaccine rollout, the U.S. was one of the fastest countries …
JONES: Right.
RITHOLTZ: … top three in terms of getting vaccinations out there. But over the past six months, the U.S. has fallen behind. I think we’re something like 37th now with the total vaccination rate of 55 percent and an eligible vaccination rate of about 65 percent.
Europe, far ahead of us, a lot of countries at 65, 75, 85 percent. How was it playing out in terms of their economy? Is their reopening going appreciably better than some of the faltering we’re seeing here in the U.S. where — where — along the Gulf Coast in South Dakota and Idaho, the hospitals are overwhelmed again?
JONES: So, we probably will all agree that going back to full lockdown is not something that we would anticipate. And so, learning to live with the variant and getting vaccination rates up is really critically important. And again, what I could experience when I was traveling a week or so ago, you know, the lines for the museums and the lovely little outdoor coffee shops and just kind of walking about, everyone is walking about.
But there continue to be pretty — you know, pretty clear guidelines. You’ve got to show your vaccination pass to get into museums or buildings or department stores. You know, you — you can go certain places and do certain things, and people are all kind of masking up. So, I do find that they are much more serious. Again, I was only in Paris that they are much more serious.
And as we know in certain states in the United States — I’m sitting here in Boston. You know, we’re one of the top three — Massachusetts is one of the top three of five states in the country in the way of vaccination (inaudible). And just this morning, most recently, you know, the overall kind of infection rate has fallen again below two percent. So, we’re — we’re on the right trajectory. It’s in some of these states as you suggest where the hospitalizations and the access to good healthcare is becoming problematic again. And those states that are more aggressive in getting their population vaccinated are seeing their economies kind of work and try to get back to a bit of a — a normal lifestyle.
RITHOLTZ: Yeah. We’re recording this on a Tuesday. I have a dinner in the city tonight with about a dozen people. And the only reason I’m comfortable going to that dinner — or for a giant 2,000-person conference I went to two weeks ago is that New York City and New York state both require proof of vaccination for entry.
Now that’s not a guarantee, but at least I feel like I’m not …
JONES: Correct.
RITHOLTZ: … exposing myself to people who may be behaving recklessly. If at this stage of the — you know, well, here we are, it’s practically the fourth quarter of 2021. If you’re not vaccinated by now, I have to assume that the rest of your daily behavior is not exactly risk-averse, and I don’t want to be exposed to you. Forget the politics. I’m concerned about the economic impact of those folks and what it means for local businesses.
JONES: Yeah, you know, the science is pretty clear, and I understand their skepticism for some around vaccinations, but my gosh, you know, we’re an investment management, so we have healthcare analyst coming in here all the time. We have physicians giving us updates.
The science is pretty clear on the safety and the efficacy of the vaccine. So, what gives people comfort — and I think New York is doing a brilliant job. My daughter lives in Brooklyn, so I experienced the same, you know, knowing that when you’re going into a place and you’re surrounded by people that are vaccinated, well, nothing is 100 percent. It just allows you to feel more safe.
RITHOLTZ: Right. You’re putting the odds in — in your side. So — so let’s — let’s move beyond the local economy and vaccination. And I want to stick with the international theme and ask you a couple of questions about China.
China is one of the biggest emerging markets there are. They’re the second largest economy in the world. A lot of investors have been perplexed by their actions towards some of their largest companies and best-known tech companies. What should investors make about this new crackdown coming from the world’s second largest economy?
JONES: So, I’m going to have multiple personalities when I answer this question for you because …
RITHOLTZ: There is no simple answer, so feel free to …
JONES: OK.
RITHOLTZ: … you know, our listeners appreciate nuance, so — so feel free to — to be internally contradictory.
JONES: So, on the one hand, we know that geopolitical risk is something that we have lived with and we will continue to live with, and that the strain between U.S. and China relations is evident, and the crackdowns and the controls are present.
With — with our — with Amundi being based in Paris, being European, and not necessarily having the same temperature between, you know, a U.S. and a China relations, investing in China and growing our business in China is of strategic importance for the organization. And Amundi was selected as, I believe, one of the first — maybe the first foreign asset management firms to enter into, you know, a joint venture with the Bank of China and to help kind of grow that business and that presence of professional money management for Chinese investors. So, it is something that we have to watch, you know, from a portfolio construction perspective and portfolio management perspective.
