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Perspectives: The future of active management
2 Playsin 2 hours
This episode of HSBC's Perspectives series features Jean Hynes, CEO and Managing Partner, Wellington Management – one of the world’s largest privately held asset managers. In-conversation with Richard Bibbey, Global Head of Institutional Sales, HSBC, Jean shares her views on the future of active asset management as well as pivotal moments from her inspiring career journey.
Watch or listen to find out more.
This episode was recorded on the sidelines of the HSBC Global Investment Summit in Hong Kong on 27 March 2025. Find out more here: grp.hsbc/gis
Disclaimer: Views of external guest speakers do not represent those of HSBC.
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Transcript
Introduction and Guest Overview
00:00:05
Speaker
Welcome to Perspectives from HSBC. Thanks for joining us. And now on to today's show.
00:00:14
Speaker
Welcome to our Perspectives series. I'm Richard Bibby, HSBC's Global Head of Institutional Sales. And I'm delighted to be joined here by Jean Hines, CEO of Wellington Management.
00:00:27
Speaker
So Jean, thank you very much being with us. Thank you for having on today. Thank you. And the conversation today is going to be around active management.
Career Journey and Mentorship
00:00:36
Speaker
But um before we get into that, I would love to take the opportunity to talk a little bit about you and your career. And I know that you tend to talk about it in three phases.
00:00:47
Speaker
So could you talk a little bit about those three phases? Absolutely. So thank you for having me on. um So I have been at Wellington for almost 34 years. I came to Wellington management right out of college. It was a small firm then, um less than 300 people, very flat.
00:01:07
Speaker
I started as an administrative assistant. So I'm not sure if you know that about me. I started as an administrative assistant in the research department. That's important to know in the research department. um And when I was graduating from Wellesley College, i i had i didn't I didn't grow up in a family that talked about stocks, but I had done an internship so I knew that I was very interested in the stock market and why stocks went up or where they went down.
00:01:33
Speaker
um in in back in 1991, even the whole concept of the stock market isn't what it is in 2025. um And so I found, so luckily, found my way to Wellington um And I so I would say that first decade of being at Wellington was all about becoming a researcher.
00:01:54
Speaker
And 18 months into working at Wellington I was asked to go work with Ed Owens who was my 20 year mentor. And the reason I got recognized is because um because I did the morning meeting notes once a week and because I was interested the admins administrative assistants did the notes and because I was interested in the markets um Frankly, my notes were better than everyone else's and that got me noticed. I could write really well.
00:02:20
Speaker
um I had an interest in the market and that got me recognized by Ed.
Biotech and Pharmaceuticals Strategy
00:02:24
Speaker
Now Ed at the time was the pharmaceutical and biotech analyst. He had been running Vanguard HealthCare fund for eight years. It was $500 million. dollars um And he was starting what became our global health care all cap and our global in our biotech funds.
00:02:42
Speaker
um and He wasn't writing as much. He wasn't writing as much research. So I was just in the right place at the right time. And I'll tell one more story about Ed is he I'm in like a nine on the extrovert scale and he's a one on the introvert scale.
00:02:58
Speaker
And he had walked by my desk for 18 months and never had said hello. And so when they said, do you want to go work with Ed? I said, no. Like, why would I want to go work with someone? I love the people I was working with, but I sort of was coached that this was a really good opportunity.
00:03:13
Speaker
ed was a great investor and it just was really a match made in heaven from day one. So from the first moments that I started working with Ed, I I went to every biotech and pharmaceutical meeting with him.
00:03:26
Speaker
um and so I just I i grew up um in sort of the renaissance of the biotech industry. And so that, as I said, that first decade was like, what does it mean to be a great researcher?
00:03:39
Speaker
What does it mean to get insights to do deep research on the pharmaceutical and biotech industry?
Leadership and Management Roles
00:03:46
Speaker
and and um And how do you how do you do that? And what's the process for it? And I just learned from the best.
