Jean Hynes, Wellington’s Incoming CEO (Podcast)

Published Feb 26, 2021, 11:03 PM

Bloomberg Opinion columnist Barry Ritholtz speaks with Jean Hynes, Wellington’s incoming CEO, on rising through the ranks, managing one of the world’s largest asset managers, and investing in health care in the days of Covid. She manages the $51 billion Vanguard Health Care Fund.

This is Mesters in Business with Very Renaults on Bluebird Radio. This week on the podcast, I have an extra special guest. Her name is Gene Hines and she is the incoming CEO of Wellington Management, a nearly hundred year old firm which manages over a trillion dollars in assets. Gine is a fascinating investors. She's got a great history both as she started her early jobs at Wellington, eventually taking over the Vanguard Healthcare Fund, the largest healthcare fund in the country. As a managing partner at Wellington and soon to be CEO, she simply has a unique perspective as to what's going on in the world of asset management. That includes everything from governance issues, who's becoming CEOs, who's rising up through the ranks across the entire industry, what the impact active sustainability is going to be on the entire asset management. We talk about private equity, we talked about passive versus active, pretty much we covered everything there was to discuss about investing these days, and really there aren't many people who have as unique a perch to look out on the world of finance and and have an informed opinion. I thought This was a fascinating conversation and I think you will too. So, with no further ado, my interview of Wellington Managements Gene Hinn. This is Mesters in Business with very Results on Bluebird Radio. My extra special guest this week is Gene Hynes. She is the incoming CEO of Wellington Asset Management. The firm manages over a trillion dollars in client assets. She began as an administrative assistant at Wellington UH and currently also manages the fifty one billion dollar Vanguard Healthcare Fund, the country's largest health care fund. She takes over as CEO of this June. Gene Hines, Welcome to Bloomberg. Thank you very much, Barry. I'm happy to talk touesday. So I'm kind of intrigued by all sorts of parts of your career. You come out of a college with a degree in economics, but your first job is as an administrative assistant. Seems a little disconnected. Explained that early career choice. Well, Barry, if I go back and maybe just give you some context. You know, I'm from I'm a daughter of Irish immigrants, and so when I went to Wellesley College on a scholarship, I didn't really know anything about the stock market UM, and I remember being in the crash of seven. That was my first experience and in hearing about what the market is. I took a sociology class and was about work, and so you had to find an internship at a play of work anywhere around Boston, and I found an internship at a brokerage firm UM, and that introduced me to the market, which I loved UM, and I particularly like the research part of it. I wanted to find out what made stocks go up and down UM and so UM in the context of which was a mini recession. If you remember, there weren't many jobs. I went out trying to find that job where I could UM, learn about the markets and UM and do research UM. I was interviewing at two different jobs that they were similar jobs who one had a much better title UM and one the one at Wellington was an administrative assistant. And you have to imagine back in Wellington's UM was under three hundred employees were now so it was much as much smaller organization, very flat. UM. I didn't know I was going to come in and do UM maybe fifty percent of my job would be more typical research assistant work. UM. And I remember back to the head hunters or tell you mean that this is a special space. You're never going to regret going to Wellington's. There's gonna be lots of growth opportunities for you. UM. And that's why it's just a job. And I guess I you know, I really did. For the first couple of years, maybe fifty percent of the job was administrative. Fift was really getting to know the markets and learning how to model and UM. And then about eighteen months and I started working with Ed Owen. So let's talk a little bit about Ed Owens. He has been called the best investor you never heard of. He ran the Vanguard Healthcare funds for quite a long time. What did you learn from working with Ed? Had the privilege of working for Ed for twenty years of my career. UM. When I think back, and as I said, I started UM working with Ed in early and that was a period of UM intense UM. I p O activity in the bio in the biotechnology spector. He was the he was the analyst, the biotech analysts, he was the pharmaceutical landilists, and he also ran the Vanguard Healthcare fund and so I just got to go deep with him right from the very beginning. Uh, you know, when we started working together, if I had to take a step back and say, what are the three things that Ed taught me that will that sort of live with me now and how I both show up as an investor and show up as a leader. I think one just the concept of very deep research. You know, when we're thinking about how we're going to make money for our clients, it's you know, how will the fu what will the future hold, what will change that is going to UM really create value for the world, And I think Ed was early taking that perspective UM. I think the other one was also following all companies any market cap global. I think he was global before UM. Many many investors were global, and that really helped us build mosaics. So, for instance, if a company was building was working on a specific met anism of action for a drug and there was a small company in UM San Diego working on it, there might be a Japanese company also working on it, and that just helped us UM fleshed out what was happening and and really trying and really helped us figure out who might be the winners. And whether this was really going to be a drug, was just really going to change medicine, And so I think that sort of deep research um and instilled an. Secondly, it's just um, you know what value is, So it is a value investor. I consider myself a value investor, and that is