Conversations with Institutional Investors

Conversations with Institutional Investors is your gateway to in-depth discussions with the masterminds behind leading global investment firms, including key figures from pension funds, insurance companies, and sovereign wealth funds. Our podcast explores the evolving landscape of asset allocation, portfolio construction, and investment strategy, offering you firsthand insights from industry experts to inspire smarter, more innovative investment approaches. For further insights go to i3-invest.com. You can also subscribe to our complimentary newsletter at: i3-invest.com/subscribe/

117: Geopolitics with Alan Dupont – Tech wars, Geoeconomics and the Mag 7 08/18/2025

117: Geopolitics with Alan Dupont – Tech wars, Geoeconomics and the Mag 7 In this episode, I'm speaking with Dr Alan Dupont, who is the founder and CEO of Cognoscenti Group. Alan is a highly respected geopolitical strategist and has advised a wide range of governmental and commercial organisations, including the Northern Territory Government, Asia Society, the Australian Strategic Policy Institute and Outcomes Australia. He has advised several Australian ministers of defence and foreign affairs, and in 2013 established and led the Abbott government's defence white paper team. Alan started his career in government, including as an Army officer, intelligence analyst and diplomat. In this episode, we take a look at the geopolitical turmoil around the world and its impact on economies and investment markets. We discuss the disintegration of Pax Americana, where the US had the balance of power since the Second World War. And we look at the redistribution of power around the world, including the potential of non-state actors to play a role. We examine US President Trump's use of tariffs and the dollar as financial weapons, and ask the question whether the performance of The Magnificent Seven is related to the tech war between the US, China and Russia. __________ Follow the Investment Innovation Institute [i3] on Explore our library of insights from leading institutional investors at __________ Overview of Podcast with Dr. Alan Dupont 04:00 Early interest in geopolitics and working with Michael Hinze at CQS 06:00 We are slap bang in the middle of moving from Pax Americana to another system, which is yet to emerge. 08:30 Kondratiev Cycles and why they are important 10:00 Are we moving into the national security era, where security takes primacy over trade and commerce? 13:00 I don’t think we are on the eve of a new world war. Putin is constrained in what he can do. 17:00 The scope of a fruitful relationship with China is limited by the very nature of its system 20:00 If Australia has to choose between the US or China, then we will get a polarised, deglobalised world and we will have to forfeit a lot of economic benefits from globalisation, which are considerable 21:30 There is a technological and financial war going on 23:00 Trump decided to weaponise the dollar for geopolitical reasons 24:30 Geoeconomics: the use of economic and financial power for geopolitical objectives 28:00 Alan, you called the Iran tensions a few days before the rocket launches happened. What gave you this insight? 32:30 China has its nose in most of the key technologies of the future world. But they are not ahead in the most important one: AI 39:30 Is the technology war part of the reason why the Magnificent Seven have performed so strongly in recent years? Full Transcription of Episode 117 Wouter Klijn 00:00 Hello and welcome to the i3 podcast: ‘Conversations with Institutional Investors’. My name is Wouter Klijn, and I’m the Editorial Director for the Investment Innovation Institute. For more information about our educational forums for institutional investors, please visit our website at www.i3-invest.com. That’s the letter i and the number three at invest.com. There, you can also subscribe to our complimentary newsletter. I3 insights in which we discuss investment strategy and asset allocation questions with asset owners from around the world. Now, as you all know, we love our disclaimers in this industry, so here’s ours. This recording is for educational purposes only. It does not constitute financial advice and is intended for institutional and wholesale investors only. Please enjoy the show In this episode, I'm speaking with Dr Alan Dupont, who is the founder and CEO of Cognoscenti Group. Alan is a highly respected geopolitical strategist and has advised a wide range of governmental and commercial organisations, including the Northern Territory Government, Asia Society, the Australian Strategic Policy Institute and Outcomes Australia. He has advised several Australian ministers of defence and foreign affairs, and in 2013 established and led the Abbott government's defence white paper team. Alan started his career in government, including as an Army officer, intelligence analyst and diplomat. In this episode, we take a look at the geopolitical turmoil around the world and its impact on economies and investment markets. We discuss the disintegration of Pax Americana, where the US had the balance of power since the Second World War. And we look at the redistribution of power around the world, including the potential of non state actors to play a role. We examine US President Trump's use of tariffs and the dollar as financial weapons, and ask the question whether the performance of The Magnificent Seven is related to the tech war between the US, China and Russia. Let's get started. Alan, welcome to the show. Alan Dupont 02:36 Thanks very much. Wouter, pleasure to be here. Wouter Klijn 02:40 So I had a little bit of a look at your background, and you have quite a varied background, including starting as an Army officer and intelligence analyst. Is that sort of where your focus on geopolitics today come from? Or is it more related to sort of your study? I think you studied international relations. How does one become a geopolitical strategist? Alan Dupont 03:06 Well, good question, and actually started probably earlier than you think. I always was interested in global affairs when I was even a student at secondary school, and that flowed through into my time as an intelligence analyst, which really whetted my appetite for international affairs, because I was the Vietnam desk officer, and, you know, I was briefing ministers and involved in high level geopolitics from a very early age. And so I re credentialed myself after I got out of the army, I went back to university and decided this is what I wanted to do for the rest of my life. Then the question was, well, how would I be able to do that and earn a sufficient money to keep in the lifestyle that I wanted? Right? So anyway, it all worked out okay, eventually, with a few detours on the way. Yeah, fair enough. So you have a wide range of advisory roles, also to government. But one thing that stood out for me as well is that you are involved with a hedge fund. Michael Heng says, CQ, s, so there's a bit of an investment angle there. What's What's your role with the hedge fund? Yes, well, the the context is that later in life, I was appointed to the chair at Sydney University, and the chair was funded by Michael hinsey. And when I first met him, I said, Michael, do you understand that this is this is actually national security, not financial security? And he smiled as Yes, as I fully understand that. So that began a sort of a long association with Michael, and then one thing led to another, and he invited me to come on to his advisory group to give a geopolitical dimension to his investment decisions, which was quite path breaking at the time. So I agreed to do that, and I served on that advisory group for nearly 10 years. Learned a lot about investment head. Funds, what they do, and I hopefully they learn something about geopolitics. So that was how