00:03:52
Speaker
you know when he When he retired at the end of 2012, he's probably the most impressive investor that no one's ever heard of because he had one of the top records of any mutual fund over 25 Fantastic. yeah and and And I guess in that era, so the sort of pharmaceuticals and yeah biotech industry, it played a very important part for Wellington then, but it still does today. So um you know how significant is that as part of the strategy of Wellington for today?
00:04:24
Speaker
Yeah, so we manage about, and up until December 31st, I managed the Vanguard Healthcare care Fund, and the last year or so as a co-manager, and I so ive have stepped down, so I only have one job now, being CEO of Wellington, but ah but we manage about $60 billion dollars of healthcare care assets, so we're the largest healthcare care manager in the world um of of of funds.
00:04:45
Speaker
And that, you you you you referenced it there. yeah So in 2020, you took over as CEO. yeah I'm sure you had a very busy family life as well. And you were managing one of the biggest funds in the world.
00:04:58
Speaker
How were you able to manage that? How were you able to have balance? The third decade of of my career was really about leadership. yeah And um as I said, in 2012, Ed retired.
00:05:13
Speaker
I became the team leader. The team leader role at Wellington is in a really important role because its we we are managed in the research department by sectors and the research the core of what we do as a firm.
00:05:24
Speaker
um I was managing the Vanguard healthcare care fund. I was a co-manager on a biotech fund and many hedge funds and our all cap um global healthcare fund. and i And then in 2014, I became a managing partner.
00:05:38
Speaker
That managing partner role, which is about the governance of our private partnership, um fulfilled something in me about leadership, you know about leadership and talent. It's a very talent oriented role.
00:05:51
Speaker
So in 2014, I thought I had the best of all worlds. I had my strat, all the number of strategies I ran from Vanguard healthcare to longshore biotech.
00:06:02
Speaker
um I had the managing partner role and I thought really that's how ah i would retire. um And i was working so closely with the CEO at the time that a couple of things. One, I think he encouraged me.
00:06:15
Speaker
And two, there were many of my skill sets that I could see myself. At first, I couldn't ever see myself being a CEO. I didn't think I had the skill set. um But as I worked more closely with him, there's a lot of parallels about making decisions with ambiguity, about taking risks, about um connecting dots, and about what the future, because I'm sure we're going to talk about the future of active
Future of Active Management
00:06:36
Speaker
management. It's about yeah what the future of industries are.
00:06:39
Speaker
Those are all the skill sets that I had accumulated over my you know long career of being an investor. um And so at at there was a point was, how did I want to spend my last decade at Wellington? And um did I want to continue down that path or did I want to think was either and was I the right person to be the CEO for the next period of time? it Was i was i the right steward of our partnership?
00:07:02
Speaker
So we went down and I was named the CEO um in September of 2020. And we did make the decision then for me to keep one money management responsibility. And that was to manage the Vanguard Health Care Fund. And we had a succession plan for all my other responsibilities from biotech to 14040 funds. And we had a number of successors on the health care team.
00:07:25
Speaker
And I think in the the last four years, four plus years, what that has allowed me to do is be in the same shoes as our investors to learn the new skills of of as as an you know investors have to evolve.
00:07:41
Speaker
How we invest today is much different than five years ago and 10 years ago in terms of the use of technology, um you know, how you put either fat momentum factors or ESG factors or whatever kind of factors you're anticipating how you how you manage that in portfolio construction. and So i think it's I think it has been a positive that I still manage money while being CEO. It kept me very, very close to the heart of our business.
00:08:06
Speaker
um and then in the And the timing of stopping has really been about um having a successor who is ready. right A client who is ready and a successor who is ready. And so so I guess coming back to active management and yeah know we're now in a more uncertain world, both economically and geopolitically.