very much linked to trying to see what the future is. So what is this company going to be worth it if this drug is successful or they or they gained this market share in this medical device. And it's not necessarily a low pie type of investing. It's really what what companies are worth. And and then just really tying back to what the stock is that so our job is not to predict the future of medicine. Our job is to buy stock um, not concepts. So we're or is that where is that value versus fundamental um? And there has to be room um in the value of the enterprise for us to make money for our clients. And this finally flexibility. Ed was a very long term, low turnover investor, but he was anything but complacent. Um. He was just very flexible to change his mind when something changed our long term thesis. I think I'm much better at that in the past decade. I think that's something you learn over time. I think it's a very important important in my leadership as well as we think about the firm. That sort of flexibility UM is very key. So I want to flesh out some of the results from that approach to investing in healthcare with some numbers. When Ed retired in twelve, the Vanguard Healthcare Fund that he was managing was the top performing fund over the previous twenty five years, over three thousand per scent for an annualized return of more than fourteen point eight percent, far ahead of its benchmark or the SMP five. So what sort of pressure was it like taking over a fund that had those sort of numbers. Well, I I worked with Ed, as I said, for twenty years on that fund, so I was int you know, very much, very closely tied to the research, as well as some of my colleagues on the team. So I guess when I took over the fund, I just felt very comfortable that we had built a team and we had learned from Ed, we had the privilege of learning from me for twenty years, that we would make him proud and and carry on um the you know, carry on the great results over over the long term that he has created UM. I would say a couple of things as well. UM. You know he as I said he for over twenty five years. He really brought that very science based long term best health care is a growth industry. I think it will continue to be a growth industry going forward. And so that is you know, really bringing that lens to UM to the fund UM. He was also very much a contrarian and and again this value investor, and you know, when you think back to big, big moves in the index, you know he made had made a big move in in um N and two thousands towards healthcare services and medical technology, which had been very much out of favor for many years UM. And that was of the index back in thousand. Now it's closer to So that shift to looking broader than just the pharmaceutical companies. Also, you know served us well during that period really interesting. And you became one of Wellington's three managing partners. What has that experience been like knowing that you're the key troika that's responsible for directing over a trillion dollars. So so one of Wellington's core edges is our private partnership structure, and that structure has been in place now for almost forty two years. It's it's UM gone global, it's it's scaled us to a trillion dollars UM. And I would say, you know, the the concepts of the private partnership structure have been in place now for forty years, forty plus years. UM. The three managing partners are responsible for the governance of the partnership. And I guess now after my seventh year of being a managing partner, I just really appreciate, you know, one the brilliance of our partnership structure, UM. The fact that UM, you know, the partners, those the partners and the employees need to trust us to do our homework and leave our biases, UM, you know, leave our biases behind. UM. So again, when I think about my last seven years, I've just learned so much about the business the manager. It's about what people the coming um partners and becoming managing directors. And it's about sharing the economics of the firm. And so again those two things being their fair UM. Knowing that businesses can make right decisions are things that have that have helped me be one of you know, helped me be one of those managing partners that are our partners trust. Quite interesting, So let's talk a little bit about Wellington's. I know they have a big birthday coming up soon to be a hundred years old. Having that sort of history, what does that mean to the firm? So our our hundred year anniversary is still a few years off. We trace our roots back to when Walter Morrigan founded the first balanced mutual fund, which is now the Wellington's Fund that is sponsored by Vanguard. Our modern history of the firm is almost forty two years old when we formed our private partnership and took the company from being all being private partnership back in nine and the firm currently is running over a trillion dollars in client assets. Tell us about some of your clients. I know that pensions and endowments and foundations as well as other global wealth managers are some of the clients of Wellington's. So what we do one thing um at Wellington and have to manage money for our clients. Um. We have a large subadvisory business in the US and around the world. We have a very large institutional business and that's from governments around the world to pension funds to endowments and foundations. We as you mentioned, we have a growing private wealth business for private banks. UM. Again, our singular focuses on providing investment content investment products, and I think that singular focus really helps us deliver investment excellence over time for our for our clients around the world. So one of your largest clients is Vanguard. That's a longstanding relationship. Obviously, Jack Bogel came out of Wellington to launch Vanguard. Tell us about the relationship between Wellington Management and the Vanguard Group. So Barry, as he said, as he said, Vanguard and Wellington had very similar routes back in when Walter and Morgan founded the company, and we went different paths in the nineteen seventies, with Wellington focused on investment management and investment content and Vanguard focusing on the