it all happened. Wouter Klijn 05:07 I think CQ s is global macro, isn't it? So it's more of a more in common with geopolitics than than, say, other types of in strategies. Alan Dupont 05:15 Well, well, Michael would tell you there, there's sort of, it's sort of a multi asset investment platform where geopolitics has taken into the decision making in a way that most other hedge funds don't. But, you know, really, I really think it's on the edges, because it's very hard to find a geopolitical trade, per se. You have to be aware of what's going on the world, but what's the trade? You know, it's quite difficult, so it took us a while to work that one out. But no, no, he's been quite sort of bit of a thought leader in the sense that he has brought the two dimensions together to the benefit of both. You know, so, and I think more and more investment companies platforms are starting to factor in geopolitics now for pretty obvious reasons. Wouter Klijn 06:03 Yeah, we've seen a lot of developments in that space. And you and I have spoken a little bit over the year about this concept of the end of Pax Americana, the great American Peace, and that there will be a redistribution of powers and potentially multiple power centres coming up, even maybe non state actors. Where are we in that shift away from Pax Americana? Alan Dupont 06:30 So where? Where we are at the moment is right, slap bang middle in the most disruptive part of this process of moving from one system to another one, which is clearly yet to emerge. So if you look at this historically, there are these great wave cycles that macro cycles that shape history. And every 80 to 100 years or so, the existing system starts to break down, and you get a lot of turbulence and unpredictability, just as we're experiencing now. And the bad news is it often lasts for 10 and 20 years before the new system emerges. So Max taxi, Americana, the American Peace is a system that was set up by the victors of World War Two in 1945 all our institutions and our norms were shaped by essentially United States and the West, and now that's under threat from authoritarian challenges and and even under threat from the US president himself, Donald Trump. I mean, in a way, he's trashing the legacy of his predecessors all the way back to 1945 and he's the guy who's really shaking up taxi Americana and saying, we're not going to be global cop anymore. We're not going to carry the burden for everyone else. We're going to look after ourselves, America first, and the rest of the world has to stand up and do what we've been doing. And you can understand why he's doing that, but that's that's another reason why Pax Americana is fragmenting. But will we see a Pax Sinica that is a, you know, a Chinese led world order? Possibly, a lot of people think so. I've got my doubts about that, but that's where we're at the moment. Wouter Klijn 08:14 So these big cycles in history, I think, that are called comrades cycles. Can you explain a little bit about how they work and why they're important? Alan Dupont 08:23 Sure. So there are two theories about the way the world works. One was articulated by a Russian economist named condratia, and the other by his geopolitical equivalent, who said, Well, the same thing is going on the geopolitical space. And when you marry up the two waves, if you like the the ups and the downs, they do tend to coincide. And I think the singular insight by both of them into the way in which the world works is that, like everything in life, things rise and fall. And it's no surprise that governments, empires, principalities, kingdoms, also rise and fall, as we know now in the distant past, empires like Rome rose slowly and they declined slowly over hundreds of years, whereas in the you know, the sort of Uber accelerated world in which we live, things happen much more quickly. So the theory is that every 60 to 80 to 100 years, the old system exhausts itself. And economically speaking, what happens is, you see, if you think, after the Second World War, the economy, global economy, boomed, tremendous advances economically, then it sort of platted out and lost a bit of steam, and globalisation, which was its handmaiden, started to come under under stress. And now people are saying, well, globalisation is dead or certainly not as prominent as it was before. And now we're into the national security era, where national security starting. To take primacy over a trade and commerce, and we can see that playing out everywhere, including with Prime Minister Albanese visit to China this week, where he's caught between a rock and a hard place. On the one hand, he wants more trade with China, but on the other hand, China is hardly classified as a friend, because he's been doing some rather nasty things against Australia and within the region. So how do you reconcile those two? And it's, it's really very difficult to do. Wouter Klijn 10:27 Yead, and with this shift to national security, I think one of the big impacts, as well as on Europe, where obviously Trump has said, You guys are going to have to spend more on on defence, I think there's the Ukraine war that sort of made him realise that maybe we should prop up our defences a little bit more. What do you think that is going to mean for the European industry there? We will see sort of a renaissance of the military complex there, or the industry. Is that going to drive growth? Or how do you look at that? Alan Dupont 10:59 Yes. Look, it's hard to really fully understand how fundamentally Europe's security environment has changed over the last few years, primarily because of Putin's invasion of of of Ukraine, but, but it's a way, it's been a wake up call for Europe, about the fact that they've been clearly freeloading off the United States for 75 years, and that has to come to an end. And slowly, grudgingly, they've come to that conclusion. And now, all of a sudden, with a bang, they've finally woken up, and the light bulb has gone off, and they realise that they've hollowed out their whole defence industry sector to the point where they can't even make as much ammunition as a North Korea. Okay, this is a bit of a problem, so that's been a big wake up cause. So I think this is a fundamental shift that defence the defence industry is going to become. It was already becoming a priority for most of Europe, not all of Europe. The Spanish, for example, said, Hey, we're not going we're just not going there because our social welfare state's too important. But to me, that's a false premise. It's not an either or proposition between the caring economy, the welfare state, and defence. You have to do both. It's a question the balance between them and Europe didn't have the balance right, and now it's shifting to rebalance. And that means defence industries, anything to do with defence, broadly defined, is going to get a massive stimulus. And we've already seen that, particularly in Germany. I mean, it's just amazing how much the Germans are now putting into the defence sector, very late in the day. But it is definitely a trend that's going to consolidate and accelerate, I think, over the next five to 10 years. Wouter Klijn 12:56 And I read this morning that Trump was apparently has said to Zielinski, when he was on the phone with him that where he basically asked the question, if we provide you the weapons, would you strike Moscow or St Petersburg? And it made me think, could this conflict grow into a broader conflict, potentially a New World War? Alan Dupont 13:19 Look, a lot of people think that it could. I'm not one of them. I'll tell you why. Putin's calculation is that he could get away with the invasion of Ukraine, because the West would never stand up to him, because he had nuclear weapons, so he rattled the nuclear weapons case for the last four years. But the reality is, if Putin was foolish enough to use nuclear