00:08:25
Speaker
um I guess a lot of passive passive investments are quite concentrated in terms of the risk that they have. So are we entering, as you look at the active space, how do you see the future from here. yeah Yeah. One of the things um i let if I take a step back and think about the asset management industry um and I've studied at studying it like I would study the biotech industry or the pharmaceutical industry.
00:08:51
Speaker
um The interesting thing about it is that it's a fantastic industry. um because we earn a fee on assets that grow over time. Now, they don't grow every period.
00:09:02
Speaker
They don't grow every day. They don't grow every month. But if you look over 5, 10, 50, 100 years, and we're going to celebrate our 100th anniversary in 2028, asset prices tend to grow with innovation, productivity, and and the world growing.
00:09:20
Speaker
um it's a fit That's a really good industry to be in but it's also cyclical. So there are these cyclical periods that we have to deal with when we think about um when we think about the asset management industry.
00:09:33
Speaker
And then what's different about the asset management industry since I've started is that passive has become a bigger part of it and privates have become a bigger part of it. I think there's a role for all of it.
00:09:45
Speaker
yeah I think there's a role for passive. I think there's definitely a role for active. We're a proud active manager and I think there's a role for privates as well. When you think just holistically about the economy, um there is more of the economies in private companies than in any other period period in my career. And then if you think about since the global financial crisis, the amount of lending that happens in the private sphere versus the public banks has also increased dramatically.
00:10:16
Speaker
And so there's just a role. It's like if if the role of investing and for individuals um and asset owners around the world in order to get access or exposure and diversification to the whole economy, there's a role for passives, actives um and
Private Investment Strategies
00:10:36
Speaker
privates. And maybe the final thing I'll say there is the price of passive has come down to a point like we might see some but it's really come down quite a bit.
00:10:46
Speaker
The price of active is also come down. So when you think about the the the not the last 15 years, the price of active equities and fixed income have come down to a level that if we if if we can do our job and we can generate say even 100 basis points of alpha in an equity fund or 50 basis points in ah and a credit or ah or ah or a bond fund, the compounding effect of that is so powerful over time.
00:11:13
Speaker
That's the role of active management. And you talk there about the old space and the the year you became one of the managing partners also coincided with the year that and Wellington started in with private equity more recently with private credit. yeah You know, when you reflect on Wellington's approach and you look to the future, how do you see this continuing to evolve? You're right to go back to 2014 because that's when we started our investment in our private capabilities starting first with vent late stage venture companies.
00:11:50
Speaker
The interesting thing about that, that started with our private investor. I mean, our public investor who was a public, he he was investing in growth companies and he just recognized that companies were staying private for longer. that That's so obvious today in 2025. Everyone like you're like Gene, but everyone knows that, but it was not obvious in 2014.
00:12:11
Speaker
um And he he took a lot for him to convince our management team at the time to start a private fund. um And I'm glad he did. he With the help of many of us, we're going to, many of us who were in the initial funding as well as a few anchor clients, we started our private's business in 2014. And now we have eight teams or eight capabilities across private equity and private debt.
00:12:40
Speaker
I would say for Wellington, one of the things that were our private's capabilities, they're very adjacent to our public capability. So I like to say, we have, we have, the we have sort of like everyone says like, what, what, do where do you have the right to win? where do you have the right, and what I mean by the right to win is can we attract great talent and can we generate really top tier returns for our clients?
00:13:04
Speaker
It's sort of anything where we can evaluate a security or a credit. And I think there's a lot of places in the private world where that fit that that we can do that and that fits in right with our strategy.
00:13:17
Speaker
And there are plenty of places in the private world where it wouldn't make sense for us to compete. But there's, you know, we don't run companies. So, you know, buyout equity probably doesn't make sense for us. And we're not lenders, we're not banks. um So there are plenty of areas that really don't make sense for us. and there are plenty of areas where we have a roadmap to continue um to attract great talent and expand our capabilities.
00:13:41
Speaker
And so what we're trying to do is think about we have a, you know, we're really focused on our solutions business and how we bring those capabilities to clients. And so that could be in combining our our hedge fund investors and um into a multi-strap fund.