mutual fund distribution business. UM. I would say we have a very very strong partnership. There are our largest clients, UM, and I just have enormous respect for how well they've done as a business. UM. And so you know, our goal with Vanguard is to to really make sure that we're delivering investment excellence over over the long term. And I would say, one of the things that I really appreciate appreciate about Vanguard is they really have a very long term horizon and they are evaluating us on five years and ten years. And I think that that that sort of partnership sert us well over time. Interesting you mentioned earlier that Wellington is a partnership, not publicly traded. I have to imagine that over time there were offers to either go public or to be sold. Why stay private? What's the advantage of that? So one of the most important advantages of staying private is that we can be very long term, long term in our investment horizons, long term and how we evaluate our talent um and thatt I that really does align with the long term objectives of our clients. So what are our what are we trying to do? We were trying to deliver investment results, investment outcomes for our clients, and ultimately there and beneficiaries which which which could be retail individual investors um around the world, that could be pensioners, um. And and they have very very their time horizons are extremely long term. And so again I think our private partnerships serves us quite well, and it might be the optimal structure UM to run an investment UM asset management business. And I would say the other thing is that this is not a capital heavy business, so we know we don't rely on the financial markets or or banks for to run our business. And so again there was never any necessity. And then maybe one final thing is that we have grown organically because I started we were approximately sixty billion, and as you said, we're over a trillion dollars now. UM. That's all been through organic growth, adding talent um along the way to grow, to globalize or grow our fixed income business. And again we haven't needed. We now have at at our size, we have the global scale to invest in our business without relying on the market. So tell us a little bit about the firm's morning meeting. It's been described as a quote signature of tell us a little bit about that. So we start the morning meeting has been going on to ninety eight UM. It is something that has started in UM in our Boston office, but now also happens we have an Eurasian morning meeting that happens in our London Eurasia meeting that happens in our London and that connects to our Asia offices. It's really a place to get together and UM debate what's happening in the markets, whether that's UM individual stocks or individual credits, or individual or what's happening on a macro level. UM. It really does bring the firm together in terms of a focus on on on how you know the news of the day. Sometimes those meetings they're very topical and sometimes they are forward looking and we try to share unfinished ideas. I think most importantly, Verry, if I could leave you with one thing about our firm is that we have a very collaborative culture. And what that means is that there's no chief investment officer UM. Each individual portfolio manager we have about fifty plus boutiques UM can go back and practice their own philosophy and process. But we have this open, collaborative platform and Morning Meeting is is critical part of that. And what you want is debate and challenge on any topic. And I think over the I think the Morning Meeting has allowed that that forum where UM portfolio managers and analysts can can have debates and have different views and different perspectives UM. I think that has really helped our collaborative platform. And you mentioned attracting talent. What has it been like this year to attract or develop and retain talent given the challenges of the pandemic and having to work remotely, not necessarily being able to interview people face to face, what's it been like this best year? But we have a tracted so again, as you said, it's surprising how you know, we're almost a year into really having to work from home and and we've been able to run the firm virtually and that includes attracting talent from all over the globe. So we have onboarded well over a hundred people in and even more starting in twenty one, and so that's has seen seamless. But again, the most important thing is how do you integrate them? And how do you integrate them um into your teams. We've had two new team members on the health care team, so I know, first Ham, we're trying to integrate them into our processes and into our team culture. UM. And again I think it takes work. It takes it takes work to make sure that you're connecting and you're getting to know them and that you're spending a lot of time with them. UM. I think the apprenticeship model is one of the things that we will as we think about the future of work that will be very important to having in person, both the combination of both in person and potentially more flexibility in the future. But again, we've we've we've done, we've we've tried a lot of different things that make sure we are both integrating new talent as well as keeping teams together during this pandemic, and technology has really helped, and it's really a lot of every day making sure people are connecting either through our morning meeting as we talked about, or through more team meetings, or through one on one conversation. So you're founded in Philadelphia, headquartered in Boston. How has the pandemic changed how you recruit and retain people? Does it open up more opportunities? I do think what we've learned from the from working from home is that you know, one, the technology work, so we can work more virtually UM and and we can we can we can be more flexible in terms of UM how we use technology to interact. So I would suspect first of all, will there will be more flexibility in the workforce, and that does allow us to think about other locations where we can attract talent so other other parts of other parts of the US where we don't have UM, we don't have offices. That's something we're looking at. No