“It's still nice not to be called a money-grabber”

Who are those people choosing to work in the pension industry? What is it they do all day for your pension? And do they truly enjoy their work? We take you with us to have a look behind the scenes.

Julian Steenman (26) is quant portfolio manager at APG. “People wrongly assume that a quant is a numb machine who is programming all day sitting behind a monitor.”

What does the work of a quant portfolio manager entail?

“A portfolio manager manages an investment portfolio. I work within the real estate team and participate in managing a real estate portfolio of APG.”

OK, and what is a quant?

“Quant stands for quantitative. It is a rather broad and vague concept in the investment world but in general, a quant is someone who looks at potential investments in a model-based and mathematical way. We try to explain the things happening on the stock exchange by means of mathematical relations, and cause and effect. In addition, we try to make sensible statements on what the future will hold. The field I am involved in specifically, is systemizing the investment process within the real estate team.”

How does that work?

“What we do within the real estate team, simply put, is answering the question: Do we want to invest in this? with either Yes or No. And ‘this’ can be a hotel for instance. The answer is always based on substantiated arguments and convictions. A large part can be standardized. We are working on a type of decision tree which has the question whether or not to invest at the top and that works its way down to more detailed information on why we should or shouldn't. By systemizing the process that way, you make sure everyone has to go through the same steps when making decisions. It also makes it easier to compare those decisions with one and other.”

How does one become such quant?

“If you studied mathematics or econometrics, the label ‘quant’ is easily applied. I studied mathematics at the university and gradually found out my interest for the financial world.”

Yet, ‘the financial world’ sounds a bit flashier than ‘the pension industry’. How did you end up at APG?

“I never really thought about the pension industry to be honest, but accidently ended up at APG to write my graduation thesis. APG is the largest asset manager in the Netherlands; that scale and complexity cannot be found anywhere else. I enjoyed it here so much that I decided to stay. So, I did a two years’ traineeship and have been working in this new job since October.”

And, no regrets yet about the choice you made?

“Absolutely not, I have definitely made the right choice.”

What do you love so much about this job?

“Multiple things. I consider the investment process a challenging, interesting puzzle. I also very much enjoy concretely contributing to the process itself, in together making sure that it gets increasingly easier to compare why we invest in hotel A and not in hotel B. That makes the process better to explain and also more transparent. And it's a pleasing plus that we serve a public interest. Yes, we are busy making money and we want to realize that by means of investments, but there also is an idea behind the reason. We do this to make sure the people will be receiving sufficient pension payments. I enjoy contributing to that goal, although that wasn't the initial reason for me to choose the pension industry. It's still nice not to be called a money-grabber.”

What drives you in your work?

“The fact that we invest for the pension of millions of people. That is quite different at many other asset managers where you try to earn money for a small number of millionaires. When I chose to write my thesis at APG, that wasn't my main motivation but I started to identify more and more with the missions of APG throughout the years. APG is a leading company within the financial industry in terms of responsible investing, for example. Sustainability is important to me as well. I became a vegetarian a couple of years ago for environmental reasons. What drives me specifically in my work is unravelling that extremely complicated process involved in making an investment decision. And then to come up with smart, quantitative solutions gives me great satisfaction.”

How do people react when you tell them what kind of work you do?

“Well, they believe it's very interesting! I notice that many people started investing privately in the past years. So, everyone in my inner circle is very interested in what I do. Every time my friends and I come together in the evening, we always talk about my work at least once. They ask me, for example, what I am currently doing and how the entire investment process at such large asset manager goes.”

Good question, how does that investment process go?

“Being a private person, you click on a button and you purchase a share. But there are many steps preceding such decision at an organization like APG. You conduct a due diligence investigation, as they call it within the real estate world: you gather as much information as possible. Just to stick to that hotel example: say we consider purchasing a certain hotel, we will first analyze such hotel entirely. How old is the building, what is the state of the rooms, does it require renovation, is the management reliable? We look at a company-specific level, but also at the location. What is our expectation of the development of rental prices of hotels at this location and of the inflation? We then put all of those pieces of information together in a valuation model. The goal is to use the outcomes to apply a valuation tag to that hotel, enabling us to assess whether or not it is an attractive investment. If the answer is Yes, we present it to an investment committee where all of our arguments are looked into once again. Is our expectation of the room prices realistic, for example? Only if we are able to properly substantiate why something is a good investment, we get the green light and are allowed to submit an offer.”

How much money are you actually managing?

“The total value of APG's real estate portfolio is somewhere between 50 and 60 billion. We manage those funds globally with a team of a little over fifty people. If you look at it that way, we manage 1 billion euros per person.”

Do you invest privately as well?

“Yes, but only within the spectrum allowed within APG. Because we are professionally involved in investing, we are not allowed to buy individual shares in private. If you invest privately in a certain company, such as Philips, that could affect your decisions at work, or the other way around. We are allowed to invest in funds and trackers (‘baskets’ of shares following the price of the entire AEX Index, ed.), so that is what I am doing.”

What does your workday look like?

“I often start my day reading the news related to the stock exchange and real estate, so I am aware of what is happening. Then I make a To-Do list of the two or three most important things I want to finish that day. Those priorities always involve that valuation model I was talking about earlier or systemizing the investment process. We have five to ten people in our team working on those matters.”

Are you tied to your monitor all day?

“Good heavens, no. That is the image many people have of quants, that they are numb machines programming and modelling little things all day at their computer. But that idea would be horrifying. I am fortunately also interacting with colleagues multiple times per day. That is very important to me. No, I don't recognize myself in the stereotypical image of a quant at all.”

What do you do in your spare time?

“I exercise a lot and like to run. I also enjoy reading, like to play chess and am a big fan of travelling – too bad the latter isn't possible at the moment.”

What are the character traits making you fit for the work you do?

“Apart from the fact that I truly understand quantitative matters and are able to think in an abstract way, I am good in creating the bridge with people with a lesser numerical background. Explaining complicated matters as simply as possible is something I am rather good at.”

What do APG customers specifically notice in terms of your work?

“That would eventually result in the amount of pension paid every month. If our investment results are good – even though real estate is only a small part of the whole – customers notice that in the fact that we don't have to cut down and that indexation takes place. And systemizing the process, what we are currently doing, leads to us eventually being able to make even better decisions and making those choices even better to explain.”