00:13:57
Speaker
that could be That could be combining our research analysts who manage 140-40 and putting them together. um That could be offering a solution to our to some clients who might want exposure to Japan and doesn't
Partnerships and Wealth Management
00:14:13
Speaker
don't like the benchmark. And so we might do some active factor active and passive to create a solution.
00:14:21
Speaker
And I think increasingly it will be about putting our private capabilities together in in together in a fund or a vehicle that that makes it easier or more attractive to go to individuals and go to their go to go work with our partners to um so that more of our more individuals can get access holistically to the economy.
00:14:43
Speaker
and And I think increasingly it will also be combining public and private together in solutions for clients. So like Wellington, ah wealth is a huge part of our business.
00:14:58
Speaker
It's a growing one and one that we're investing in significantly. Given the rise of this sector, how is Wellington evolving and and adapt and adapting? So if you go back in our long history,
00:15:12
Speaker
um um we ah we we we were once one company with Vanguard and there was a ah separation, let's say, in the 1970s, just about 50 years ago.
00:15:24
Speaker
and we became very focused on investment management for a fee and Vanguard went and became what they are today with the distribution of of mutual funds and eventually with ETFs and passive. And right now, they're our largest clients and we're their largest sub-advisor.
00:15:46
Speaker
And I'm just telling you that story is because of the history there, we became extremely focused on investing for a fee and and that let us down really focusing on institutional clients.
00:15:58
Speaker
About 15 years ago, um we were looking for great partners like Vanguard, in Europe and Asia and they don't really exist. ah They, you know, not uniformly. And so it was clear clear to us that in order to offer our investment content, which is who we are at the heart, we had to we had to have funds.
00:16:19
Speaker
we had to have our We had to have a funds business. And so we've spent the last um not quite 15 years really building that fund business. And so that allows us to sell our content or partner our content with firms like at HSBC to offer that content to
Future Plans for Wellington
00:16:38
Speaker
the wealth market. And when you think about the wealth market around the world, it's anywhere from individuals all the way up to ultra high net worth individuals and the continuum of retirement and savings and
00:16:52
Speaker
um And so what we're doing as a firm is making sure that we're great partners and what's new for us would be a brand. um You know, we have, you know, our name, most people don't know our name. And so we're working hard on bringing the Wellington brand, the quality of the Wellington brand.
00:17:10
Speaker
That means more marketing. It means working with our clients in different ways. It means vehicles and new ways of bringing that content. And so that's a big investment we're making around the globe.
00:17:21
Speaker
Where do you see Wellington going over the next five years? Well, now number one, there are some things that will be true and some things that I think will evolve. I think that the hallmark of Wellington over my 34 plus years, 34 years, is that we've constantly evolved from evolved our capabilities while what's constant is the client fiduciary, the culture, the shared values.
00:17:47
Speaker
um that part of it has to stay constant. um Everything else we can evolve, like everything else. you know And so I would say, um you know i wouldn't say five years. By the time I pass the stewardship on to the next person, I would say I would like to see us um just be one number one generating top tier returns.
00:18:10
Speaker
in all of our asset capabilities, because if we don't if we do that, then we will have done really a good, very good job for our client. And and the at its core, our mission and purpose is to help our clients, whether they are individuals and Hong Kong or London or their firefighters or teachers or people saving for retirement.
00:18:32
Speaker
If we can help them with their savings, um with their ability to help their citizens, then we will be doing our job. So that's like number one. It's like table stakes. And so there we have to constantly evolve our investment capabilities and how we how our investors evolve individually as well.
00:18:52
Speaker
because the market structure is constantly evolving. So that's our number one priority. in It should always be our number one priority. I think the second part of our priority is to continue to expand in two areas where we we have presence in but I suspect will be larger and that would be in our private business.