weapons, it would be a suicide note for Russia, because he's not the only one with nuclear weapons, right? Yeah, so that would actually destroy his dream of making Russia great again. What's the point of blowing everyone else up, if you blow yourself up, right? Yes, I think they're always been constraints on what Putin will do in Europe, and the fact that the Europeans and and even the US were reluctant to take him on only encouraged him to keep pushing the envelope. But if the Europeans are standing up and Trump is starting to reverse his position. Now suddenly the task of, you know, making Russia great again becomes much more difficult and counter productive for Putin's own rule. So my argument is contrary to the view that we should concede to Putin the most effective way of stopping him from doing what he's doing in Ukraine and in beyond is to be stronger, to deter him and make him realise that he can't win. And I think Europe and the US combined are capable of doing that. It's not their economies combined. Economies are 10 times the size of Russia's Russia's economy. Is only slightly bigger than Australia's, so it would be completely foolhard here for him to study. Then go right now, I'm going to invade Europe, you know. So, so that's why I don't think it will escalate. My concern is we'll go into this. No, you know, sort of no man's land. Of nobody's winning, but nobody's losing sufficiently to bring about a peaceful settlement, which is what everybody wants. Yeah, it has a rings as well of the old Vietnam War to it, where it was a much longer drawn out conflict than people expected, correct? Yeah, yeah, interesting. So what's, what's the role of China in all of this? Because we have seen some support from China for for Putin. There's also, of course, concerns around the Taiwan situation, whether that would escalate and how that would draw other parties into the conflict. What are your thoughts around that? So my view is that China is a greater problem for democracies than Putin for the simple reason that China is the only near competitor to the United States. It's an emerging superpower, and it It dwarfs the capacity of Russia in any field, economic, financial, militarily, and why I see China as a problem is that fundamentally, its values and interests are completely opposed to those of Australia's and the US and most democracies. Now that's not a reason for not trading with them or having a stable relationship with them, but there are clear constraints about how far Democrats can go in having constructive relations with China. If China continues to be as assertive and aggressive as it is globally, trade coercion against Australia, what it's doing in the South China Sea. I mean, I could give you a whole list that. So it's not that I'm anti China or anti anti Xi Jinping, but I just see, think that the scope for a fertile relationship with China is limited by China's China's the the nature of China, China's system and its actions. But now the second point is this, China plays on a global chessboard, and all these conflicts are connected. What happening in Ukraine is clearly connected to to the Indo Pacific. China is supporting Russia. It's pretty clear. It's been careful not to go too far, but it's providing all sorts of material to Russia in the war against Ukraine. It's flooding Europe with cheap goods, subsidised goods, okay? It manipulates the market. Critical minerals is a classic example. One of the reasons why our critical minerals miners is having struggling with prices, because China has artificial depressed them to keep them to keep them out of the market. So all those sorts of things are going on in the economic sphere, and then in the financial domain, China would like to see the US dollar dethroned and replaced by preferably by the yuometer knows that that won't be possible, but certainly by a bricks currency, or some other alternative that doesn't favour the United States. So is that in Australia's interest? I wouldn't have thought so. But anyway, that's debatable one, I suppose. So my bottom line is that China wants to be number one. It wants to be the preeminent state in the system. It's entitled to have that aspiration. But the problem for the rest of us is, what does that mean for the rest of us? If China's going to be number one, well, then we're presumably going to be number 234, and five, right? And is that, if you're happy about living in the China world, that's probably great, but I personally would not be. Wouter Klijn 18:54 So how do these tensions interact with sort of, the broader trend of de globalisation? And I think you... /episode/index/show/5bcc2d8e-2740-4ba1-86ed-831c46b535f3/id/37698310

116: Igneo Infrastructure Partners' Danny Latham – Infrastructure 2.0, Waste to Energy and Transition Assets 08/04/2025

116: Igneo Infrastructure Partners' Danny Latham – Infrastructure 2.0, Waste to Energy and Transition Assets In this episode of the [i3] podcast, Conversations with Institutional Investors, we speak with Danny Latham, Partner and Head of Australia and New Zealand for Igneo Infrastructure Partners. We discuss the evolution of infrastructure assets, termed "Infrastructure 2.0," which includes renewable energy, digitalisation, and waste management. Danny highlights the shift from traditional infrastructure to more dynamic, B2B-focused assets, emphasising the importance of cash flow predictability and regulatory risks. He also touches on the role of gas as a transition fuel, the potential of hydrogen, and the integration of water management in infrastructure projects. Finally, Danny explains his investment strategy, which involves active management, matching up hard assets with good people, and leveraging mid-market opportunities for value creation. Follow the Investment Innovation Institute [i3] on Explore our library of insights from leading institutional investors at Overview of podcast with Danny Latham, 02:00 The Four C’s of Lending: capacity, capital, collateral and character 04:00 Funding versus financing; there is plenty of capital in the world, but are people prepared to pay for services and products? 05:30 My first venture into infrastructure was actually a prison in rural Victoria 09:00 Changes in the infrastructure over the last 30 years 13:30 There used to be a perception that these assets looked after themselves 17:00 Infrastructure 1.0 versus 2.0 18:30 Theoretically, infrastructure 1.0 should be a little less risky, but you are trading demand risk for regulatory risk 24:00 Are people taking more risk because of the odd YFYS benchmark? Yes, we are seeing that 26:00 Atmos Renewables, a key example of how Igneo invests 27:00 We’ve moved away from large caps, because we see more opportunities, better bolt-ons and better bilateral deals in the mid-market space 30:00 Today, our focus is on taking ownership stakes of 50 - 100 per cent, so we are driving the bus 35:00 Large, hyperscale data centres today are probably more frothy than other parts of the market 36:30 Australia’s power consumption will double between now and 2050. Where is that power going to come from? The potential conflict between energy transition, decarbonisation, and the reliability and affordability to support growth is a huge thematic across the globe. 38:00 Natural gas does have a long term role as a transition fuel 41:30 In the UK, the last coal-fired power plant has been shut down. In fact, one of the last assets we’ve acquired in the UK was a waste-to-energy asset that is located on an old coal-fired power plant site. 44:00 In a waste-to-energy model, you get paid for your fuel. So it is quite a different model. 46:30 In Australia, we are actually not that good at recycling water. One of our businesses takes wastewater and uses that to water the McLaren Vale wine region. 