decisions have been made, but that's something that I would suspect will look at over time UM as well as other parts of the world where we don't have offices, Like how how do we how do we take a fresh look. We have a group of our leaders now studying we have a business challenge, studying the future of work UM. I think in the next couple of months will will see what's there. And they've done such extensive work in terms of serving other companies and serving our employees, and I think they'll come recommendations about how will work in the future. And I assume we'll have more flexibility and that will allow us to think more broadly about where our employees are located. So what's going on Gene in the health care industry today? What insights do we have on the vaccine and innovation? This has really been a hell of a year for healthcare. Yes, Berry, I think when you think about health care, and I did mention earlier that healthcare is a growth industry and what I mean by that is that when you think about demand, what with the population aging as well as in many many and virgin markets such as China, more people entering the middle class. That just increases health care demand. So health care demand is increasing at a brisk rate, and then we have payers around the world try to figure out how to control that natural growth of health care. So that's what's on the demand side. I think on the on the supply side, we are in and I really like to say we are in a revolutionary period of biology. And so when you when you talk about the bio pharmacide by a pharmaceutical side of healthcare, Um, this is the most exciting period in my five plus years of following the industry. And I think in that technology. The power of that technology really came through when you think about how fast um, the vaccines and the and the antibodies, and you know how fast they were able to be developed during this pandemic. So last year m r NA was the new tech. It really showed its stuff in developing the COVID vaccine. What are some of the next great healthcare technologies? What when are the nanobots gonna eat the cholesterol that's built up in people's vascular systems? Or is it something else entirely Yeah, I think if we take a step back and think about the history of biopharmaceutical and you had small molecule drugs that those are small drugs like you know advil or aspirint and then in the nineties you have the discovery of that you could deliver proteins, and the late ninety nineties you have the discovery that you could um deliver monoclon landi bodies, which we went after much larger receptors UM in the body. That has opened up biology UM. So again, when you think about the past twenty years, it's it's been the growth in the industry and the and really being able to treat many different diseases has been about using these biologic um to treat diseases. I think we're in a we're in a completely new era now in when you think about the ability to target d NA and in a completely new way. So we think about those the history of all medicines, those three modalities, and now we have small interfering RNA as you mentioned, messenger RNA, gene therapy eventually cristoper. We have new modalities called bispecific antibizes which targets to targets at once, and even small molecules. Because you understand biology at at a completely new level, small molecules are are becoming more targeted with less side effects. And so when you look forward to the next twenty years, UM, as we unravel biology, we're just going to have many, many more modalities. UM, I'm not sure. I'm not sure if we're going to have nanobos, but I do think that these technology platforms will be used broadly across all diseases to treat diseases. And I think if we look back thirty years from now, we will have made a substantial in roads into disease and treating disease and UM and that's that's very exciting and encouraging, and we'll create a lot of value for the industry. What about oncology and cancer, We we've seen a lot of progress, but it turns out cancer is not one disease but hundreds of diseases. What are we looking at in that space and how important is genomics for pursuing a broader cure for cancer? So when you think back to ten years ago, cancer was treated with UM with chemotherapy, which are like poisons and chemotherapy really has resulted in you know, really controlling cancer or treat helping to treat cancer. But it's been the past ten years where you've you've used you've had the ability to use genomics and use genetic information to both understand how why cancers grow. And like you said, it's you know, breast cancer or lung cancer is not just just because it's in the lung doesn't mean it's being driven by the same kinds of mutations. And so just a better understanding of my patients UM what's driving their cancers has led to much better identification of targets and much better identication of drugs. And so when you think about cancer now you have you still have chemotherapy as a backbone. You have immuno oncology which helps the immune system UM overcome UMM overcome the cancers, and you have targeted therapies in terms of UM driver mutations, the ability to target those UM driving mutations. I think in the future some of the interesting areas are going to be UM antibody antibody drug conjugates, which is more precisely delivering chemo through an antibody. Though that though those platforms I think will expand going forward you have you know, they're the first of carts. I think those those could possibly be used much more broadly and other and other diseases as well. So I think we're on the We're on the brink of really making dramatic changes in ecology. And interestingly, when you look at the industry, when you look at the biotechnology industry, I think half the companies are oncology based and approximately half of a half of R and D spending in the industry is oncology. So when you think about the combination of really unmet medical need and um being very susceptible or driven by genetic mutation, that's the perfect marriage in terms of really making progress. M quite quite interesting. So what does this mean for longevity and future lifespans? Are we looking at someone being born today