PhD Student testimonial

Chua Sue Wan

Consultant (Treasury), Hong Kong Jockey Club, Hong Kong SAR, Singaporean

Could you tell us about your background and what you are doing now?

From an education point of view, I read Economics at St. John’s College, Cambridge University and obtained my Master’s degree from New York University. I then started my professional life in New York, as an Asian Portfolio Manager and later was transferred to Singapore by the firm (Yamaichi Capital Management, a company later acquired by Société Générale Asset Management and now merged into Amundi). In the aftermath of the Asian financial crisis, I left for the World Bank in Washington DC to manage part of the pension funds there. After a few years, as I wanted to return to Asia, I accepted a position with SEI which was in a globalisation push at the time and needed support to set up their Asian office in Hong Kong. SEI invests across asset classes and their forte is to put together entire investment solutions for clients, something that you would call outsourced CIO or fiduciary management today. At SEI, I was in charge of managing those kinds of portfolios for the company’s Asian clients as well as selecting funds and managers for Asian mandates ranging from public equity to private equity and hedge funds. In 2009, I joined the Hong Kong Jockey Club. I was the Deputy Group Treasurer for the first four years. My role, which has not really changed much, was to manage the endowment funded from the accumulated earnings of the corporation. Some of the funds are managed in the short term for liquidity needs, but the vast majority is invested in a typical endowment structure to grow capital and fund future charitable endeavours. About two years ago, I switched to a part-time role, mostly to have more time to pursue my doctoral studies.

Obviously you are not looking for a promotion, so what are the reasons behind your decision to undertake a PhD at this stage of your career?

At the start of the programme, I had already been in the industry, and specifically asset management, for twenty years. I had seen good times and bad times, worked in multiple asset classes, seen different types of portfolios and managers, and enjoyed it all. However, I have always been very academically inclined and I wanted a different perspective on the things I had been doing. I was particularly curious to find out about the academic developments of the last two decades in finance in general, and asset management in particular. My motivation was to understand these developments and acquire new skills to be a better investor.

Why did you choose this particular programme?

It is hard to do relevant research on asset management if you do not know what is going on in the markets or what investors are thinking, or if you are not aware of product trends or changes to the regulatory environment. I did not want to lose touch with the industry while doing my PhD, so the format of the programme, which did not require me to stop working, was ideal. The company was also kind enough to afford me with the time to pursue the programme.

What were you expecting from the programme?

I was looking for a programme that would allow me to take an in-depth and comprehensive look at the research that had been done to spur innovation in the asset management industry. Naturally, this being a PhD in Finance, I also expected to review other aspects of finance which would not have direct relevance to my work as an investment professional. As it turns out, I find that these other aspects are very relevant to what I do. Take corporate finance for example – while the focus is on the corporation in general and a lot of it deals with issues of governance and agency conflicts, it has significant implications for long-term minority investors in companies with different governance structures.

How else has the programme lived up to your expectations?

I expected a challenge and I was not disappointed. To be frank, it has not been easy going back to school after being away for twenty years. The programme is very rigorous and extremely demanding. It requires an exceptional level of commitment in terms of time, concentration, and diligence to fill up the gaps in one’s technical knowledge and to understand the literature. When you realise how much work needs to be done, you go through a challenging phase, but the resources are there, so it is a matter of discipline and motivation in putting in the time and effort. In this regard, the course was structured systematically, the lectures were very relevant and they provided a lot of guidance in terms of identifying the relevant papers to understand recent advances in finance. Also, programme faculty is extremely knowledgeable and that it is a great inspiration to interact with people who are at the forefront of research in their specialised areas.

Once I had made the investment, I experienced a huge difference in terms of technical skills, but also, and more importantly, with respect to my ability to make the most of the existing academic research. I was able to leverage the innovations, insights and takeaways, and translate these into possible applications professionally.

So there is no doubt that the programme is challenging, but with discipline and diligence you experience this transformative progress in your ability to benefit in a meaningful way from academic research.

Have you found benefits in interacting with other programme participants?

For one thing, classmates have provided welcome moral support in terms of getting through the challenges that I have mentioned. But besides that, I have benefitted from the diversity of backgrounds in the classroom and out of the classroom. Working on assignments in groups allowed us to interact and exchange notes on one another’s experiences, both with the course as well as professionally. In spite of the diverse backgrounds, it is interesting to find out how inter-connected our professional networks and experiences have been.

Can you point to specific insights that you have gained from the first year of the course?

In investment management, the mean-variance optimisation framework is the industry’s standard for asset allocation. It has been a standard for a long, long time, and it is still taken as the holy grail in a lot of things we do. We all know the shortcomings: volatility is not static, optimisation is very sensitive to small changes in assumptions, etc. While the industry is aware of the issues with the model, there has not been much change in the tools that practitioners use. Well, half a lecture into the first core course, the lecturer had already underlined that the mean-variance framework as practised in the industry clearly was not a good reflection of the true world. Starting from there, the vast majority of the courses was about innovations in modelling and their implications. Deviating from this framework that has been around for so long has lots of practical applications. The core courses helped me consider different implementations of more advanced models and understand how they could transform practical portfolio management. Now, these innovations demand quite a high level of technical expertise and it is one important reason why their uptake in the industry has been limited to date. The course builds this technical knowledge and once you have these skills, you can find out more about scientific innovations and bridge the gap in practical implementation.

What do you intend to focus your dissertation?

I have started working on private equity and portfolio management issues. From a research standpoint, private equity is a young industry, and there is still a lot of room to do research that is relevant both academically and professionally. From a practitioner’s stand-point, I am interested in issues and questions such as: whether private equity funds add value; how to measure risks and returns; how to benchmark performance; how to overcome day-to-day portfolio management issues such as the risk of commitment or currency; or how to address corporate governance issues between the investor and the manager and between the fund and the companies that they invest in. These are all practical issues that will help in my professional life. As I said at the start of the interview, the key motivation in pursuing the degree is to take stock of the experience that I have accumulated and take stock of academic research relevant to the field to come up with innovations and ways to do a better job. The dissertation will certainly bring this objective to fruition.

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