50:00 Adjacency benefits: Amazon has just bought the plot of land next to our waste-to-energy plant in the UK 54:00 AI and infrastructure; is it all about data centres? Full Transcript of Episode 116 Wouter Klijn 00:00 Hello and welcome to the i3 podcast: ‘Conversations with Institutional Investors’. My name is Wouter Klijn, and I'm the Editorial Director for the investment Innovation Institute. For more information about our educational forums for institutional investors, please visit our website at www.i3-invest.com. That's the letter i and the number three at invest.com. There, you can also subscribe to our complimentary newsletter. I3 insights in which we discuss investment strategy and asset allocation questions with asset owners from around the world. Now, as you all know, we love our disclaimers in this industry, so here's ours. This recording is for educational purposes only. It does not constitute financial advice and is intended for institutional and wholesale investors only. Please enjoy the show This episode of The i3 podcast was sponsored by Igneo Infrastructure Partners. As such, the sponsor may make suggestions for topics, but final control over the podcast remains with the investment Innovation Institute. Welcome to Episode 116, of the [i3] Podcast, Conversations with Institutional investors. In this episode, I'm speaking with Danny Latham, who is a partner and head of Australia and New Zealand for Igneo Infrastructure Partners, a manager that's owned by First Sentier Group. Danny and I are discussing the new wave of infrastructure assets, also referred to as Infrastructure 2.0. What is this and how does it fit in with an existing portfolio of assets? Are they riskier than traditional core assets, and what's their return profile? We take a look at assets such as waste to energy in the UK, where Amazon has just bought a plot next to Igneo's plant, we will discuss gas as a longer term transition asset and the national security aspects of it. Finally, we talked about capturing and repurposing wastewater and of course, AI, please enjoy the show. Danny, welcome to the show. Danny Latham 02:26 Thank you very much. Wouter Klijn 02:27 So tell me a little bit about your background before we get into all the details of the deals and the pipes and everything. Why investing and why particular infrastructure? Danny Latham 02:37 Sure. Yeah. So thank you. Thank you for the opportunity to be here. So in some respects, sort of my, my journey to infrastructure really started with, I guess my first exposure to the investment industry was more in mortgage securitization, okay, so back in the sort of the early 90s. So yeah, been around a little while, and so as part of that sort of evolution. So been involved in sort of a lot of the, I guess, a lot of the foundations around, sort of credit analysis and the like and, and I guess, sort of some of those learnings for being sort of good stead for, I guess, sort of the subsequent career in infrastructure. And I guess, sort of some of those principles around, if you like the four C’s of lending, Wouter Klijn The four C's? Danny Latham The four C's, yeah, so capacity, capital, collateral and character. Wouter Klijn Okay, so last one is a bit different than the first three? Danny Latham Absolutely. And I think this is sort of a, I think it's probably an hour, an area that's sort of less focused on. But when it comes to investment, investing, whether it be in the public markets or the private markets, a lot runs, we are still fundamentally a people business. And so as part of that people business, character becomes important, right? So who are you dealing with? Who are you backing? What are their values? What are their ideals, in terms of, sort of managing money as part of that fiduciary responsibility, in terms of whether it be in the infrastructure world, about or even in my previous life, in the mortgage securitization world, is, if you lend someone money, are they going to pay it back? Wouter Klijn 04:20 Yeah, yeah. It's kind of important. What about the other three C's? Danny Latham 04:29 Yeah. Well, I think that is actually a very direct correlation across to sort of investing in all its guises. So it's understanding where the cash flows are coming from the variability of those cash flows, the capacity of the business to to pay. And this is sort of, I touch on, sort of in other aspects, but it's also about this sort of financing versus funding sort of ability. So I think, as a general rule, there's plenty of money out there to. Finance things. But in a cost of living pressured world, are people prepared to pay for the for the services and the products, and whether it be infrastructure, whether it be anything, so that's sort of that, I think that that funding capacity is often sort of under, under appreciated and and so it doesn't matter what you put into a model you need to under underpin that was sort of saying, what is the partly comes back to the character, what is the ability and propensity of people to pay? Wouter Klijn 05:32 Yeah, yeah. So we'll go a bit deeper into the investment process later on as well. But do you still remember your first infrastructure deal? Danny Latham 05:42 I do actually, and and essentially. So if I sort of segue from my journey from sort of mortgage securitization, yeah, into infrastructure. Mortgage securitization was great, and was lending, it was getting people into houses and so forth. But fundamentally it was, it was sort of just financing, yeah, and so for me, I guess intuitively, it was about sort of what's what's more real, and infrastructure became something that is more real. And so I grew up on a farm. My dad was a builder, so a lot of my sort of upbringing was about real stuff. Yeah, yeah, tangible stuff. So that sort of segued into, sort of my, my jumping from sort of financing, which was a little bit less real, into something much more real and tangible. And my first opportunity, as I sort of looked at the as I jumped into that sort of infrastructure space, was actually a social infrastructure asset in in rural Victoria, basically the sale of a prison. So, so a very atypical journey into, sort of jumping into that sort of infrastructure space. But then sort of that was sort of a more of a lending type deal, the real big sort of infrastructure. First asset was the Melbourne City Link deal, where it was, it sort of quite interesting this sort of, we were the, we were the underbidder to what became Transurban, yeah, sort of way back there in the in the 90s. So, so that was sort of the, if you like, that, sort of that start of definitely something real in the context of of a new build toll road, in a fundamental piece of infrastructure in Victoria. Yeah. Wouter Klijn 07:32 So how do you go from mortgages to a prison, which is a form of housing, to a toll road? Danny Latham 07:39 Yeah, good question, because if you unpick it all, it all goes back to those sort of the four C’s I talked about. And this is really sort of as a if you like an infrastructure investor, and really an infrastructure investor on behalf of clients and that sort of fiduciary responsibility. It was really about sort of understanding the cash flows, delivering expected investment outcomes, to for the risk, to to those underlying clients. And so it's back to those sort of four C's. So, so as I mentioned, those sort of foundations in the securitization world did translate across to and they equally apply to all investing. So fundamentally, investing comes down to cash flows. Where are they coming from? What's the variability, what's the risk of those cash flows turning up? And how do those cash flows end up in the hands of investors? Wouter Klijn 08:37 Yeah, with toll roads, it's quite interesting, especially new toll roads, because much relies on, sort of the estimation of traffic flow and usage of the road itself, which, you know, can sometimes be a little bit of an esoteric art. Danny Latham 