Class of 2017 Forty Under Forty

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Dr. Zoë McHugh Investment Strategist, First State Super Trustee Corporation
(Sydney, Australia) 38
Dr. Zoë McHugh
(Art by Marcellus Hall)

She has worked in the finance industry in Australia and the UK, having held previous senior roles at ANZ and Aberdeen. An accomplished macroeconomist with a PhD in Economics, Zoe is tirelessly inquisitive with markets and tenacious about her work.

How have you been a change agent at your organization? What have you done that you’re particularly proud of?

I am proud to stand on my own and defend the investment of a manager that most of my colleagues do not like. It’s always easier to side with the majority; given the risk you could be wrong, but thus far (firmly touching wood!) they have done what it says on the tin and I will continue to defend them as being a valuable part of our Fund.

What is the asset class or investment that keeps you up at night, and why?

Fixed income: a 30-year bull market in bonds has delivered a generation of investors who have not experienced the impact of rising interest rates. A reversal of this trend would have ramifications across all asset classes as well as our members’ consumption and investment decisions that most of us have never experienced before.

What methodologies have you adopted within your institution?

I am a strong advocate of allocating capital to external managers on an alpha per dollar of fee paid basis. Often asset owners fall into the trap of either allocating capital to managers that do not deliver, or assuming an “expensive” manager is not worthwhile.

Where do you fall in the passive vs. active debate?

The main risk to our members is having insufficient funds in retirement, hence, other things equal, I would allocate more of their risk to passive equities, which are cheap to hold and should deliver the best risk premia over time to grow their retirement funds. However, markets can stray from fair value for a long time, and so some active management helps to smooth returns and prevent members from changing their investment options at the wrong time.

What are the changes you’d like to see the institutional investing community make in 10 years?

Not being afraid to say, “we have too much capital for what we are trying to achieve.”

Who is a manager you don’t currently work with whose brain you’d like to pick?

Shemara Wikramanayake at Macquarie Group Asset Management.

Ideally, where would that meeting take place?

Lavender Bay, Sydney, overlooking our beautiful harbour.

What is the software investment tool that helps you most?

Any software tool is only as good as the data that are inputted into it, and so smart, careful colleagues who take the data we have and are able to deliver to me information that is accurate, are more valuable.

What would improve the relationship between you and managers?

The best relationships I have with fund managers is with those who are humble, honest, and upfront about their investment capabilities. I know a fund manager cannot be all things to all people; those managers who think they can don’t belong in our Fund.

Why did you choose your current path?

I believe passionately in Australia’s superannuation system and the benefits that our compulsory contribution system provide to retirees. Therefore, I wanted to be a part of ensuring that this system does the best it can for members.