Investing in People
When Aoifinn Devitt created The Fiftyfaces Podcast in 2020, she wanted to showcase the diversity of the world’s investors by telling their stories. Now, she tells our Hugo Scott-Gall her own story—from her start as a lawyer to her current role as the first female chief investment officer at Moneta, an investment advisor with $27 billion of assets under management. In this wide-ranging discussion, Aoifinn explains how the Russia-Ukraine conflict could change how we think about ESG, whether we’re in a new investing regime, and what she’s learned from podcasting.
Let’s start with your career journey. Where did your interest in investing come from? What got you hooked?
Aoifinn: It certainly wasn’t sitting around the dinner table discussing the Financial Times. I went into corporate law right after law school.
I spent two years in New York, then went on to Hong Kong. It was during the Asian crisis, so we saw clients’ fortunes rise and fall, giving me a visceral sense of how much initial public offerings (IPOs) matter to a company. That was where I first became interested in the world of finance, though my first foray into investment management wasn’t until 2002, through Cambridge Associates.
I have a reasonable skill in assessing people. I enjoy seeing what makes them tick; it fascinates me. I think that has enabled me to select managers with whom I would entrust my clients’ money over time.
So you became a consultant in the investment management industry. Did you just think, “Well I quite like the idea of investing, and I think I can do it better”?
Aoifinn: Well, I certainly did enjoy meeting the managers. I also enjoyed relating some of that to clients. But my interest has always been at the manager selection stage.
I have a reasonable skill in assessing people. I enjoy people. I enjoy interacting with them. I enjoy seeing what makes them tick; it fascinates me. I think that has enabled me to select managers with whom I would entrust my clients’ money over time.
My curiosity also extends to markets. They’re never dull; they’re always changing, always dynamic. I don’t like to predict markets, but I like to decipher them.
Do you think the fact that you’ve moved around physically, and by type of job, has given you a more diverse hinterland to go to when you think about all the different types of people you’ve met?
Aoifinn: There’s no question. Traveling and working in different cultural settings opens your mind to different ways of doing things. It enables you to develop an empathy and really connect with people on their level—in terms of the way they like to communicate, the information they like to take in, and the level of due diligence they like to do.
A lot of what we did in corporate law was looking at precedent. If we were writing a contract, we would look at the old contract and make a few modifications. But in Asia there was no precedent for many of the situations we found ourselves in. Initially that was daunting, but I remember partners saying to me, “You want the contract to say this? So write it to say this. Now you actually have to use your skills.” To adapt and improvise in that way was key, and a skill that I’ve taken with me ever since.
How important to you has it been being a mentee and a mentor? Did you have people along the way that really helped you? Did you seek it, or did it come to you?
Aoifinn: I think in almost every case it came to me as opposed to me seeking it. I’m not sure I even had the self-awareness to know that I needed to seek out mentors. Early in my career, I didn’t embrace feedback the way I should have. I always took it personally; I didn’t see it in the spirit of which it was intended. But I’ve definitely learned a tremendous amount from the brilliance of others.
I think being a leader in an industry that remains dominated by men now gives you a real advantage in bringing a different perspective to the table.
Can you talk through what it’s like being a female leader in a male-dominated industry?
Aoifinn: Role models are so important, and in seeking them you have to look for examples of people who have navigated this path before. The sad fact is, because there are so few women in senior positions, I didn’t have many female role models. By default, many of the role models had to be men. So, I tried to learn from the wide diversity of men that I worked with.
I think being a leader in an industry that remains dominated by men now gives you a real advantage in bringing a different perspective to the table. We all talk about cognitive diversity and how important that is. My deep love for working with people and my curiosity about people and what makes them tick has led me to be very curious about others and ask them questions about themselves. That has enabled me to build trust.
But I wouldn’t say it has been a factor in my career progression as such. It’s just something that just sits there. Just like I have red hair, I’m also often the only woman in a room.
Why is it that there are not enough women in our industry? And it’s not really changing.
Aoifinn: There are certainly many great groups out there, like Girls Who Invest, that are trying to improve the pipeline. But it’s not changing fast enough. I think the missing piece is nurturing. That’s where we fall short in the industry. We’re very good at the beginning of the race, the starting corrals. We get everyone all excited about the vision and how much of a contribution they’re going to make. But at the points when they’re starting to feel weak, or their energy is ebbing, I don’t think we’re rallying in the same way. Maybe it’s because we’re all too busy.
In our industry it has always been taboo to mention investment mistakes. I think it’s only when we have the safety to talk about mistakes and what we learn from them that we actually can see where the true talent lies.
You said earlier you think you have a good mental model for assessing people, and a big part of your role now is assessing asset managers. Could you share some traits of good investors and also some traits of less-good investors?
Aoifinn: I think you become pretty good at knowing when you’re seeing smoke and mirrors, and I always try to look through it.
I like to ask managers how they fare through challenging times—about their winners, their losers, what they’ve learned from them. One can gain a huge amount just hearing how a manager even reacts to that question, because whether they’re defensive or whether they’re open, you get a good sense as to how aligned their interests are, their skin in the game.
And I look for managers that are just very open and upfront about making mistakes. In our industry it has always been taboo to mention investment mistakes. I think it’s only when we have the safety to talk about mistakes and what we learn from them that we actually can see where the true talent lies.