00:19:12
Speaker
and and in our hedge fund business. um And we are we are, if we can launch vehicles that are like a multi-strat hedge fund, which we have we are in the process, and then if we could eventually launch evergreen funds with our private capabilities, I think that just allows us to continue to attract great talent for vehicles like that. So I think vehicles will become more important and back to solutions for putting our capabilities together.
00:19:40
Speaker
will also become more important in the next five years. So those are a few that that I'm focused on. And and you talked there at some point about handing the baton on. I hope it's not for many, many years.
00:19:53
Speaker
But when that eventuality happens, what would you like your legacy at Wellington to be? What I would like people to say about me and i I'm not a big person about legacy, but really it's this this concept of stewardship. Like, will I have accomplished things during my tenure, you know this decade of the 2020s that will make Wellington be around for another 100 years?
00:20:23
Speaker
yeah know We're gonna reach our 100 year anniversary. Will I have done things to increase our position in wealth to increase our position in privates, for example, to have increased our, made our investment performance better so that um we can pass on this great, fran continue to pass on this great franchise.
Leveraging Generative AI
00:20:42
Speaker
Great, it's inspirational to hear the enthusiasm. ah So final question for me, and I think it would be remiss not to talk about the transformational technology that yeah is upon us with generative AI and the likes. How is Wellington thinking about this both from an investment lens, but also from an operational one? yeah I will say we have ah on our on our operations and infrastructure side, um all different kinds of ways of doing um reporting, client books, um how we interact with clients.
00:21:18
Speaker
seeing use cases and seeing progress. I think on our client side, really how to how to serve our clients better. Like we have a trove of data now we use Salesforce.
00:21:29
Speaker
That trove of data, how do we really utilize that? And that could be as we interact with clients, it could be as we interact with financial advisors in conjunction with our partners.
00:21:41
Speaker
um How do we use all of that? um I'm not going to say most importantly, but I do think most importantly, it's how does it make us better investors? And one of the things about Wellington is that we see we have 20,000 company visits a year.
00:21:55
Speaker
We have that breadth of capabilities. We have a lot of data. We have a lot of um information about meeting companies. We have all our research notes. And so we've really spent the past year creating the data lake.
00:22:08
Speaker
um And that means, so putting our own data in there, eventually you could put company transcripts in there, you could put expert transcripts in there. And so we're really close to um having that available to our investors as a way to query. Like for instance, you could say someone's researching something you know tell me you know which companies have talked about um price deflation.
00:22:36
Speaker
And like back like instead it like, you the human brain can't connect that no matter how much they read. So that could really help our research process. um I think the next stage for us is how do we do combine that with ah like a research agent yeah to really help and augment our investors in their research process?
00:22:55
Speaker
Because so much of what we do as investors, and um and i and I'll tell you, I just i just stopped investing December 31st. And my biggest observation about that is like the next day you're like, oh my God, I have so much time. but ah Like really, you have so much like the the like the job of an investor is this constant, constant accumulation of knowledge.
00:23:20
Speaker
that you layer on and layer on and layer on. And so at some point down the line, you may use that piece of knowledge yeah to connect a dot. And so how do we use generative AI? Because I'm never going to be able, i was never able to consume all the information I needed. I just consumed enough to be able to do my job well.
00:23:38
Speaker
And so you could imagine that generative AI can really augment that. that that skill set. And so we're just working really hard on the tools that will help our investors. And we have a lot of interested investors in this. And so hopefully a year from now, will we'll have ah many, many more use cases.
00:23:55
Speaker
It's the gene bot of 91, recently graduated from Wellesley, writing all those reports. Thank God that the bot wasn't available in 1990. Look, thank you so much for joining us today and sharing your perspectives. It's been yeah fantastic and so enjoyable.
00:24:16
Speaker
Thank you so much. Thank you. Thank you for joining us for this episode of Perspectives. Make sure you're subscribed to HSBC Global Viewpoint to stay connected.