with the high probability of reaching a hundred I I always suspect that lifespans are going to be prolonged going forward. I think you're you're already seeing that. I think that just recently the death rate from cancer has a clined in the last five years. We just talked about the number of new technologies, So you're already seeing it in the data, So that would be one. I think that also the the ability to have gene therapy for these are hundred monogenic diseases that potentially could be susceptible to a technology like geen therapy. That if you give those two newborns, that could dramatically change um the lifespan and the quality of the lifespan of individuals with those genetic mutations. So that would be another area UM. And I think when you think about the large um large parts of the market that really drive mortality, you know, really really it's UM. It's cancer, and it's also cardiovascular disease. And I think we've made progress in terms of congestive part failure and in blood pressure, and so again, if we can crack those and you have more people at an earlier stage controlling all of those risk factors, that will also likely lead to longer lives in the future. Quite quite interesting. So let's talk a little bit about Wellington. I think of you guys as an investor in the public spaces, but you have a pretty robust business in alternative assets like private equity and venture capital. I think that's over thirty billion dollars. Now, tell us a little bit about what's attractive in that space, and so we have an over thirty billion dollars at alternatives, which are both UM long short funds as well as UM an emerging private equity business. If I think about the private equity business, UM, we and you mentioned that we were a public company. One of the things that we started, you know, right around two thousand and fourteen is fifteen is is launching a late stage crossover fund. So that was our first private funds. You know, came out of the observation that companies were staying private longer and there weren't as many I p O s and it was a very natural adjacency to our to our public investing UM. We've just launched the third of that platform UM and a few years ago we also launched the first of a biology based private funds UM. Again, I think the big observation when you step back is that there are more companies staying private longer, There are more companies that are private UM. When I when I think of biotechnology, there are more private companies relative to public companies now than any part in my career. UM. So it is a very right area for investing it and it really is very much aligned with how we invest in the public market. Um, it's very adjacent to our public market investing, and I think if you think about wellingting going forward, we'll have more platforms beyond those first two. It's an area that we're investing in as a firm. So some of the older alternatives that are out there, hedge funds seem to have gotten very crowded over the past twenty years, and and some people have argued the same is true for the venture capital side. A lot of money is chasing only a finite amount of deals. What does the risk look like in private equity? Is there the possibility that that becomes a crowded space. Also, I'll go back to what I've talked about in terms of a number of private companies. So again, when we think about our process and think about Wellington's very rooted process in terms of both valuation and assessing fundamentals, I think we think that there's plenty of opportunity right now for using our skills as public investors, using the skills we've generated, you know, skills we've told you know, skills we've honed over many, many years, to apply those to the private market. And I think the observation about maybe the productivity of the world, that there are just a number of private you know, a larger number of private companies than probably any time in history UM and and creating real value for the world, and that that's the opportunity really interesting. Let's talk a little bit about sustainable investing. Wellington is known for its sustainability and alternatives approaches. You guys have a partnership with Woodwell Climate Research Center. What are some of the physical effects of climate change on capital markets? How how has climate change affecting asset prices? So, UM, let me take a step back and talk about sustainability and then talk about our would Well Climate Research partnership and then how it impacts UM the market. UM. In terms of sustainability, it's it's I would say that it's broad. It's it's if you think about E, S and G, environment, social and governance. UM. I think governance has been UM, you know, an important part of our process for the past twenty five years. Governance has always been important important part of our process. That we now have more, we now define it more and we are interacting as a firm more with companies as well as boards. In terms of in terms of our oversight of governance of our of our holdings, and I think that will continue. Um. I think in the last number of years the environmental has really become quite important in terms of, you know, new regulations being put in place in in certain parts of the world. And again that we have this very exciting partnership with would Well Climate Research Center, and we're working with a few of our clients on this partnership and we're asking questions such as how does climate impact asset prices, and they just spend fascinating insights into how water shorter shortage for example, or heat map. So we're we're bringing that climate research down to very specific parts of geographies and then connecting them and trying to connect them then to well, this businesses in this geography and it's not going to have an impact potentially on municipal bonds for example, or even on the equities um in the in the in the media too long term. So that what we're trying to do is take those insights, make sure we're asking the right questions, take those insights and bring it down to very specific mapping of climate risks, and then trying to connect back to actual stocks and credits UM and so we are in the in the process of doing that. It's a very