08:50 Oh, absolutely. And I think you touched on a great point in terms of the evolution of this space over the last sort of 30 odd years. And if we look at sort of the, I guess, my experiences over those last 30 years, and it tends to be the ability to forecast and predict human behaviour has become the most challenging aspect of that sort of infrastructure journey. So particularly for as you, as you touch on, for if you like new build toll roads, where you actually then sort of say, what's the likelihood that someone is prepared to pay a toll to save some time, versus sort of that they stay on the congested road? So that sort of predicting of human behaviour, I think, frankly, has been probably one of the biggest challenges and been one of the biggest one of the biggest issues of infrastructure over the last over the last 30 years. So as a general rule, particularly for by definition, humans tend to be lethargic and apathetic in terms of. Their behaviours, they tend to be creatures of habit. So they tend to, sort of for them to change is often misunderstood from, from an economist perspective, the economist will say your time saving is x, so therefore you should be your value of time is y, so therefore you should be prepared to pay a toll. Yeah, yeah. It doesn't sort of get into the behavioural aspects around around people. Wouter Klijn 10:26 Yeah, there's a bit of behavioural finance in there, counting on people not to change their stripes. Absolutely, absolutely. I was going to leave the question question for last. But since you mentioned it, what are some of the biggest changes you've seen over the 30 years that you've been involved in this space, I can imagine that the type of assets have changed, but also the structures of the transaction themselves. Danny Latham 10:49 So if you think from it, from an industry perspective, if we go back to sort of the mid 90s, particularly here in Australia, obviously the real estate and the property space have been around for forever. It's really around that sort of mid 90s that the private equity and private infrastructure funds management really started to sort of take off. And there was a whole congruence of factors that sort of sort of all came together at that point in time, one of which was obviously mandated superannuation, so that the pool of capital was increasing. There was a whole lot of micro economic reform in Australia at the time, really striving for productivity improvements. And as part of that, there was also, in some states, like Victoria, there was sort of financial stress. So there was whole lot of factors sort of manifested at the point in time in terms of supply of opportunities, and then also demand for those opportunities. And that sort of really started in that sort of space. So that's the origin of it. And then over the last 30 years, what we've seen is the as the growth and the development of the infrastructure space globally, and not dissimilar to the evolution of the infra of the property sector, it has grown and developed. So if I look at it, I'm trying to think where, what the analogy now is, is I think where I think the infrastructure sector is probably beyond the the pimply adolescent, yeah, we're probably now into the to the young, young adult phase, and at the point of, sort of getting married, having children, and the sector has grown. It's segmented by by sector, by geography, by by by risk, and so so back in the sort of the mid 90s, it was a bit more of a homogenous sort of product. It's now grown and developed. And so from an investor perspective, there's there's much greater choice in terms of the number of players, the number of managers, the number of strategies. And so therefore there's a greater opportunity for the end investor to then say, well, okay, what? What works for me in terms of my own objectives, in terms of risk and return? So I think that's probably the main it's that evolution in terms of diversity of options. Now, as part of that, the definition has certainly evolved. So if we go back to the start of my infra journey, it was reasonably traditional. It was very much sort of the infra 1.0 it's now evolved, and it's now to the 2.0 which we can dig further into. But it's even then beyond that, sort of, almost, sort of a very, very diverse extension of the of the definition and and, like beauty, it's very much in the eye of the beholder as to what people's definition of infrastructure. Wouter Klijn 13:56 Did you see sort of an increasing specialisation as well? Because I think there's sort of, you mentioned the private equity industry that's involved in many infrastructure projects, and you've seen sort of an evolution there, where initially they had similar models, like, you know, reduce costs or change management, but now they've evolved to target very specific parts of different business models. Some of them use AI. It's much more specialised. Is that similar in the infrastructure space? Danny Latham 14:24 Yeah. I mean, I think the the thematics that play out on a from a PE perspective, are no different. So I think there's, there was a perception incorrectly, that these assets looked after themselves. Fundamentally, these are large, complex businesses, and in some cases, much more oversight visibility from a community perspective, so many more stakeholders in terms of of those sort. Of having a view around these businesses. So in terms of the they certainly don't look after themselves. So I think that's one of the I think one of the main aspects in terms of that sort of evolution is these need to be, if like actively managed, no different to PE the the end game might be different. So depending upon the nature of the asset, depending upon the structure in which it's held, it may be that they they're held in an open ended fund, and they're sort of very much sort of built out over a long period of time. So it's less focused on an exit in five to 10 years time. It's but nonetheless, you are actively managing these businesses you are, you're appointing the boards, you're appointing the management teams, and then you're down in the trenches. Wouter Klijn 15:46 So you mentioned there that we've moved on to infrastructure 2.0, how is it different from the first iteration? Do they still include include core assets? I mean, can you tell us a little bit about is there a different risk profile, are they more like greenfield projects? Danny Latham 16:04 Sure, I mean, that's sort of that evolution of the sector, and it's not, it's not just an infrastructure thematic. So what we've seen is a fundamental shift in terms of, and I guess you can put it in the context of, sort of the third industrial revolution, or the fourth industrial revolution, and then sort of what flows off the back of that from a from a broader community perspective, but also from an infrastructure perspective. And so if you think about, sort of the the traditional infrastructure, arguably, is probably more of a second industrial revolution type, types of scenario around those sort of traditional assets, of of utilities, water, gas, electric, telco, and then more on the sort of GDP correlated assets, more around sort of your ports, airports, road, rail. So if you think about they are very much a early 1900s sort of thematic as we move forward into, I guess, that sort of third and fourth industrial revolutions. It's more about electrification, Internet of Things, AI and and that's sort of how that sort of set up. I put sort of the the traditional infrastructure in that 1.0 and now we're moving to the 2.0 and the 2.0 is really driven by a lot of those sort of macro thematics that we see that are not just infrastructure related. So energy, energy transition, or decarbonization, digitalization, de globalisation, as we've moved from a sort of a global world to a much more sort of look after ourselves in a post pandemic world, and then a lot feeding off the back of that also is a lot more about circular economy. So how do we, how do we do more locally with what we do? How do we, how do we recycle our waste. How do we be very focused on our water use, etc, etc. So that's, I think that's the part of that evolution, and they can co exist. But as a general rule, I think what we see is that the the infrastructure, 1.0 tends to be a bit more traditional, a bit more of a of an interface with government. So these sort of regulated monopoly assets that are sort of focused around sort of economic regulation, because they're monopolies, and the influence of regulators in that, if you go to the 2.0 it's a bit of a sort of move from a B to C world to a B to B world. So if you... /episode/index/show/5bcc2d8e-2740-4ba1-86ed-831c46b535f3/id/37630090