The U.S., in most of our assets under management, are U.S. source, so U.S. equities, U.S. fixed income. However, we do manage global equity portfolios. We manage global high-yield portfolios that can invest in some of these markets. We tend to be more large cap not as speculative, and we always remain cautious when we don’t have a clear understanding of earnings or accounting principles and practices. So, it’s — it’s one of those risks that will be with us for a long period of time.
For some institutional investors, because we have these conversations all the time, allocating to the — to — to China, in particular, is both tactical as well as strategic long-term importance. And we’re happy to have those conversations.
RITHOLTZ: What — what sort of questions are you getting from clients about cryptocurrencies? Does your institutional demand — are you seeing that from clients for — for cryptos? I — I keep hearing from a lot of people who are crypto curious is probably the best phrase …
JONES: Yeah.
RITHOLTZ: … I’ve heard for that.
JONES: A crypto crazy maybe?
RITHOLTZ: Well, it’s that also.
JONES: Yeah. I mean, it’s easy for us because we don’t operate — we don’t get involved with it. We’re not in — in the business of working with our clients on cryptocurrency.
You know, the view is today that it’s much too speculative for the conservative profile and — you know, and platform that we put forth to institutional clients and to some of our retail clients. It’s — it’s a bit at a crossroad of, you know, interesting technology, innovation. Is it really money? Does it really have, you know, the same value as currencies that we know of today. So, our view is we — clients, obviously, are talking about it, but it’s not something that we are offering today with our clients.
RITHOLTZ: So, I — that doesn’t surprise me. We — we — whenever we get the question, the challenge is always how do we custody this? How can we make sure that …
JONES: Yeah.
RITHOLTZ: … you’re not part of the — depending on which study you see, 2025 percent or more of those people who have either lost a password or had the hard — hardware damage so they no longer can access that. That’s nothing that we don’t have a — nobody has a solution for that yet. Although I’d imagine one would be coming eventually.
JONES: Most probably and, you know, we’d rather not be a market leader in that. And — and I think also as people talk about cryptocurrency, some automatically believe it’s just bitcoin or just there. So I mean, that there’s — there’s multiple types of cryptocurrencies, so it’s not as straightforward …
RITHOLTZ: Right.
JONES: … as well. So more to come for sure.
RITHOLTZ: Huh, really, really interesting. Let’s talk a little bit about what it takes to build a diverse team. You — you talk about the importance of relationships and how trust is a two-way street and loyalty is important. How is that a business imperative? How do those factors translate into a business environment?
JONES: Well, simply if we were to take it, Barry, from — let’s talk about portfolio management for a second. For anyone who is sat down with a portfolio manager or with your financial advisor looking to invest in a U.S. equity portfolio, what you constantly hear is the benefits of diversification, but diversification spreads out the risk.
So not that I’m the first to say this, but why doesn’t that then matter when it comes to the people you hire and the diversification that you have on your teams. And diversification today — and I love when this whole discussion around diversity, equity, inclusion has kind of gone over the last several years. Diversification doesn’t mean today solely whether I’m a man or a woman, I am white or I’m non-white. You know, it’s really diversification of thought because we can get into trouble when you have groups think and you’re not challenging status quo. So, I do believe that building a diversified team is a great way to harness intellectual curiosity, to challenge the status quo and, frankly, just to look through — look at the world through the lens of our shareholders and our institutional clients who are super diverse.
RITHOLTZ: And you mentioned earlier some of the data and science around this. It’s been pretty clear from everybody who studied the space that the more diverse points of view you take into any sort of situation, the — the better the decision making tends to be.
JONES: I would agree with that. Now, obviously, you’re preaching to the choir …
RITHOLTZ: Right.
JONES: … because I’ve grown up — I’ve grown up in this industry for 30 years as a woman. You know, I have the great honor of leading this organization, but I’ve had many experiences like others on the car when you walk into the room and you’re the only one of your kind however you want to define that. And how sometimes that can silence you or — it never silenced me, by the way, but it could make it more difficult for some people to contribute and to participate in a conversation. And that’s where running an organization and being more focused on inclusion. Inclusion of thought, inclusion of all perspectives, and building a respectful work environment, you end up tapping into all of your employees rather than just a handful of the go-to employees that may stand out for one reason or another.
