Brett Minarik’s been called “sharp, analytical, incisive, and articulate.” The senior portfolio advisor manages some of Aksia’s “largest and most important relationships,” says one hedge fund manager. With more than five years at the hedge fund specialist, Minarik primarily advises allocators on day-to-day management of their hedge fund programs—much like an extension of their internal team.
How do you defend investment consultants in face of critics?
Honestly, the service model isn’t for everyone. To the extent an investor has sufficient internal resources, subject-matter expertise, and governance procedures that allow for independent decision making—then good for them that they can save those fees. Of course I’m simplifying a bit. We work with clients that fit that criteria but retain Aksia because they value a second opinion, want a bigger pipeline of new ideas, or just like having an army of on-the-ground research folks at their fingertips.
Describe the weirdest interaction you’ve ever had with a client or potential client.
I’m sworn to secrecy.
Design a hypothetical portfolio: An existing foundation in your home country has been invested in a 60/40 portfolio since its inception and is looking to clean the slate. The fund has US$3 billion in assets with an annual target return of 7.5%. The annual spending rate is 5%, and the fund receives an average of $70 million in annual inflows. Given today’s markets, how would you allocate the assets?
This is outside our scope as an alts specialist, but my simple observation is this “naïve” 60/40 portfolio was incredibly hard to beat post-crisis, especially in the US. This CIO was long risk assets through eight years of uncertainty, which was the right move to maximize returns. She hung in there in the face of tremendous noise and spikes in volatility… so maybe not so naïve after all.
What is your least favorite part of being a consultant?
Consultant, allocator, or manager, I think everyone in this business shares the same “least favorite” thing: Preaching patience though difficult markets.
What is the most exciting investable idea you see in the market right now?
Filling in the gaps created by the retrenchment of big banks. A broad opportunity set of private credit and other opportunistic strategies emerged following the increased regulatory constraints on banks and reduced capital market liquidity. These are typically ‘yieldy’ strategies and offer downside protection via structural seniority and collateral, spanning from corporate-focused direct lending to real assets lending to healthcare finance. While the suitability of each strategy varies by investor, they have been an effective means for clients to capitalize on dislocation and generate yield in an otherwise challenging market environment.
Name your favorite food and drink.
This is a fun game… I’ll call them Leo & Carol.
The trend of consulting firms moving into OCIO is…
Quite natural, although we are not a part of this trend. Outsourcing (more broadly) is part of a free market solution to the problem of scarcity. It’s natural that as the investment management business becomes less arcane, it too benefits from the economies afforded by outsourcing. Consulting is a solution-driven business—with the complexity of investing increasing and the limited resources of institutional investors, outsourcing the CIO role may provide a solution.
What will be the biggest innovation in your industry in the next 10 years?
Self-driving hedge funds.