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Olivia Engel is recognised by her peers as being at the very top of her profession.
We were lucky to catch her before she leaves Australia to take up the role of Deputy Chief Investment Officer, Active Quantitative Equities at State Street Global Advisors in the US. As well as explaining exactly what that means, Olivia introduces us to the culture of State Street, a bank formed in Boston, MA in 1792 and with over $2.4 trillion in assets under management in 2016.
“I remember the first group offsite we had, I remember looking around the room and there were thirty of us there probably. Two American accents out of the lot. And that was our global team located in seven different cities around the world.”
Olivia has a very succinct definition of the quantitative approach to investing and portfolio management. In the podcast she explains the process and the benefits.
“Those numerical calculations enable us to apply fundamental ideas across thousands of companies around the world, in fact we calculate expected returns for 14,000 companies every single day.”
“I’m not surprised that people focus on individual aspects [of a company], they are the things that people understand and find tangible that are associated with their investments, what is BHP doing now, what kind of things are they digging out of the ground and what price are they charging for them, because that helps people to get comfort levels with their investments. It’s the same reason investors have a love affair with tangible things like property, because it makes it easy to understand what their outcomes might be. But it’s a false level of comfort I think, because how portfolios come together is a very important part of the process, it’s not just about picking the right stock”
Olivia is not only employed by State Street’s but an investor with the company as well.
“I’ve invested in my own funds. So that makes it really easy, all I have to do is buy units in the funds I control, so my interests are aligned with the investors.”
From a childhood filled with music and an education in the ‘quantitative disciplines’ at school and at Uni, Olivia started out almost by accident in a Commonwealth Bank Graduate program.
“My very first rotation was as an equity analyst, I learnt all about researching and coming up with target prices and expected valuations for individual companies. So I know what it’s like to come up with a model for one stock, and go and visit the company and meet the management and fall in love with companies and all that goes along with that.”
Looking back on her 20-year career she attributes a lot of her success to the advice she has received from others.
“I’m not afraid to ask for help, that’s the big thing. My confidence levels have changed greatly over the last 20 years. I used to be less confident and afraid to ask for help, then, later still, unconfident but at least I’ve got the courage to ask for help. But I still didn’t have the confidence to come up with the answer myself. And now, when I ask people and get their advice I’m now confident enough to say, well thanks for the advice, but my way is actually better.”
Olivia has continued to learn throughout her career, investing time in a business writing course, something she thinks every email user should do and importantly the Chartered Financial Adviser qualification.
“The CFA program has so much breadth to it, it’s great. I also did a live-in course at the Harvard Business School, called the investment management workshop where you do all these amazing case studies on various investment firms. Some of them were financial advice firms, some were private equity, some were listed equity funds. That course was just a phenomenal experience, going to Harvard, these professors are brilliant teachers and I got to meet people from all over the world working in investments.”
Olivia tells us how she manages working with the 24 hour market cycle and what she does to relax.
“I absolutely need 8 hours sleep, some people call that luxuriant, but if I don’t sleep I don’t function well. Having other interests as well, like I said before I’m into music, so I’m in a choir, actually. It’s my favourite thing to do where all I’m thinking about is music. Because you can’t actually sing while you are thinking about other things, you’ve got to read the music and concentrate. So I absolutely love it. And that is one of the biggest things I’m going to miss about moving to Boston, but I’m looking forward to finding another choir when I get there.”