We talk to the international multi-family office's investment chief about its approach to capturing returns, sources of liquidity and risk management for its clients.

One quality that ultra-high net worth clients pay for is experience and composure when the sound and fury of news headlines get others in a funk. 

For a multi-family office organisation such as AITI Tiedemann Global, this kind of mindset is what’s expected of those who talk to clients about goals and risk tolerance, and how the investment case is set up.

“Politics and geopolitics can be unnerving, but in the long term they tend not to have a lasting impact on fundamentals and thus markets, though they can bring bouts of shorter-term volatility,” Nancy Curtin (main picture), the firm’s global chief investment officer, told this publication in a recent call.

We asked Curtin – as we have with other firms recently – about topics such as whether the vogue for private markets investing has peaked, whether the investment case for AI is robust, and how the business of assembling client portfolios is changing. She has been at the firm for just over five years. Prior to this, US-born Curtin spent more than a decade at Close Brothers Asset Management in the UK, and before that, she spent almost eight years at Fortune Asset Management. A graduate in political science from Princeton in the US, she also has an MBA from the Harvard Business School.

Curtin did not agree with the suggestion that enthusiasm and inflow to private markets has run out of steam, notwithstanding some digestion issues and delays to exits.

“No, not at all. Infrastructure, for example, has never looked better and the asset class looks terrific,” Curtin said.

Demand for power generation, for example, drives infrastructure, and the rise of artificial intelligence proves that point. “There’s no AI without EI (energy infrastructure),” she said. 

The private credit market is also strong: the US economy is robust, demand is high and default rates are low, Curtin continued.

The private markets story
The private markets theme has been one of the most talked-about wealth management topics in recent years. After the 2008 financial crisis and the fall in central bank interest rates to zero, a hunger for yield turned attention to the less liquid end of the investments spectrum. Tougher post-crisis bank capital rules, such as the Dodd-Frank legislation in the US and their equivalents, meant that demand for credit found an outlet via the private credit – aka “shadow banking” – area.

A spike in global interest rates after the pandemic four years ago jolted some of these calculations, with venture capital and private equity areas having a tougher time than in many years. There has been talk of investor indigestion as exits on VC and private equity deals in some sectors have been delayed. 

Solid place in the portfolio
But the long-term characteristics of private markets in general mean that they have a deserved place in the toolkit, Curtin argues.  

Alternative assets are “core to what we offer to our clients and that is something we’ve done for some time,” she said. “We call it endowment style, where our offering is highly customised to client circumstance, illiquidity preferences and tax/jurisdictional considerations.”

Because of wide performance dispersion in alternatives, much of Curtin’s work and that of her colleagues is devoted to engaging with managers, examining strategies and performance. “We can use our size and scale to negotiate fee advantages. We can go in deep to what managers are doing," she said. 

AITi Tiedemann Global’s investing framework consists of three “exposure categories or buckets” that relate asset classes to their role in a wealth portfolio: (i) “stability" (capital preservation, liquidity and funding lifestyle/capital needs); (ii) “diversified” (a range of asset classes when combined aim to deliver absolute returns around 8 to10 per cent, with low correlation to equities); and (iii) “growth," grow wealth over time, by investing in durable public and private companies.”

Take the “stability” category. That covers the need clients will have to obtain liquidity relatively easily. “You never want to sell something from your growth bucket to fund a lifestyle need,” Curtin said. The first bucket – stability – holds items such as shorter-duration government and municipal bonds. 

In the “diversified” bucket, this has of a mix of different asset classes to deliver absolute returns. Five asset classes could come into this exposure category, customised to client need and circumstance: Credit – both private (typically direct lending, senior secured) and dynamic public; infrastructure (inflation-linked income, driven by strong demand drivers); commodities (such as gold, currently doing well, hedge against fiscal challenges, fiat currency debasement and geopolitical risks); hedge funds (downside protection, diversification), and real estate (both in equity and debt forms, focus on residential).

The third category – “growth” – has public and private equity, (buyout, growth and venture), and the latter, i.e. private equity invested via a spread of strategies and vintages. 

Curtin was asked about the rally in gold last year, which continued this month, breaking above $5,000 per ounce. “Gold still looks good to us and we own it and still like it,” she replied.

She also reflected on hedge funds, a sector that can sometimes be criticised for high fees and uneven returns, but which has forced the critics to take stock with the best overall gains since 2009.

“Markets are more volatile than they have been for a decade,” Curtin said, giving this as one reason why these funds can do well. Moves in currencies, yield curves and interest rate paths play to the skills of trading, event and and other hedge strategies," she said.

AI spreads out
Asked about the hot area of generative AI, Curtin said the kind of sectors benefiting from this are changing from the “builder phase to the beneficiaries,” referring to how the firms that are gaining traction are those that benefit from the diffusion and application of Gen AI across sectors of the economy rather than those that simply build AI infrastructure. 

For example, she said, as AI affects more business sectors, this will lift output per worker (productivity), and firms’ margins and revenues in affected areas can benefit. As the winners and losers of this process emerge, this is going to require nimble assessment.

“This is all part and parcel of innovation. Gen AI is also creating value in ways we have never seen before. The scalability we are seeing in private markets [companies] – revenue scaling is off the charts,” Curtin said.