exciting partnership UM. And we're also doing with that data doing climate reviews of our portfolios. So again what our portfolios look like from a climate perspective. If I take a very big step back, I think the next the next stage will be social and you know, again, how how does social interact with the public markets UM, And I would suspect starry that we are going UM that sustain ability is UM is not a fad, A's here to stay and it is really going to impact how the markets evolved in terms of where assets go into what kind of funds. And so it's a very important area of investment for Wellington in terms of you know, both talent in terms of the talent that comes with E. S G background, as well as a technology investment for us in terms of how we can use our climate for example, or our governance insights into portfolio construction. UM. I think if we're early in the process, but eventually it will become part of the dialogue of all stocks UM in a number of years. So in June you take over for Brended Swords as Wellington's fifth CEO since the firm went private nine. You're the first woman to serve in that capacity. You're only one of two female CEOs amongst the largest asset managers. UH. What does this tell us about governance as an issue both in corporate America generally but in the finance sector specifically. So I'm going to answer that in two parts. One would be very Wellington specific and then maybe one about a comment about UM corporate, you know, the world of corporations and what the future might hold UM from from a Wellington perspective. UM, as you said, I'm going to be the fifth generation CEO of the of the private partnership eras in ninety nine. I think the most important thing to know is we really value stewardship. We really really value passing the baton to the next generation, leaving the partnership in a better place. Like my goal is that this partnership in this firm will be thriving fifty years from now. So that's very important in terms of that's a very well in specific stewardship of the firm. UM. If I shift and think about governance, you know, I you know, I just have an observation you know, I think it is a novelty now that as a female becoming a CEO, and it's very exciting to see a number of peers in the industry and in the other in other in other industries becoming CEOs And hopefully, hopefully it will be a novel it won't be such a novelty in ten years. And the observation I'm going to make and I and I and I, it's an observation based on seeing what's happening in the healthcare industry um and seeing broader data, is that I do think it's more women in all industries have more experience running parts of the business where we are going to see more females become CEOs and and hopefully I'm you know, hopefully ten years from now, there will be a lot more deserving women who have had the opportunity to run business is being prepared to be CEOs of corporations around the world. You know, when I think about myself being a managing partner that we talked about earlier, that really provided me that experience. That experience for me, it really brought in my perspective and I got to know the firm and got to know both the clients and the firm and the talent throughout the organization that has helped me prepare for for the next UM, for the for the upcoming succession from Brendan. That's quite interesting. So over the past UM, let's call a decade or so, certainly since the Great Financial Crisis, we've seen a lot of assets flow towards passive. You guys seem to have done pretty well l as an active manager. What are you doing to compete more effectively against passive? Is that going to be an ongoing shift or is this eventually going to reach some form of equilibrium. I strongly believe there's a very important place for active management UM. There's also a very important place for passive. And it's our job at Wellington being an active manager and that that is our strategy going forward to how do we how do we deliver UM, how do we help our clients UM achieve their investment outcomes? And when you think about our clients and again back to what are we trying to do for clients? We're trying to help them with their their future liabilities or you know, how how do they fund their pension funds for example, or how do people retire with more assets so they can live a fulfilling retirement. That's what we're trying to do, and we believe that we can deliver our investment excellence that the alpha part of the alpha party, the equation will become even more important going forward. So when you think about where interest rates are, you know, what is the outlook for bond returns going forward? When interest rates are um you know, close to work, close to zero uh. With the equity market, you know, having a strong run for the past twelve years, we think alpha will become an even more important part of the outcome for our clients. And so again maths are that's where our that's our number one focused investment excellence. We can deliver our clients. We will do well and help them solve their problems, hopefully gain more of their trust and gain for their business over time. That's interesting you mentioned interest rates. How much attention do you pay to the macro? Does is what the Federal Reserve is doing? Um impact how you adjust your portfolios. Do you think about the state of economy or is all that stuff background and you focus on finding companies at the right valuations. So I'll talk about Wellington and then I'll talk about Jean and how she incorporate, how I incorporate interest, race and what is happening at the at the macro level. So we have half of our business is fixed incomes, so what happens on the Federal reserve or the European government is critical to investing UM in fixed incomes. So it's a very important part of our dialogue at the firm. We have, you know, a very strong macro research effort at Wellington to help support um are both our equity as well as our fixed income and credit at fixing race investors as well as our credit investors UM with your investment. So for the firm, macro investing is very important UM. I would say for for myself as a health care investor, I probably would lean more that's fundamentals