115: Gain Line Analytics' Ben Darwin – Performance Analytics, Team Cohesion and The Wallabies 07/14/2025

115: Gain Line Analytics' Ben Darwin – Performance Analytics, Team Cohesion and The Wallabies Ben Darwin is the Co-founder and General Manager of Corporate at Gain Line Analytics and in this episode we're going to take a look at what makes teams successful and stay successful. Ben is a former Wallaby player, having played 28 test matches for Australia. He's a former coach and a performance analyst, having worked with a number of rugby teams, including a Japanese team, the NTT Shining Arcs and Suntory Sungoliath, he started Gain Line in 2013 out of a desire to introduce a greater degree of empirical analysis into professional sports. But his research goes broader than just sports, it also goes into the dynamics of professional teams across industries and the cultures they foster. In this podcast, we're looking at how this has implications for investment teams and also for super fund organisations. Overview of Podcast with Ben Darwin, Gain Line Analytics 03:00 I was always interested in Australian sports punching above its weight 05:00 I realised that my efforts as a coach did not necessarily have any influence on the outcomes 08:30 We would find that teams that didn’t buy new talent and held on to the players they didn’t want did better 11:50 Attribution bias, we overly attribute performance to the individual 13:00 With cohesion, I’m trying to measure the attributes that drive people’s understanding of each other 14:00 We all misattribute what change does 18:30 When people try to make things better, they usually make things less cohesive 20:30 The dangers of growing organisations (super funds) too quickly 23:30 Growth is really hard 27:00 Cohesion is not the same as culture 37:30 Is it possible to build cohesion in a team with a high level of turnover? 44:00 The tumble down effect: one change causes more changes, which causes even more changes 48:30 Cohesion can drop 50% in a week, but it can’t grow 50% in a week. It grows maybe five per cent a year 52:00 My experience is that economies of scale are vastly overrated 1:05:00 Often we are dealing with a competent person who works in a structure that makes them look like they are incompetent 1:06:00 Building interpersonal trust is great, developing clarity is better Follow the Investment Innovation Institute [i3] on Explore our library of insights from leading institutional investors at Full Transcription of Episode 115 Wouter Klijn 00:00 Hello and welcome to the [i3] podcast, conversations with institutional investors. My name is Wouter Klijn, and I'm the director of content for the investment Innovation Institute. For more information about our educational forums for institutional investors, please visit our website at www.i3-invest.com There, you can also subscribe to our complimentary newsletter, [i3] Insights, in which we discuss investment strategy and asset allocation questions with asset owners from around the world. Now, as you all know, we love our disclaimers in this industry, so here's ours. This recording is for educational purposes only. It does not constitute financial advice and is intended for institutional and wholesale investors only. Please enjoy the show. Welcome to the [i3] podcast, conversations with institutional investors. I'm here today with Ben Darwin, who is the co founder and general manager of corporate at Gain Line Analytics. And today's topic is a little bit different from our normal investment focus podcast, because we're going to take a look at what makes teams successful and stay successful. So Ben is a former Wallaby having played 28 Test matches for Australia. He's a former coach and a performance analyst, having worked with a number of rugby teams, including a Japanese team, the NTT shining arcs and Centauri Sun Goliath, he started gain line in 2013 out of a desire to introduce a greater degree of empirical analysis into professional sports. But as research goes broader than just sports, it also goes into the dynamics of professional teams across industries and the cultures they foster. So in this podcast, we're going to have a look at how this has implications for investment teams and also for super fund organisations. So Ben, welcome to the show. Ben Darwin 02:21 Thank you so much. Wouter Klijn 02:22 So tell me a little bit about the origin story behind gameline. I just mentioned why you started it, but can you tell us a little bit about the history of it? Ben Darwin 02:31 I suppose I have to begin in a way, and I apologise to go back, but with my own history in that not being Australian and coming from the UK, I always sort of had a bit of a always felt like a bit of an outsider in my view of the world and becoming sort of, then part of Australian Rugby. I was always confused by this idea of, like, people say to me, you know, I go to the UK. Oh, geez. They breed them big in Australia. Actually, I was born in crew in the Midlands, like, I'm not even from Australia. And they would say, you know, you Australians, you're so good at sport and things, and I'd be like, I don't, I don't quite understand why. And so I was always interested by this idea about Australian sport punching above its weight, and why rugby particularly punched above its weight, and also why countries like England or France for that matter, or just generally, larger countries would would have all the resources in the world and not necessarily be as successful. And I remember a particular phrase by Peter Fitzsimons talking about England coming out to play, and thinking, is this the best they can put together? Because with, you know, they've they have a million rugby players. For example, in England, Ruffin, I think we have 60,000 so it's like, how's it, how's this taking place? So as a player coming into that environment, I was a little bit confused by it. And then you become, you know, one of the problems with sport is we all see things. So magically, we all see and we, you know, we see individuals as heroes, and not sort of think of them as everyday people. So you then sort of become part of that environment, and you meet the coaches, and you meet people as part of the system, and think, well, like, how is this successful? It doesn't, doesn't make sense. And not that people aren't talented, but the people you're up against being just as talented, if not more, talented, and not understanding why. So then I became a then I became a coach, because I had a spinal injury 2003 so I got very young into coaching, and the first club I was ever a part of, I don't think I won a game as a coach, so I'm like, Okay, I'm a terrible coach. And then I went to another club, which was the Western Force, which was a startup team, and we didn't win anything. And then I went to Japan and didn't lose for two years. Then I come back and coach somewhere else and win there. And then I coached again in Japan and didn't lose. And thinking, okay, maybe it's just me in Japan, but then I'd have other teams in Australia to do well