So, I think there’s a lot of momentum in the market. I tend to see the world with the glass half full. I’m the ultimate optimist, but I like what I’m seeing where the energy is. We have a lot of work to do, but there is definitely energy and commitment around it.
RITHOLTZ: Right. So, the upside is the overall trend moving in the right direction. And I don’t want to use the word downside, but the downside protection is sort of what you alluded to earlier in terms of ESG as a risk factor. Let’s — let’s talk about that G in companies with a broad governance that it’s not just run by an old boys’ network, but where there’s true diversity of thought and inclusion.
They tend to get into far less trouble than the sort of group think organizations. Is that a fair statement?
JONES: Well, I’m sure there’s lots of statistics to support that or to challenge that. What I — what I would agree with you on and what I would say is that by having a diverse balance of people and, in particular, now I’m lending through the lens of a female — of a woman. I do think that the — the qualifications or some of the awareness that I can bring to an organization is a bit of a balance of that. We talk about the balance of the E.Q. and the I.Q. You know, it’s really listening. It’s understanding. It’s a different risk profile that you can bring into — it’s — it’s thinking about some of the risks and some of the factors and lending that to a conversation. We may all end up arriving at the same decision, but at least my — my view is that we would have considered many more factors when you have diversity of — of thought being brought to that discussion.
RITHOLTZ: So what sort of advice do you give to women who are struggling to become advocates for themselves and advocates for women in the workplace be it employment or promotion or, you know, governance as — as part of the member of the board or — or C-suite?
JONES: This is a question I’m constantly asked, and I offer myself to any and all of the women in my company and, you know, friends and family. I’m a mother of two daughters, 28 and 25 years old. And I try to provide them with advice that, frankly, I was never given, but I had …
RITHOLTZ: Yeah.
JONES: … to learn on my own.
And what I do — what I would love to see more women do is really advocate for yourself. Don’t allow decisions to take place around you, but to really sit down with management and communicate what are your career aspirations, where do you want to go, and how can I help you get there. And position yourself for being truly qualified for a position.
There’s some other scientific work that’s done that when there’s a job description out there in the marketplace and it says, you know, need 10 years of experience that if a woman has nine years and four months, she won’t apply for that job. But if others, maybe a man has, you know, seven years and nine months, you may apply for that job thinking that she’s totally overqualified for it.
So, we’ve taken the practice at Amundi to be a bit more flexible with job requirements and instead of saying, you know, 10 years. Maybe it’s seven to 10 years or instead of looking for a graduate degree or B.A., just look for the skills and look for the requirements because we also want to attract from some of those urban communities and centers that may not be a natural path for financial services and asset — and asset management.
So, for women who are out there, network, find an advocate, find a mentor, and make your career ambitions in the path that you want to pursue. Let people know about it. And volunteer for projects and initiatives within the organization. Get involved across the organization and keep working on it.
RITHOLTZ: Huh, really, really intriguing. So Amundi has made very specific efforts to improve its approach to recruiting, be it women or people of color, but generally looking for that sort of diverse background that leads to better decision-making. Tell us a little bit about what Amundi is doing to put — put their money where their mouth is.
JONES: So, in — I — I would I would look back to — I joined in 2014-2015. And I would say in 2017, early 2018, I worked in earnest with my executive team and my head of H.R. to put in place a DE&I framework for the entire organization. And we wanted to take a look at what did we need to do kind of internally in order to have success with this.
And I can just come back to culture. One, I — I believe that a more diverse group is a more positive culture. It’s more inclusive, it’s more respectful. I also know that you can’t necessarily have success when something is top-down. So, we needed this — this movement, if you will, this journey to be both top-down and bottom-up.
The first thing that we did is we put all of my executive team and broader operating committees through unconscious bias training. And this was in 2017-2018 where everybody has done it, everyone is doing it.