than we talked about health care what's happening. I would spend most of my time thinking about what's happening with mechanism of action or how cancer is going to be cured. That's that's the most important thing to get right. But I found it very important over my career to make sure that you're focused on the macro. And there are probably two macro things one would be, UM, what's happening in regulations around the world, regulatory bodies, what's happening in politics. That's a big important macro um effort for us in terms of understanding what could influence healthcare fundamental. And then its secondly would be what's happening with interest rates? Because biopharmaceutical stocks are long dated, you know, you're looking so far into the future in terms of how you think about earning streams, so you know, making sure that that's part of the process in terms of valuations and how much you want to pay for those long data assets, that it's part of the equation that is very necessary to think about when constructing portfolio. Is I have to ask you a little bit about some of the craziness we've seen in the market. Uh this past month we had game Stop going wild, but we've also seen a little bit of frothy activity in bitcoin in Tesla. UH. What are your thoughts on the question of is this just pockets of froth or are we looking at a more significant bubble? I guess the observation I would have is that we're twelve years into a bowl market um valuations are are higher than they have been and that's partly due to the low interest rate that we talked about the FED policy around the world. So again getting making sure we know the future direction of interest rates will be very important to valuation. I'm not the expert on Tesla or or other areas, but I do observe that some parts of my investment in Universe um that the relationship between growth and valuation is that extremes and in some parts of that not certainly, most parts of it are very attractive value ation. So I guess as a value investor, that's just a very interesting relationship to me that I'm watching very closely. So I think of the CEO role as a full time job. I would also imagine running a fifty one billion dollar healthcare portfolio as a full time job. You're going to continue managing the Vanguard health care funds. That seems like a lot to do at once. How are you going to juggle the two? A couple of things. Want Number one, we are naming We have named a president. My my managing partner, colleague, Steve Klar, will be president. So he will he will be a partner with me in terms of running parts of the organization. So that would be number one. UM number two, I'm really believe in empowering the empowering the leaders and so we have a management team both in terms of running the business as well as running running our regional offices. Very excited about our leadership team UM. And that's a group of twenty people. So that would be an observation number two. And then I would say in terms of US observation number three specifically for health care. You know, we have UM expanded the team over the last number of years. The team is has matured and they're both their research and risk taking skills. So again I'm going to be able to leverage that fifteen person plus team very significantly UM as I go forward UM. And then and then maybe the last UM, just the last thing to share with you, Barry, is that one of the things that I think this is very specific, but one of maybe my super strength is that I'm very organized and again making sure and I've spent a lot of time thinking through how I'm going to spend my time going forward and and and again, then it's up to me to execute that plan to make sure that I'm both ending UM significant time on UM managing healthcare assets for the Van Guard Care hole or as well as the firm and all the clients with the firm. So I feel very comfortable in the plan going forward and how I'm going to be spending my time UM, and then just hopefully there are benefits. The benefits of it will be that I'm going to be staying very close to our investors. I'm going to be you know, we're gonna be UM in the morning meeting together, We're gonna be in company meetings together, and so staying close to investors hopefully will help me think about how we're going to evolve as investors. How are we going to use more science, how are we going to use more technology to help us evolve. So again there're synergies to both the roles UM, and I think as we hopefully at the end of my term at Wellingtons CEO, that will that will look back and say that was a benefit that you know that that was the benefit both to the firm as well as to UM as well as to Vanguard shareholders. So let me throw a curve bawl at you. Gene becomes CEO, and then Gene notices UM the manager of the Vanguard Healthcare Funds is falling behind prior performance. How are you going to fire that manager? What? What are you gonna do? Swapping hats that way. So government, we talked about governance and our our producer responsibility at Wellington is another area that we take very seriously and so we have a plan in place. So first of all, it will be Vanguard's responsibility to to decide, you know, how well of a job I'm doing, So Vanguard will be the ultimate decision maker there. And then from myself we have again you're it's very important that we have do you share the oversight of me as an investor as well? And so we have a plan in place, UM to make sure that happens makes sense. I assume that there was some mechanism that you guys weren't just spit ball and not not with that much money. UM. So let's jump to our favorite questions that we ask all of our guests, UM, starting with what are you streaming these days? Tell us what's keep can you entertained either Netflix or or podcast? Or what are you doing for entertainment at all? So one of them, you know one of the things I you may or may not know that I have four daughters and so they're they're in their um early twenties and late teens, and and so I've been pretty busy over the last twenty two plus years. And so one of the things, one of the things I'm streaming now is these Theories that I never got to watch as I was working full time and raising a