or poorly. So I began to understand that that my influence on a team was sometimes good, sometimes bad, but that didn't necessarily lead to outcomes, and I've got so probably my worst coaching I ever did was in a team that did not lose the whole year. So my son. I was trying to derail them, and almost did derail them, to be honest, but they won despite me. And once you bounce around enough organisations, you start to kind of see some causality around performance. And sometimes teams win with good coaches. Sometimes they win despite good coaches. Sometimes they lose with good coaches. You talk to enough people with enough experience, they'll tend to tell you the same thing. So the last team I was part of, from a coaching perspective, I also became a data analyst, and that was the Melbourne rebels, and that one of the questions they asked me was after two years, because we spent a lot more than the market. We basically spent double what the market had in terms of talent, but we didn't win a lot of games. And so the question came up for me as an analyst, how long is it gonna take for us to win? So that question led me down this path, and I did one more stint, sorry, approaching at Suntory, like I said, and I came back to Australia and basically started the business because I didn't want to work in sport anymore, because I could not control the outcomes at all. Yeah, the team that last job I had as a coach, I was literally fired after we went undefeated. So I'm like, okay, bugger this. I could this is not working. So gameline is basically a consultancy company because then, because you see a lot of people in sport, when they lose their jobs, or in business, they become a consultant to kind of fill the time. This is basically that option. It's just gotten out of hand, but it's a stock gap that's gotten out of hand now for 13 years. Wouter Klijn 06:28 Yeah, it's got out of hand in a good way. Ben Darwin 06:30 Yeah, in a good way. So that's kind of how I arrived that point. But the original idea for the business was actually not cohesion analytics, as we call it. It was actually something entirely different, which was a model whereby clubs would come to us, and we would tell them who was, who was off contract. And the way I arrange the data is I always arrange the data visually so I could just easily find a player, and I arranged them by team, but I would couple all the all the players in that team together, and then I would notice contractual changes year to year between teams. And there was one particular team that that basically came to us and said, We want to gut the whole team. Can you help us find new players? And we tried to help them do that. And then they came back and said, We're really sorry. The owners got financial problems. We have to keep the players we don't want. So we knew what they wanted and didn't want, and it wasn't what they had they didn't want. And the next year, they went from, I believe, second last in the year they came to us, and the next year, they made the finals for the first time. And I don't think they've had the final since. So this one year where they stabilised because of an external force, which was the financials, made them keep the place they didn't want, they dramatically improved. And I'm like, okay, that does not make sense. And then there was another example. At the same time in 2013 of a team called the highlanders in Super Rugby, who had a recent period of under performance. And they were gifted through New Zealand Rugby, a large amount of players have been highly successful at the 2011 World Cup and and the the market responded by saying, Okay, look how much talent they have. So they went, I believe, from 40 to one, so with 2% chance of winning the competition, to six to one, which put the favourites second favourites. And they won three games, including losing to the rebels, which generally gets you five as a coach, right. But, yeah, but that that team two years later, without most of those guys, then won the cop. So I was really confused now because, and it was almost running against my own self interest, because we were trying to help players go into the marketplace. And what it was saying was, don't buy talent. Yeah, hold on to the talent you don't want. And so the more that people that imported, the less they could do. So sorry, the more, yeah, more people imported, the worse they got. And the less they imported, the better they got. So I started to run analysis on this, and just built some very simple algorithms, one called Twi, which the acronym I'll regret forever, particularly in financial services that we've that's what we've got and and we just started to find some commonality. And then we found weaknesses in that system. And then there was a it's been a continuous iteration ever since, on this kind of formula for success or failure. And then team started talking to us, but the core of that research was not out of sport. It was it was out of Grossberg work on portability talent. It was around military data on shared experience. It was around hospital research on contractual stability. It was on other military research around structure and size of teams, and we just then applied it to sport, and then it came back again, where we've taken it back to corporate again. But this the we just found it to be particularly long term, really strongly predictable on performance, but also we felt was getting to the heart of causality, because a lot of data in financial services and in sports. Sports industry is fundamentally measuring outcomes, measuring performance, but what we're trying to get to the heart of is what's causing that performance. Yeah, so we're not really interested. In, in the scenario of like a company is selling this much more, what, which is, why are they selling this much more? Or why are they having performance? So we're trying to remove ourselves from form. And the turn of phrase I'll use to that is, the closer we've what we're finding is the closer you would get to correlation, the further you would move from causation. Yeah, two things were so tired, I'll give a very simple example. This in sport, in rugby, the team that makes the most line breaks or gets the most run metres will generally win the game. Okay, well, that's pretty close to try scored, because you can't really make one score tries without making line breaks. So why don't we just say the team with the highest score wins the game? Okay, but that's really not getting to the heart of causation at all. Let's go right further back. Why are they catching the ball? Why are they able to pass the ball? Let's keep, keep coming back to the core about why the skills of the players develop so well. And so what we're we're really trying to is to move entirely away from form, because form has no hard end causation. Wouter Klijn 10:59 Yeah, yeah, you touch upon something there that I thought was interesting as well. You, you did a presentation for us at our strategy forum in May, and you were talking about this concept of spending a lot of money on talent is actually not necessarily helping the team perform better. And I sort of made a comparison there with investment teams, where you often have a star investor or a star fund manager, but if you take them out and put them in a different team, in a different company, they don't always perform as well or are as successful either. And you talked a lot about cohesion within a team. Can you tell us a little bit about what do you mean by cohesion, and how do you develop it? Ben Darwin 11:41 So that turn of phrase, and all of these pretty much terms have been used, you know, brought up by other people, but the turn of phrase attribution bias, I really like, which is we overly attribute performance to the individual, either successful or unsuccessful, to the individual, rather than the collective of the situation that