What we wanted to do was to get some grass roots effort, so we created an ambassador program. We asked employees across the organization who felt passionately about helping us to become a better employer of people of color or — or gender or any — anything else for that matter to volunteer on the ambassador program. And they won monthly initiatives for the organization to raise awareness on LGBTQ, to raise awareness on disability, to raise awareness on, you know, Hispanic Heritage Month, and to bring in awareness.
What we recognize is that, externally, this outreach for a long time the asset management industry has said, “I’d love to hire more diverse candidates. I’m just not getting their resumés. And to us and the industry, that’s just no longer a good reason. We’ve got to figure out how do we get those resumes. So instead of recruiting just at the best and the brightest, you know, the all of the named schools, we’ve created partnerships with different community colleges with some of the, you know, historically black college university consortium that exists in and around North Carolina.
We have partnered with an organization locally here in Boston called Bottom Line, which develops relationships with inner city students, you know, before they’re ready to graduate. So we’ve changed how we’re reaching out into the community.
We’ve also, as I mentioned, modified how we put together job descriptions and job requirements. And we’re extremely conscious that when we have a position open and that person who is coming into the organization may be a 27-year-old white woman or a 35-year-old African American male, but let’s make sure we don’t have five 50-year-old white man or five 50-year-old white women being the people that this individual is interviewing. So, they want to see a diverse organization.
We’ve also — the last thing, Barry, that we’ve done is we’ve really started to measure by metrics. So, you can’t manage what you can’t measure. And we are presently 30 percent women, 70 percent men. That’s kind of consistent with where the industry is. We’re 20 percent nonwhite, 80 percent white. Both of those numbers need to get higher, need to improve. And these efforts that we’re putting in place is the — is one of the ways that we’re looking to drive some change.
RITHOLTZ: Quite, quite fascinating. Let’s talk a little bit about what’s going on in investment today. Despite very low rates, we continue to see huge flows into fixed income. Why is there so much demand for yield? And — and is that going to put a cap on interest rates?
JONES: So, Barry, I wonder if we’re seeing the demand and the flows in fixed income. Let’s think about where we were almost a year ago today. So, in March of 2020, that kind of March-April time period, we saw such a significant selloff in the fixed income and the credit markets, you know, on securitized credit anywhere down from 20 to 30 plus percent. Though part of the flow is in the latter half of 2020 and then continuing into 2021 is a bit of a rebound and a bit of an opportunity opportunistically to kind of get exposure to some of the selloffs in the marketplace.
With fundamentals, we’re really quite strong with some of these technical shifts that we were seeing in the marketplace. So, investors on the fixed income side who were able to jump back into the marketplace have experienced some really attractive rates of return. What we’re seeing today though, if you think about the current state of where we are — where we are with the potential for installation, you know, continuing and thinking about any — you know, any effects of a rising rate environment, we’re seeing considerable flows in the short end of the marketplace in short duration fixed income kind of ultra-short duration fixed incomed. And we’re also seeing very selectively for clients who are looking for still attractive yields looking at the agency market — the agency mortgage-backed security marketplace again where active management can apply a selective approach.
RITHOLTZ: So, given your very heavily institutional client base both here and — and overseas, where else do you see investors going to find yield? It’s not just treasuries, corporates and tips, they’re obviously looking elsewhere. Where else is that?
JONES: So, from a retail perspective, there is attractive opportunity and, you know, as we’ve seen closed-end funds launched in the marketplace, the benefit of closed-end funds as your listeners and you probably know is that you can apply some leverage, you know, selective leverage 30, 35, 40 percent. So, you can take a fairly low rate and with leverage achieve, you know, on the tax-exempt side kind of four percent.
We launched a closed-end fund not too long ago over the summer time. That has over, you know, a four percent target yield on a tax-exempt basis. That’s very attractive especially during the threat of increases in personal taxes that we may all experience.
Securitized credit is another place. But — but from our perspective, investors don’t have to only stay in fixed income to look for yield or to look for income. Multi-asset portfolios, which have grown in popularity over the last many years, is a way to achieve a higher level of monthly income. Some of the multi-asset funds do pay monthly income, and you can get levels that are much higher than just in a traditional short duration product or an investment grade product as.
