Piers Metcalfe is a Family Office Chief Investment Officer with over 20 years of experience across multiple asset classes, geographies and sectors. Having spent 12 years as CIO for Hawkstone, the Family Office of His Highness Sheikh Khalifa bin Hamed al Thani and many years before that within a Multi Family Office and Asset Manager, Piers is considered a thought-leader within the Family Office investment community and now helps Family Offices from an external position of consultant.
I interviewed Piers to find out what a Day in the Life of a CIO looks like, what influences his investment decisions and what the future holds.
How does your day begin?
I wake up really early and always have done. I then make coffee and flick through the news. I read the same four newspapers every day, three serious, one not so serious: The Financial Times, Times, Guardian and Daily Mail. I also listen to Radio Four, not because it is relevant to investing or the Family Office field but because it offers a good overview of the world’s events and of course what we do is highly interconnected. I have listened to The Today Program for about 40 years now and I listen to it religiously wherever I am in the world.
Whatever your political bearing, consuming a variety of news and opinions wakes the brain up and offers a global and well-rounded picture. Once I have plugged into the world, I check my emails and make a list for the day ahead.
The majority of the investments I make are long-term and therefore long-planned so there are very few times that we change our decision making in an instant or in reaction to current affairs. It has to happen sometimes but we take a long term view so that “sometimes”, is not often.
What does a day in the life of an in-house CIO look like?
A lot of what I do is research-based which means I am always looking at where are we going to go next. Now it is inflation, supply side issues, the ongoing conflict in Ukraine, rising rates and commodity prices and a recession priced in but the “next” goes far beyond that. We have spent the last 18-20 months protecting ourselves as investors. We have been building equity portfolios using proprietary software and found that performance is holding up really well. It is down, but it is down in the low single digits rather than the 20-odd percent most of the markets are suffering.
We are also looking further ahead. Markets will go down quicker than the economy as we all know but they will also recover much quicker than the economy recovers. When markets recover, which they will do, they will recover sharply. You have to be invested. We are looking at investments in the Distressed Space and we have great connectivity in that space. We’re also looking at small caps that have, historically done quite well in inflationary periods. You cannot wait for the bottom market; you have to adapt to protect on a down cycle and it has been very successful so far. Exposure to real estate and commodities are looking solid at the moment.
You will receive input from all kinds of people. It is part and parcel of the role you play in the Family Office.
Your Principal or their major advisors will call you up and say, what about gold? I’ll say, what about it?
While our investment strategy and focus very rarely changes, what you do quite frequently is start researching things that you had never intended to research. You must be an enhanced google at all times and while it does not happen perhaps as much as some would think, Principals will get excited about things and it is your role to either make something happen or advise against it as much as you can and then do it anyway. We had a spat where we were going into pre-IPO tech stocks for instance, that was very opportunistic and several that my Principal and his advisors liked but they were not entirely sure why they liked them or what returns they would bring. There was more of an element of fear-of-missing-out at play while they are hot and receiving good press.
My experience may be a little different to others in the sense that my Principal was never in the same office but I had worked for Family Offices where the Principal is in the same office. Some keep a really keen eye on markets, some are interested by short term market moves. I have been very fortunate in working with people who are long term investors and do not get excited by short term volatility but were more likely to ask if these movements would bring opportunities.
How does the Family Office world differ to other investment careers?
I have worked in Asset Managers and Multi-Family Offices and while I enjoyed my time there, it never had the freedom of the Single family Office. There are always internal products to purchase and that can impact results. In a Family Office, you have the freedom and access to look where you want and the time-scales to match which I believe makes performance better. There will always be chicanes in the road but as long as you know how to navigate them, you can really build lasting investment programs; I am passionate about this; and if it’s your bag you could thoroughly enjoy working in a Family Office.
The other difference is that, given the title perhaps, Family Offices really care about family and not just theirs but yours too. I was working for a very large, Middle Eastern Family Office when my wife had our first child. Without asking, the Principal told me that this was the most important thing that would ever happen to me and that I should take time off. During my tenure, on some days I would base my day around watching a school nativity play or a whole variety of other little events and was incredibly grateful for it. I would go to school events in the middle of that day and sometimes be the only dad there and it meant the world to me to be there. I was very appreciative for their understanding of family life, something that may be less likely in a more formal corporate setting.
Once you have shown loyalty to your Principal, they will show you loyalty back. It is a much more rewarding environment than any other, with small teams and flat structures. The caveat to this is that if you do not get along with one another, it can be untenable. You need a high EQ, to be personable and to know when to create boundaries. It is a curious position to be in. Staff turnover can be very low and I was always very lucky to work and sit with some colleagues for over 10 years and still enjoy their company.
Family Offices are essentially the investment vehicles of billionaires across the world, what pressure does this place upon you – the person responsible for managing and making their investments?
I have never worried about decision-making and believe it is down to two reasons. The first is temperament, I have never been one to become overly excited or anxious about things and so approach everything knowing both the risk and reward attached.
Secondly, Family Members and colleagues within the Family Office will always know that by the time something reaches them, it will already have been openly discussed, a plan of action implemented and been through a process of due diligence and research. You need to have a process. We had one and it was tried and tested. I always invite questions and it is very helpful to find people who challenge you. I have a skill in being able to translate finance-speak into a language easily understood which was great as often some of the most engaging conversations were had with people who weren’t investment professionals.
At one stage we did very well in the mortgage markets. It’s complex, comes with its own weird language so to help the team in our deliberations I would create a glossary of terms which helped everyone to feel comfortable. It’s about being open, honest and approachable at all times; you never want to hide behind a wall of jargon. You want to highlight successes and also importantly if an investment disappoints, don’t ignore it but try and understand and learn.
What other advice do you have for Family Office Leaders?
Be adaptable. Strange things happen. I remember being called by my Principal one day who had just seen an announcement that the Ferrari belonging to Argentinian racer Juan Manuel Fangio had just been sold for $8M. I spent time researching the classic car market; it was amazing and from an investment point of view also quite frightening. It later transpired our Principal was more curios than interested but it was a fun project.
You spend quite a lot of days doing various tasks like that. You may well be asked to do things that you are not sure about, or to work on asset classes you have no experience in working with. I remember working on a large country estate in France the only qualification I had was the ability to speak French.
One thing is though, you must be patient, because sometimes the decision maker might not be available, they might be traveling and so you have to adapt. I would travel quite a lot to see our team, it was not uncommon for me to go and have Sunday lunch with them in Switzerland for instance. Things will change, goals will change, sometimes they get big asset inflows through the sale of an operating business for instance and you need to know what to do next. I built an investment process that was not only robust but scalable too. It is really good fun and there really is no better investment job out there.
What does a post-pandemic Family Office…
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