ALO31: What If the Illiquidity Premium Was Never Real? ft. Richard Tomlinson
Top Traders Unplugged
Navigating Sophistication in Investment Processes
This chapter explores the crucial balance between complexity and simplicity in the investment process. It emphasizes the significance of operational due diligence and risk management to ensure alignment with client objectives while avoiding over-engineering.
Richard Tomlinson joins Alan Dunne for a conversation shaped by experience, not theory. As CIO of LPPI, Richard is responsible for £27 billion in pension assets - but what stands out here is the clarity with which he navigates complexity. From the fading utility of labels like “illiquidity premium” and “hedge fund” to the trade-offs between cost, alignment, and control, this episode is about building portfolios that work in the real world - not just in a model. They explore inflation’s structural drivers, the quiet rise of fiscal dominance, and why some of the industry’s most comfortable assumptions no longer hold. It’s not about being contrarian - it’s about being clear-eyed.
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Episode TimeStamps:
02:14 - Introduction to Richard Tomlinson
07:07 - What makes Tomlinson and LPPI stand out from their peers?
11:52 - Who are LPPI's clients?
13:26 - The investment philosophy behind LPPI's work
18:06 - How LPPI's allocators work together
19:05 - Getting the allocation right
21:29 - Are they worried about the decline of equities?
23:37 - Tomlinson perspective on global macro
26:55 - Public vs private markets
29:05 - Their approach to allocating domestically
31:15 - How their allocation is distributed
33:51 - Is there a place for multi strategies at LPPI?
36:01 - Balancing growth strategies with risk
39:13 - How much would they allocate to alternatives?
41:22 - Their framework for thinking about risk
43:59 - How they approach commodities in their strategy
45:39 - How much focus do they put on ESG?
48:15 - The challenges of high fees in the hedge fund space
50:36 - Is it best to keep managers in-house or external?
53:41 - How they create a strong team of managers
55:37 - The right way of evaluating success and performance
58:41 - Advice for others investors
01:00:19 - The structural themes and trends that are likely to continue
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