RITHOLTZ: Huh. And I just wanted to clarify, your — the investments are typically through separately managed accounts or they directly into mutual funds or other products like that?
JONES: We’re vehicle-agnostic.
RITHOLTZ: So, you don’t (inaudible)?
JONES: So, we — we — any rapper (ph), any vehicle that we can put our active management into, so we offer separate accounts, collective investment trust, mutual funds, and then the USIP, which is the sister of the mutual fund in the international markets.
RITHOLTZ: Quite interesting. So — so given your perspective from both the institutional side and the individual side over the years, how do you see asset management as having evolved? What’s different in 2021 from say 2001 or — or when you and I were both in college, 1981?
JONES: So, the — the lines between the distribution channels what was on the one side institutional and one side retail and never the two shall meet, those lines have completely blurred. There is an institutionalization and a professionalism of all investment management selection. So, whether you have an individual account at a wealth management firm, that wealth management firm has a research department that is selecting and doing the due diligence on the investment products that they’re allowing to be kind of offered and distributed through their channels. And that level of rigor, that level of institution of due diligence is present today across all different channels.
The second aspect of change over the last 20 or 30 years is with the growth of wealth, the growth of the high net worth investor, and the focus on maximizing after tax return. We have seen vehicles come to market that in the past were only for the institutional account or only for the retail account. So, 10, 15, 20 years ago, it was less likely for large institutional investors, pension funds and the like to invest in mutual funds. And it was less likely for individual investors to access the separately managed account.
So, when I said that we’re vehicle-agnostic, it’s because the investor, whether it’s institutional or individual, everyone has different goals, and outcomes, and considerations that the growth of — of multiple vehicles, and the desire for an asset management firm to unwrap active management and to offer it in a manner that helps to meet the outcome and the goals of the clients, that’s vastly different.
And the third aspect of what is vastly different is pricing. So, 25 years ago, you have frontend loads that were — let me see if I can remember this — 7.25, eight plus percent …
RITHOLTZ: Right.
JONES: … and you now have today 90 — over 90 to 95 percent of our loads into our mutual funds comes into an NAV level, so without a frontend sales charge. So, pricing has also evolved in order to be appropriate for the type of investor.
RITHOLTZ: Huh, that’s interesting. So — so that’s the past 10 or 20 years. Let’s talk about the next decade or so. Now that you’re running a large group of investors and $100 billion, what are you looking at as how the industry itself might change over the next decade or two? And what are you doing to anticipate that?
JONES: So, pricing will always be front and center for the industry on a going forward basis. We have seen margins come down, but as an industry, we still enjoy very attractive profit margins. And so, we’re seeing pricing pressure come down, whether it’s driven by, you know, zero, you know, zero free ETF or where the total expense ratio is on mutual funds vis-a-vis where yields are, you know, that pressure will continue. So, we have to be relevant and competitive from a pricing standpoint.
We — if we were to look out — and this has happened already to a certain degree and in some parts of the world, but our industry is ripe for disruption, whether it is an entrant from outside of asset management who wants to come into this industry or how technology will disrupt our business, we have to think about how will our business be disrupted and how do we, as a firm, who — who frankly has been running and managing money since 1928. How do we make sure that we’re not disrupted, that we remain relevant?
Artificial intelligence will become a bigger part. It’s already present, but it will become a bigger part of portfolio management, of trying to streamline operational efficiencies, and will also continue to experience, you know, the big getting bigger. So, in the marketplace over the last several weeks, whether it’s here in the United States or abroad, the consolidation that we’re seeing, you know, I believe, will continue to occur. So, the bigger going to get bigger, the small will have to be truly specialized in boutique and offer true value. And the — the middle is what has been squeezed and will continue to be squeezed in the future.
RITHOLTZ: Huh, that’s really quite intriguing. So — so you mentioned things that might disrupt the existing firmament of finance. What are your thoughts on apps like Robinhood and that generation of millennials who seem to be their prime client base whom they’ve gamified investing for?
JONES: So, let’s think of a couple of points in history. And — and I’ve always learned that when we, as an industry, or when media, as a reporting entity, starts to talk in terms of either-or or versus or one or the other …
RITHOLTZ: Right.