Also, from a practical standpoint, I like managers to treat their investors like partners. I like to see not too much focus on asset gathering, and I’ve always been somewhat allergic to overly simplified, dumbed-down presentations.
An investment manager’s competitive advantage is its skill in making decisions, its intellectual capital. There are no physical assets. So how do you assess culture?
Aoifinn: It’s essential to visit the manager on-site. That old adage about kicking the tires does really ring true. It’s the body language, the atmosphere in the office, the sense of industry. It’s in a meeting: if the senior person’s there, whether the junior people have a chance to talk. I also read a lot into the energy and excitement I see, particularly among the junior staff.
If we were to fast forward 10 or 15 years, would you be looking for different things in managers than you are today?
Aoifinn: I don’t think so. This really is a people business. Obviously, in 10 years we would certainly expect certain technology to be in place. But in terms of who you’re going to entrust your capital with, the ability to deliver value is really dependent on the skill and the network and the experience.
Let me ask you a similar question but on the product side. Do you think the range of things you can invest in is going to look different?
Aoifinn: Definitely. We’re going to see evolution in terms of structure, whether it comes from customized indices or more products being democratized and made available to the smaller investor. And there will be technology platforms that make that possible. In terms of subject matter, too, we’re already seeing massive innovation around digital assets and impact-focused funds, and perhaps inflation-resilient funds, or funds that are tied into the commodity complex.
Looking out 5 or 10 years, what’s your view on humans vs. machines when it comes to investing?
Aoifinn: The ESG revolution has been a lifeline for active managers; there is still a skepticism around how passive strategies can achieve that. And I think index customization is going to be a great boon to large players who can construct those into size. Some of those firms didn’t exist 10 years ago. They really just sprung up in response to that. They’ve moved swiftly. Arguably, they’re looking at the entire exchange-traded fund (ETF) complex as their potential client base.
There is always a temptation, when we’re in the middle of something, to think it’s different this time. At this point, I’m probably on the fence as to whether we’re in a new regime. I’m watching carefully.
One argument for humans over machines is that machines can only process current and historical information; humans can see patterns and should therefore be good when things change in an unusual way or a meaningful way. Do you think that when you see big shifts in investment regimes, humans can thrive? Or perhaps the bigger question is, do you think we’re moving to a different investment regime?
Aoifinn: There is always a temptation, when we’re in the middle of something, to think it’s different this time. At this point, I’m probably on the fence as to whether we’re in a new regime. I’m watching carefully.
But even if we are in a new regime, would we necessarily change what we do? Looking back through historical regimes, a solid portfolio with a steady allocation to equities would probably have still made a lot of money.
That goes against one of my core investment beliefs, which is not reactive investing, but having a strong strategic orientation.
But generally, the best advice of all is to do nothing. That’s actually something that some of the models and algorithms are quite good at—sticking to their rebalancing discipline. I think possibly the human tendency toward action bias, and toward knee-jerk reactions and sentiment, is probably a mistake.
Right now, I think it’s pretty easy to produce a laundry list: Is it Cold War II? How persistent can inflation be? How long before rates will have to rise? All of those things are very difficult for one human brain to process. How do you think about that?
Aoifinn: I’d say the only aspect of today’s regime that is different is the stakeholder-driven concept of investibility, which seems to have come to the fore around Russia. And that is, to me, really a crescendo of what we’ve seen building up over the increased awareness of ESG issues. A lot of this came about in summer of 2020 with the murder of George Floyd. We saw companies responding, and now there is this groundswell of response to governance and social issues with Russia. I wonder whether that’s something we’ve seen before. And that’s something I’m watching very carefully to see if it’s a flash in the pan, or the beginning of a much bigger trend.
We’re thinking about what it could ultimately mean if we decide that a country is uninvestible, not because it’s illiquid but because we can’t tolerate its regime. What does that mean for many of the emerging market regimes that we already invest in?
ESG is in some ways being tested now, because some countries are going to burn more coal, etc. And this is a test of something that’s really proliferated into a lot of products. Some of them are perhaps not doing exactly what they claim to be doing. Does ESG come through this a little changed, but stronger for it?
Aoifinn: Definitely. There are so many articles written about whether the war in Ukraine is going to ultimately be the boon for renewable energy and ESG overall. I think ESG may be stronger for it—certainly in terms of us understanding what it means to have an ESG overlay. Because now we’re thinking about what it could ultimately mean if we decide that a country is uninvestible, not because it’s illiquid but because we can’t tolerate its regime. What does that mean for many of the emerging market regimes that we already invest in?
I think it’s going to create increased focus on the trade-offs that are implicit in ESG, and whether they make sense in every case—whether there is sometimes a necessary evil in order to ensure stability and to continue to ensure that economies continue to run. It’s very easy to have theory around ESG; when it’s put into practice, then that’s when it truly gets tested. I think it will be stronger for it. I don’t think it necessarily means that certain whole sectors will be untouchable.
Finally, I just want to ask you about podcasting. I feel like I’m in the presence of podcasting royalty. What have you learned from your experience behind the microphone?
Aoifinn: The power of listening. We don’t listen nearly as much as we think we do. I think that’s when we get a sense of a person and their resilience; what they’ve been through. It’s also very powerful to have that story as a bank to draw on for other experiences. We don’t all have enough experiences in our own careers to create a library, but if we can gather them together through a podcast series, I think we really have true leverage. And with leverage comes impact.
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