The last three minutes of this short podcast are dedicated to telling people like me that we cannot share it without the written permission of L&G. The podcast is then published on Linked in and no matter that its stated intention is that it is made available only to experts, it then becomes available to anyone who can click a mouse or press enter on their keyboards.

We are also told that the intention of the podcast is not to influence those listening to invest with LGIM , a point reiterated by John Roe in the comments on linked in

I think the key for DC’s successful inclusion of more illiquids is to ensure that their risks and difficulties receive at least as much limelight as their benefits.

So that’s what we tried to capture here – explaining, not advocating.

I enjoyed the podcast, I enjoyed listening to the clear explanations and while there were no great insights on offer, I thought that it explained both the risks and rewards of investments very well. It’s a nice little advert for LGIM – and let’s not pretend to the contrary!

We learned from Roe that we had to accept illiquidity as the price to pay for the benefits of

1. The high returns from Start ups and Scale Ups
2. Bonds of development banks – offering a higher return because of lower liquidity
3. To access the managers we really want

We understood from Mistry – the social impact of illiquids – such as turning a brownfield site into social housing or helping develop an anti-cancer drug.

We found “an unintended consequence of investing this way”, finding illiquids can drive different/better levels of engagement – leading to wider benefits – such as putting more money in (and getting more out)

John Roe spoke of “very attractive risk-adjusted returns”, based on valuations on a best-estimate basis using an agent.

He mentioned being able to get the same economic exposure – whether you invest in an investment company or have direct exposure to the asset.

He praised illiquids for the diversification they bring to multi-asset portfolios and mentioned diversification being at the core of how DC schemes should be run.

Roe talked of diversification both in terms of new assets but also of diverse geographies.

Since he saw it as “impossible to have high conviction in advance”, such diversification was integral to getting steadier returns.

All of this seems to me reasonably easy to understand and the value of the podcast was to say best what often  had been said before.

I do not think we need to be warned against excellence or to worry that by explaining things so well, we might be drawn to invest with Mr Roe and Mr Mistry.

Indeed I would be concerned if LGIM had committed the time of these well-heeled executives if it were not to promote LGIM as a good place to put our or other people’s money

Nor can I see any harm  in Roe and Mistry explaining the downside of illiquid investments

1. Pricing anomalies created by valuations based either on fundamentals or what the market is currently paying – leading to
2. Too many people running for the door at the same time.

Nor do I think it unreasonable, where the market is not driving the price of the illiquids that the manager protects the fund from people selling at above market value by

1. Dilution – including liquids in the illiquid package
2. Notice periods
3. Gating

My only objection to this podcast is that so much of it is devoted to explaining that it is not intended for ordinary people and that it is not an advert for LGIM. For if it so easy to understand that even I get it and if I come away thinking these chaps know their onions, surely it is doing precisely the opposite of what the warnings tell us and precisely what Roe and Mistry took time out for.

People need help about investments , they need to feel there is someone  maintaining risk management and ensuring diversification over the long periods of time pension money is invested for.

They need to understand there are people managing DC cashflows so that their money is in the market , People find these investment matters hard and they need multi-assets managed for them

People need help understanding how over time a high carbon project like building a hospital can be good for the planet if the hospital over time uses less energy and emits lower emissions.

People want the research on high performance assets done for them and they know this will come at a higher cost than just chucking money at the stock market. And people know that cheapest isn’t best.

LGIM , it turns out , interviewed 3600 members of pension funds they manage money for – more than 75% said they’d pay more to invest with positive social impact. More than 8 out of 10 investors said they’d take more of an active interest in their funds by finding out how they were invested

And try as he might, John Roe cannot help but point out at the end of his time, that you can’t do this kind of investment yourself but need someone to do it for you. Now who do you think he means?

My total support

John and Jesal have my absolute support in producing this podcast. Suneet Chavda has every right to amplify it on Linked in. I have no doubt that this stuff helps LGIM to get more people to understand what they are up to and more people to want to send them their money.

None of this is bad, none of this is wrong. So why do we need al this absurd tra la la to tell us we shouldn’t be treating this as an advert? Why should we be told we shouldn’t be listening to this unless we are expert enough to know it all already?

And – let’s face it – it’s not exactly breaking new ground!