2018 Knowledge Brokers

Mark White

For Mark White, real assets are starting to come into their own. In fact, the asset class is one that clients increasingly are embracing—without necessarily fully understanding all the nuances. But that only makes the work more fascinating, says White, head of real assets at Albourne Partners. “It’s the most interesting asset class to be in as far as I’m concerned,” he says.

Formed in 1994, Albourne is a specialist alternative consultancy focusing on complex activity, including hedge funds, private equity, real estate, and real assets. It provides data, analytics, implementation support, research, and advice to a wide range of clients, including institutional pension plans, endowments, family offices, sovereign wealth funds, and others.

White joined the firm in 2008 to build out its real assets practice. Now he oversees a team of nine dedicated analysts, conducting due diligence on investment managers, doing portfolio construction, and running day-to-day operations. He helps build portfolios from scratch and revamps existing ones, as well as advising on direct and co-investments, and managed accounts. According to White, he’s helped clients build and oversee (since Albourne is non-descretionary) roughly $21 billion in real asset portfolios.

For White, who defines the nascent asset class broadly—everything from timber to mining to aviation leasing—part of the challenge lies in the many purposes it serves. “It has multiple functionality across portfolios, and no two clients will have the same objective or portfolio,” he says. While some clients focus on diversification benefits, for example, others emphasize cash-yield components or capture the cyclicality of such sub-sectors as mining and energy.

But he also finds there’s an education process required. “Usually clients have been told they have to get real assets on the books because everybody else has it,” he says. “But they aren’t really aware of what they should be trying to achieve or how to measure it.” That means, for one thing, making sure clients understand the inflation protection characteristics, which don’t constitute the panacea often expected, according to White. For that reason, he prefers to use the term “inflation participation.” For example, clients can invest in energy to participate in movement in that sector. “But it won’t provide a perfect hedge,” he says.

Then there’s the matter of tradeoffs, something that looms particularly large with real assets, he says. Large investors, for example, may not have access to certain strategies that are too small relative to their typical allocation. On the other hand, because of their size, they may be able to take advantage of opportunities for co-investments. Smaller investors are not disadvantaged because they can capitalize on smaller managers or more esoteric strategies that meet their needs in a meaningful manner relative to their size. The biggest wins for clients have come from early allocations ahead of the market in smaller strategies such as mining, royalties, and agriculture. Infrastructure has best been capitalized by larger clients who have taken advantage of co-investments to create tilts in exposure and reduce fees in an increasingly competitive area. The key objective is looking for new strategies and trends that firmly meet the definition of real assets with quality partners. “We see opportunity in new structures in agriculture and infrastructure that capitalize on the cashflow characteristics and longevity of some assets,” he says. “Managers and investors are trying to determine the best structure that captures alignment and separates beta from alpha, but more importantly, create long-term partnerships in the interest of both parties.”  

In his own team, he looks for people who have backgrounds working with the asset class from not just a financial perspective, but real-world experience, as well. For his part, he’s had two distinct career paths. First was in resource management in forestry and mining, working in the private and government sectors. After nearly 14 years, he moved over to institutional pension management in Canada with the Nova Scotia Association of Health Organizations (NSAHO) pension plan, where he developed and implemented investment and operational due diligence processes. White says that practitioner experience gives him a better understanding the operational aspects of value creation and destruction.  “You learn more from the person on the ground than in the corner office,” he says. “I’ve been on multiple sides. I know what can go wrong.”

By Anne Field

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