JONES: … that whoever is on the other side of that is quick to say, “No way, that’s not happening.” So, if you think back in the 1980’s was, at the time, active versus passive, load versus no load. And what we see today in — in all of our own portfolios is that there is an appropriate place for passive. There is an appropriate place for active. There’s an appropriate place for load, an appropriate place for no load. And I would suggest that there is just as we as an asset management firm are vehicle-agnostic, I think that those wealth management firms that make their services available to investors, they need to be delivery-agnostic.
So, if a client wants to come in and sit down with me as a financial advisor, fantastic. If they want to do something over an app, terrific. If they want to do something over, you know, some type of a — a different, you know, a — a Robinhood or — or Nutmeg or any of those others, then what you’re really wanting to do is to understand the client segmentation that’s most attracted to that and tailor and customize your offering to that client segmentation in how they want to purchase what you’re selling.
RITHOLTZ: So …
JONES: But I think — I think it’s all relevant. You just have to figure out how to segment your offering and be appropriate on how you deliver it.
RITHOLTZ: So — so you mentioned the sort of tension between active and passive. You’ve managed to navigate that pretty well and — and stayed on the right side of mix between active and passive. Tell us how you manage to — to do that.
JONES: Well, it is a constant battle and, you know, one of the recent statistics that I saw, this might be, you know, maybe a few months older so, but seven of the last 10 years actively managed mutual funds have been in net outflows at the expense of kind of index and passive investing.
And as a — you know, as — as we’ve talked about you and I earlier and before, when you take a look at where the concentration in the market has been in 2019, where you saw such a strong concentration of where the momentum was coming from really again of those five or six stocks that we’re returning some 50 to 60 percent in their overall return.
When you’re an active manager and the returns are so heavily skewed in just a handful of stock, you’re going to underperform. You’re not going to because you’re diversified. You know, you’re — you’re looking to put your conviction across, you know, multiple — multiple different names. Today, where we’re seeing more breadth and what the market is delivering, we really believe that this is an opportunity for active management to contribute.
Part of the other way that we’ve tried to fight this, you know, this — this headwind of remaining actively managed is pricing is a key part of it. When you think about how the tenure of some of the mutual funds that are offered in the United States and, in particular, for some firms who have been in business for decades like we have at Amundi U.S., the pricing for those mutual funds were created 20, 25, 30 years ago when interest rates were 15 percent, when CDs were 12 percent, and your total expense ratio, at that time, was appropriate.
And come 20, 25 years later, when you have interest rates in the single-digit and you have other attractively priced vehicles, pricing has to be key. So, we’re constantly evaluating, in particular, with our mutual fund, with my board of trustees looking at the market, looking where pricing is, and making the necessary decisions on reducing the pricing of our management fees and our total expense ratios in order to be more competitive, in order to have the best opportunity to achieve an attractive total return for our shareholders.
RITHOLTZ: I know I only have you for a few more minutes, so let’s jump to our favorite questions that we ask all of our guests starting with what are you streaming these days. Tell us what’s kept you entertained during lockdown, be it Netflix or Amazon or podcasts or whatever.
JONES: Well, thank goodness for streaming, right, over the last year and a half or so. So, we — you know, the rules in the house, it’s something that my husband and I will enjoy and like to watch, so it can’t have extreme violence or be too — be saucy on the other hand. So, some of the — some of the — the streaming shows that we watched, we completed Ozark. We just completed, what is it, Nine Perfect Strangers. We’ve watched the Mare of Easttown. I think we also watched as well and we just finished Queen of the South. I don’t know if you’ve seen some of those, but maybe you can add some of those to your (inaudible).
RITHOLTZ: No, that’s an — that’s an interesting list like there. People are always asking that question …
JONES: I know, I know.
RITHOLTZ: … because they want — they want some — some perspective. That’s a — that’s a pretty interesting list.
Tell us about some of your early mentors who helped shape your career.
JONES: So, the — the early mentor that helped shape my career was when I was at MFS, he actually just retired not too long ago. It’s Jerry Potts. He was the head of the Bank Distribution channel. He hired me at MFS. And he was just a super mentor to me. He saw my strengths. He picked me up when I was down. He challenged me when I was getting too comfortable. He always had a super sensitive humor, and he was always my advocate. And he was someone that — that really helped me move throughout the organization.
