Building the Assets

The largest 300 Pension Funds collectively hold about $18 trillion (12 zeros) worth of assets. The idea of a retirement fund has taken root. That you can build capital to put to work on your behalf when you no longer can. Many Retirements Schemes started life as Defined Benefit Pension Plans (DB). This means the payment was a promise from the container the retiree was part of (employer/sponsor). The amount of the promise depended on formulas based on length of service, final salary, and age (for example) rather than on investment returns. Many were funded Pay-As-You-Go (PAYG) with those currently working effectively paying those who retired directly. PAYG is fragile with a constant balance between contributors and beneficiaries. There has been a big shift to Defined Contribution (DC) where individual accounts are set up. Where the amount paid depends on the Capital built over the working life. There are lessons to be learnt in figuring out how Universal Basic Income can be funded. How do we build the assets to support strong, flexible, foundations?

Building over more than a day...

Connecting the past, present, and future

Public Pool

Pooling allows us to have a slice of something bigger. If you buy a house, it is yours or it isn’t. Private Property. Mostly, it is also the banks because it is easier to borrow for. Equity is different. You can buy and sell smaller slices of ownership. It isn’t as either or. A share/stock is a slice of ownership in a real underlying business. Public Equity. It is like getting your money a part-time job with clear constraints rather than giving it a boss with 24-7 access to its email and phone number. Your money can work at multiple companies. With multiple suppliers. In multiple countries. For multiple clients. It is not in a Scrooge McDuck pool of coins. It is working. An Equity Fund is when you have units of a pool of money that a professional equity manager chooses jobs for. A Public Pool.  An Equity Analyst acts as the Engine Driver, doing the Due Diligence on the underlying businesses. When you need money, you sell units. If the money does a good job, over time it grows. If that growth is sustainable, it can power your focus on things that don’t make money.