person's performing in. So what we're trying to do is to understand what are the drivers of that individual performance. And so we know that a player is is much more likely to perform well when, for example, in rugby, you have a 910 combination, a passer and a catcher, if that passer has been passing to that person 9000 times before they're going to know where to put the ball. Okay, in financial services, for example, you might have a researcher. Relationship between a researcher and a fund manager, and that researcher knows how to deliver the information effectively. And you can use all of the terms and phrases that we like you know, and can get to a shorthand, or can look for the keys that this person's really interested in? Well, that's just a relationship that can work much faster and cover off more detail. And we also like how the things are handed to us. So whatever form this takes, whether it be sport or corporate, I don't really see too much of a difference. So what I'm trying to do in cohesion is I'm trying to measure the attributes which directly drive understanding between people. And there's different forms of understanding. So that understanding could either be interpersonal understanding, it could be system understanding, it could be role understanding, and then things like size of the team, which we can touch on later on, then structure, which is extremely important how different parts interact. In fact, there's a group I did some some work with in Sydney. Was a was a asset management company, and they had different divisions in the business, and realised the different divisions were not talking to each other, and another one would make a change, and the other one would say, Why didn't you tell us this was going to take place? This is going to take place, this is going to completely stuff our systems up. And they were like, we didn't even think of talking to you. And I mean, I've done work with an almond manufacturing company that had the same problem, right? It doesn't systems are systems are systems. And of course, there's different nuances to each scenario, but, but under we all miss attribute what change does in its many forms, and so cohesion is fundamentally trying to measure change as well as the level of understanding between the component parts of the team. So if I look at a if I look at a team, and we've done work with Platinum, for example, the Platinum team has a level of measurable understanding that we can map at any one point, and it's shifting all the time, up, down and and when a team doesn't change, it's shifting. So if you and I do something, if we do this podcast, there'll be misunderstandings. We do it again, and you'll go, Ben yesterday, I heard about this, but I want to talk more about this. Or you might say, I I know when Ben's talking too long, or, you know, I know with my wife, for example, you know when the when the left eyebrow goes up, that's a dishwasher related issue, right? We have this shorthand that we all misunderstand, right? If I could give you a really easy example of this, and I. Didn't present this at the thing, but I was, I was in the supermarket one day, and I normally shop at Woolworths in Blackburn, and I was up at Doncaster, which is a little bit further from our house, with our daughter, and my wife said, Can you do the weekly grocery shop? Okay, now, sometimes I sit my car on my phone after I've done a grocery shop, and my wife sells me say, Why are you taking so long? And on this particular occasion, I couldn't find anything in the Woolworths in Doncaster, right? And my wife messaged me, why you taking so long? It's like because bread's not where bread is. It's in my mind's eye. I had a picture because I know I actually do this sometimes at conferences. I say, right? Tell me who does the shop right, and which, which one do you go to? And they say, Woolworths here. I say, Where's the bread? They'll go, oh, seven. Where's the chocolate? All four, right? You have in your your head of mine's eye. So not every Woolworths is mapped out the same. And so there is a map in your head of what that looks like. Or, you know, you get in the car and the indicator goes off because the windscreen wipers on the other side now, right? Yeah. And so we we use the human brain, uses shortcuts all the time to help us, and it's discombobulating when it becomes ambiguous as to where things are, and all of a sudden we keep going to the wrong places, yeah. That's cohesion. That's a form of cohesion. I have a level of cohesion with that supermarket. Now, if I keep going to Doncaster, I'll build up a different cohesion. The problem is the learning and the unlearning, right? That's also a form of cohesion, and because if you've done something a lot before, now it becomes the problem, right? If I have a if I have a CRM that I'm using in my financial services business, and I changed to a new one, because it's better. The problem now becomes the old system, and my knowledge of... /episode/index/show/5bcc2d8e-2740-4ba1-86ed-831c46b535f3/id/37232405

114: Bellmont Securities' Michael Block – The Michael Block Roadmap to Investing 06/30/2025

114: Bellmont Securities' Michael Block – The Michael Block Roadmap to Investing Michael Block is Chief Investment Officer of Bellmont Securities and Adjunct Industry Professor at the University of Technology Sydney (UTS), where he helped establish the UTS Anchor Fund. The UTS Anchor Fund is a live investment portfolio managed by students to give them hands on experience with managing portfolios. In this episode, we take a look at Michael's extensive career in investing, spanning roles with Future Plus, Nambawan Super, Australian Catholic Superannuation & Retirement Fund and now Bellmont Securities, and discuss the lessons learned during this time and how you can condense this experience in a course for students. We talk investment theory & philosophy, impact of regulations, meeting your investment heroes and the Michael Block Roadmap to investing. Enjoy the Show! Overview of podcast with Michael Block 02:00 I’m just a nerd with a PC, interested in investments 05:30 I once was an analyst working for the government looking at money laundering, where I saw the bust of a bikie gang and they confiscated a live alligator 08:00 The greatest accolade I can have is that the people I’ve [mentored] are now achieving in the outside world 09:00 Getting involved with the UTS Anchor fund 11:00 The UTS Anchor fund helps students ‘from go to woah!’ 13:00 The Graveyard of Good Ideas – There are many good ideas that super funds can’t do 16:00 A super fund of the future will look massive and passive 17:00 Changes in the wealth space can be glacially slow 20:00 There will never be another super fund that fails the [YFYS] performance test again, because they will never take enough risk for that to occur 26:00 The Michael Block roadmap: 1 Set an age appropriate SAA 27:00 Funds that don’t believe in lifecycle just want to put everybody into a balanced fund. That is lazy 28:30 The Michael Block roadmap: 2 Only move away from the SAA under extreme circumstances 30:00 The Michael Block roadmap: 3 Decide when to be active and when to be passive 35:00 Your time horizon is what matters; LTCM became insolvent but was ultimately proven right 40:00 Super funds are faced with an activity bias 42:00 I rather be vaguely right, then precisely wrong 44:00 I’m a purist so I believe there are only two asset classes: equities and bonds 48:00 Mean/variance optimisation is like driving in a car looking only in the rearview mirror 55:00 On Jeremy Grantham and other heroes __________ Follow the Investment Innovation Institute [i3] on Explore our library of insights from leading institutional investors at The [i3] podcast is available on , , , , or your favourite podcast platform. /episode/index/show/5bcc2d8e-2740-4ba1-86ed-831c46b535f3/id/36995680