And as I’ve gone on in time, I would say that mentoring, as you achieve kind of growth in your career, comes less from people at least for me in and around my organization and more from people that I’ve reached out to either at other leaders and asset management firms where were sharing certain challenges. It’s kind of affinity groups that you may belong to where you can kind of share some of your challenges. But to me, that mentoring in your first 10 or 15 years of — of your career is super important. So, shout out to Mr. Jerry Potts.
RITHOLTZ: What are some of your favorite books? What are you reading right now?
JONES: So I did — I haven’t opened it yet, but I did order recently the new Chris Wallace book, the “Countdown Bin Laden.” That one is something that I want to pick up.
And then a very quick read, I got together with a group of high school and junior high school friends not too long ago, and one of my friends gave each and every one of us a book by Charlie Mackesy, I think is his last name. It’s called “The Boy, the Mole, the Fox and the Horse.” You literally can read it in — if it takes you longer than 15 minutes, you’ve — you know, you’ve day dreamed. It’s a quick read, but it is so uplifting about hope, and generosity, and care. And it was one of those great little feel book — feel good books in the middle of a pandemic. I’ve given it to my girls and I’ve given it to a couple of other — other friends as well. So those are a couple that just comes to — come to mind, Barry.
RITHOLTZ: Huh, very intriguing. What sort of advice would you give to a recent college grad who is interested in a career in either investment or financial management?
JONES: One, I would say it is a fantastic career path that is professionally and intellectually rewarding where you surround yourself with smart, capable, engaging people. So, I — I think it’s a — it’s just a terrific career path.
Start networking before you graduate. So, use your college alumni networks. Use LinkedIn — LinkedIn. I mean, it sounds so basic, but I’m surprised of how many don’t use it.
And let’s not forget the art of handwriting. We’re all getting — especially in this Zoom day and environment, phone calls have gotten away, but we’re getting hundreds and hundreds of emails. It — it’s OK to drop a handwritten note.
And be persistent. Part of what an employer wants to see is your ability to have tenacity and overcome objections. So, if after one, two or three tries you’re not getting a response, don’t just walk away. Keep going at it. Figure out a different way to get in front of the company that you’re interested in.
And last but not least, and this should be in the wheelhouse of the young — the young colleagues who are coming out of college, do your due diligence and research on a company. Everything is available online. Please don’t come and sit down with me and say, “You know, how many assets under management do you have or how many countries are you in?” Like understand the company that you’re talking to.
RITHOLTZ: Huh, good — good advice to say the very least. And our final question, what do you know about the world of investment management today that you wish you knew 30 years or so ago when you were first getting started?
JONES: So, I wish today what is so clear to me only by trial and error, and I would say broadly from a career perspective, it’s OK to take risks. You’re either going to fail and you learn from it or taking the risk will be rewarded. And at the time, I didn’t realize risks I may have been taking changing jobs, changing companies, changing profiles, but I think taking a risk is really important. And — and that’s more career advice that I would offer.
From a world of investing perspective is, you know, 30 years ago, the market was pretty domestic and not as global or as connected geopolitically or as multinational. And whether it was something I wish I knew 30 years ago or thought about or maybe we just needed all evolve overtime, but today thinking beyond your borders is super important.
RITHOLTZ: Really, really fascinating. Thank you, Lisa Jones, for being so generous with your time.
If you enjoy this conversation, well, be sure and check out any of the 386 prior discussions we’ve had. You can find those at iTunes, Spotify, all the usual podcasts places.
We love your comments, feedback, and suggestions. You can write to us at mibpodcast@bloomberg.net. Sign up for my daily reads at ritholtz.com. Check out my weekly column at bloomberg.com/opinion. Follow me on Twitter @ritholtz.
I would be remiss if I did not thank our team that helps put together this conversation each week. Muhammad (ph) is my Audio Engineer. Michael Batnick is my Head of Research. Paris Wald is my Booker/Producer. Atika Valbrun is my Project Manager.
I’m Barry Ritholtz. You’ve been listening to Masters in Business on Bloomberg Radio.
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