It’s a long way from sitting in a freezing room with two colleagues and a telescope to leading a 25-strong, near-$30 billion superannuation fund investment team, but that’s where Kate Misic’s career path has led her.
Misic was named as acting chief investment officer of TelstraSuper on March 14, when the fund’s CIO of nine years, Graeme Miller formally left the organisation after a lengthy handover period.
TelstraSuper is mid-merger with Equip Super to create a $60 billion fund with around 225,000 members, with a successor fund transfer expected late this year and operational integration a year later. While the new fund’s chair, deputy chair, chief executive officer and deputy CEO have been named, the merged funds’ permanent CIO hasn’t.
Misic’s appointment is a logical step in a career that initially looked like being in astrophysics, but which took a left-turn into finance, and then into investing. And there was an unexpected link between the two fields that meant the transition felt natural.
Misic has previously acted as CIO at TelstraSuper in Miller’s absence. She says moving into the CIO role changes her day-to-day job “in some ways materially, and in some ways not a lot”.
“As head of alternative investments and real assets, [I’ve been] very focused on those asset classes and needing to be the subject matter expert for the CIO in those asset classes,” Misic tells Investment Magazine.
“The role of the CIO also extends upwards and outwards across the organisation. You become part of the executive team, so you need to be thinking of yourself at that executive level; you’re obviously going to be involved in a lot more people management; and you have greater responsibility for regulatory reporting, and so on. There are explicit accountabilities that come with the CIO role, so I think it’s really stepping up.
“And the other thing I would say is, you often find yourself needing to lead the team in various projects and things over the years, and you have periods of time where you’re acting in a CIO role, so you do get plenty of exposure to leadership capabilities.”
Eye-opening
Misic studied a Bachelor of Science degree at university, focusing on maths, physics, and in astrophysics and in her final year undertook work experience at the Mount Stromlo Observatory just outside Canberra. It was an eye-opening event.
“I discovered that whilst my nerdy self loved it on paper, in reality it was quite an isolated kind of role,” she says.
“You go into the telescope, [there] might be two other people. You’re not allowed heaters or anything because the instruments could be interfered with. I was sitting there thinking, what have I done? I have no interest in this.”
Misic says a university professor suggested she consider finance, because “people that are good with numbers usually can pick it up pretty quickly”.
“Strangely, the first interaction I had with finance was doing an option pricing course at uni, and it uses the same equation as heat diffusion, how heat moves through things,” she says.
“So it was like, OK, I can do this.”
Misic says the maths underlying options pricing and heat diffusion is closely related.
“As both time moves and the market moves, your [options] pricing becomes more connected to the underlying,” she says.
“With heat diffusion, when there’s a big difference in temperatures the heat transfers quickly, and as the as the difference between temperatures of the two bodies is smaller, the heat diffuses more slowly.
“The similarity is that with derivatives pricing you have times when the price is a big driver, and then times when it moves less quickly than the price moves. So it’s why that particular equation is relevant.”
Approachable and direct
Misic describes herself as both approachable and a direct communicator and says she favours an environment where “people feel they can communicate anything with me immediately, as soon as they need to”.
“I’m really great at hearing people out, I’m quite a good problem solver [and] good at identifying ways to kind of get to a great solution that can be practical when we’re thinking about investments or operations,” she says.
Shortly after joining the finance industry, Misic started her CFA qualification but her involvement with the organisation didn’t end there.
“I joined the board, initially in candidate support, but ended up working through a number of roles on the board, and eventually was president of CFA Society Melbourne,” she says.
As past president, Misic served on the global technical committee and chaired the asset owners’ subcommittee for Global Investment Performance Standards (GIPS).
“That had me interfacing with pension plans and sovereign wealth funds and so on from around the world,” she says.
“I did that for a number of years, and from there I wrote some curriculum. I’m one of the co-authors of the CFA Institute’s textbook on how to manage money for institutional investors – effectively, how to set asset allocation, all the considerations, stakeholder considerations, tax considerations, all that sort of thing.”
Misic continues to review curricula produced by CFA, which she says keeps her “really connected to what I believe is best-practice investment management”
“That standard-setting mindset and best-practice mindset is something – whilst it’s not in my career path – that’s definitely been what I’m doing with my spare time,” she says.
Inevitably, the role of CIO entails more time spent dealing with non-investment issues. Misic says her building teams to make sure individuals are put in a position where they’re playing to their strengths “is the best way to have people engaged and motivated”.
“That’s something that I’ve seen Graeme do, and it’s something that I am very passionate about, and have always been passionate about,” she says. “That’s how you get the best out of people, because when people are engaged, people will go above and beyond.”
Misic says she prefers to foster an environment where “my team is highly engaged, highly motivated, feels like they can come to me for anything, and I’ll be there to listen”.
But obviously, I also need to be the ultimate decision maker at times,” she says.
“My approach is always to just be really upfront and clear with people, because you can’t always give people the answer that they want. But I think if you communicate really well, that’s fine, because they understand the reason for your position.”
Stepping in
Misic says she is “absolutely stepping into a lot of things that Graeme does” and says she is conscious that she can’t allow herself to favour the asset class she knows most about.
“One of those things I wouldn’t be stepping into right now is if there was an investment decision in alternatives,” she says.
“There will be a very clear delineation of that. When Graeme finishes, I will no longer act in any way as head of the alternative investments and real assets team, and so there’ll be arrangements in place that we can’t comment on yet.”
Misic’s first role in finance was working with Wilshire Private Markets in Canberra, whose major client at the time was Commonwealth Superannuation corporation (CSC). She subsequently entered the asset consulting field, joining Frontier and moving from Canberra to Melbourne.
“That was my first role where I was working across asset classes,” Misic says.
“One thing I would say about alternative investments, it’s like Hotel California: you can never leave. Even though I was working across asset classes, of course I was allocated a lot more of the alternatives work.”
Misic completed her CFA qualification, and through the CFA network she was invited by Richard Friend, invited her to work with him and John Nolan at Warakirri.
“I was there for quite a while working with Richard and John Nolan – obviously, founder of Jana – and that was a fantastic kind of training ground in terms of really getting into the weeds of very thorough manager due diligence,” Misic says.
“John has quite a unique approach to due diligence, and so I would definitely say that’s where I was schooled in deep-dive due diligence but also spending a lot of time in Aussie equities while I was there.”
But then: “I mentioned Hotel California – another contact of mine, Nicole Connolly, was at TelstraSuper, and was at the time head of alternatives and tapped me on the shoulder to come work with her,” Misic says.
“That was 15 years ago.”