family, and so UM I watched West Wing was a big west Wing year for me. I never watched the Theories, so that would be one. And then UM, this British series Bridgerton, that was a big series with my daughters over the holidays. We you know, we binge watched that, um when they were all home. Yeah, that's that's funny. It's always interesting to see what people go back to. We never saw Madmen, and we ended up just watching that very interesting period piece, just like just like West Wing. Tell us about your early mentors who helped to shape your career, Well, we already talked about Ed. I would say, you know, Ed was just so vital um someone that I worked alongside with for twenty years and I and I again back to Ed being just giving me the space to grow, um, the space to learn mistakes. So he was very critical. There's another person, Phil pearlmother, who was one of the managing party, was a managing partner. He since retired. He's recently retired from Wellington's, but I would consider him a sponsor. He was always looking out for me. He was a midcast growth portfolio manager, so I guess I was helping him. But he was always making sure that my career was moving along. Let's talk about what you're reading these days. Tell us about some of your favorite books and what you're reading now. So I really like historical fiction, um, where you learn about a place or time through fiction. So I think my favorite book this year was Educated Needed. UM. I am on my bedstand right now. I have UM Barack Obama's book. So that's my next some my my next book to read UM in the coming run. Sounds good. What sort of advice would you give to a recent college graduate who was interested in a career in either stock research or asset management or working in finance. I would give two pieces of advice. One would be always all just always be learning. So when I when I observed talent at Wellington, I get very excited about the talent Wellington's, the ones with this growth mindset that are always learning, always UM, challenging the status quo of how we do things UM. The you know, it's just very exciting to see. So again, always have that curiosity growth mindset UM, always thinking about what what more could you be doing in your in your in your role. So that would be an important piece of advice. Then secondly, just at the asset management industry and you know, research UM in terms of researching stocks and it's just such a great business UM. So I would encourage I would encourage people graduating from college to think about the asset management industry. And and and again there's a significant broader purpose here in terms of serving individuals and beneficiaries all over the world to help them UM lead better, better lives long term. And so how do we attract talent to that mission? UM? Of how and again it's how are we you know, we're allocating capital to companies UM that are going to make UM the vaccines that save you know, that really get us back, that save the world and protect the world. I think that is the kind of mission that that I'd like to make sure that everyone knows. And and just how you know, how exciting it is to be UM to meet companies and to meet heads of R and D, and to meet CEOs and and and see how they're changing the changing the future of the world. That is just intellectually, I've never I've never when I wake up every UM, I never had this Sunday night that I don't want to go to work the next day. It's just such a great business to be in. Quite interesting and our final question, what do you know about the world of investing today that you wish you knew thirty years ago when you were first getting started. UM. I think when I when I think about the when I think about the world of investing, I think about it in three phases. And we talked about being a deep researcher, being an investor, and I and I take being an investor meaning to can you do recommended can you take all your research insights and make recommendations, and then finally being a risk taker and taking taking risk in portfolios. UM. I guess if I had to UM, if I had to know back thirty years, it probably would have been really perfecting each stage and getting maybe more training. I think that's one of the things we're going to we're really focused on at Wellington is making sure we're training during those pivot points. So that would be one thing. You know, these are these are skills you can be you can learn and skills that you can get better at with development. And so that's a very important initiative on my part in terms of how do we develop investors along that path um. And then I think, you know, personally, just being very flexible UM pivoting when you have new information. That's what I think really hard. It's hard to do after you, after you maybe you might have invested two or three years and into a stock and then something changes. That ability to be flexible at pivot I think is critical to investment success. And you know, the earlier you can learn that, the better. Terrific stuff. Thanks Jane for being so generous with your time. We have been speaking with Gene Hines. She manages the fifty billion dollars Van Guard Healthcare Fund and is the incoming CEO at Wellington Management, which runs over a trillion dollars in client assets. If you enjoy this conversation, well be sure and check out any of the previous three hundred and eighty seven prior to such conversations we've had over the past seven years. You can find them at iTunes, Spotify, wherever you feed your podcast fix. We love your comments, feedback in suggestions right to us at m IB podcast at Bloomberg dot net. Give us a review on Apple iTunes. You can sign up for my Daily Reads at rid Halts dot com. Check out my weekly column on Bloomberg dot com slash Opinion. Follow me on Twitter at rit Halts. I would be remiss if I did not thank the crack staff that helps us put together these conversations each and every week. Reggie Bazil is our audio engineer. Michael Boyle is my producer slash booker. A tink of Valbronn is our project manager. Michael Batnick is our head of research. I'm Barry Ritolts. You've been listening to Mascuw's in Business on Bloomberg Radio

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