Capital Decanted

Peter Madsen is the CIO for the $5B Utah School and Institutional Trust Funds Office or SITFO.  We discussed his formative years in the capital markets and how they contributed to his current philosophy of managing risk and return for this permanent fund: circumspect about equity beta, deep sensitivity to draw down risk, finding alpha in up and down markets, and ensuring each strategy is contributing to the total portfolio goals.  Finally, we discussed the inherent benefits of being located in Utah's Silicon Slopes and its burgeoning venture ecosystem.

Here we say goodbye to tired market takes and superficial sound bites to dive beneath the surface of capital allocation. This show attempts to challenge conventional wisdom and likely some of your own assumptions as we explore the nuances that can change how we understand an issue and its practical implications. Along the way, we draw on experienced voices from across the industry, allowing their perspectives to breathe and follow their thinking as it opens up in unexpected directions.

This season, we're serving Capital Decanted as a tasting flight, a series of focused conversations, each offering the chance to spend time with one distinctive voice and plenty of room to explore what emerges. One voice, but a deeper pour.

What happens when governments can't fund infrastructure anymore? A $1.6 trillion private asset class that doesn't recognize itself in the mirror. In the 2020s, infrastructure has entered a battlefield where geopolitics, government agendas, and investor returns collide. We trace infrastructure's evolution from nation-building mechanism to one of the most integrated asset classes in modern investing. In this episode, we explore a central tension: is infrastructure still a stable, boring, income-generating asset, or has it become a bigger bet on which governments can actually execute their vision? Joined by Peter Blue of Franklin Templeton and Gautam Bhandari of I Squared, we dive into one of the oldest asset classes in human history.

Guests:

Peter Blue, CFA, CAIA, FRM, Head of Private Market Solutions, Franklin Templeton

Gautam Bhandari, Co-Founder & Managing Partner, I Squared Capital

⁠Episode Sources⁠

(00:00) Infrastructure as an invisible but essential backbone of daily life and economic activity.

(01:24)Introduction to infrastructure as a paradox: ancient in practice, modern as an institutional asset class.

(03:43) The projected $100 trillion global infrastructure investment need through 2040 and the funding gap.

(06:06) Infrastructure allocations remain modest despite structural tailwinds and capital demand.

(10:32) Infrastructure as both inanimate and “alive” through its system-wide economic impact.

(12:04) Roman publicani as early private infrastructure investors and the blending of public and private capital.

(16:24) Infrastructure historically used as a tool of statecraft, control, and regime stability.

(20:35) The Gilded Age, robber barons, and the rise of private capital in U.S. infrastructure development.

(24:50) Australia’s superannuation system and privatization wave as the birthplace of institutional infrastructure investing.

(27:52) Macquarie’s listed infrastructure vehicles and the financialization of the asset class.

(29:43) The contrast between Australia’s GP-led model and Canada’s direct “Canadian model.”

(35:49) Post-GFC surge in infrastructure AUM and its appeal as a stable, inflation-linked asset class.

(41:59) “Suffering from success”: record fundraising, rising valuations, and expanding risk profiles in the 2020s.

(42:20) Redefining infrastructure through resiliency rather than rigid asset definitions.

(46:17) Expansion into digital infrastructure, renewables, and social infrastructure beyond traditional core assets.

(50:52) Data centers as the new “highways” of productivity and the complexities of underwriting digital infrastructure.

(55:32) Energy transition investing and the scale of renewable and grid infrastructure needs.

(57:43) Talent evolution and systems thinking as infrastructure becomes increasingly cross-disciplinary.

(01:01:18) The re-politicization of infrastructure and its return as a strategic instrument of global power.

(01:05:58) China’s Belt and Road Initiative and infrastructure as influence diplomacy.

(01:10:46) Local alignment, commercial contracts, and operating “below the radar” in politically sensitive environments

In every tech supercycle, investors are good at identifying disruptive technologies, but bad at picking the winners. AI is no different, except for the pace and velocity of growth, investment, and hype. And this time the incumbents are leading the charge. This episode works through how to separate the hype from who actually captures the enterprise value, walking through four layers of the AI investment stack, and which of these layers will exist independently or get absorbed. Joined by Kai Wu of Sparkline Capital, Jerry Neumann, retired VC investor and writer, and David Haber of a16z, we synthesize views and research to explore this very complex topic.

Guests:

Kai Wu, Founder & CIO, Sparkline Capital 

Jerry Neumann, retired VC investor and writer

David Haber, General Partner, a16z

⁠⁠Episode Sources⁠

Key Points From This Episode:

●[00:00:00]Kai Wu on the current stage of the AI infrastructure buildout and adoption cycle.

●[00:04:13]Introduction to investing across the AI stack and the challenge of capturing value from technological revolutions.

●[00:11:18]Historical technology cycles, hype cycles, and lessons from past paradigm shifts.

●[00:15:57]The “historical autopsy” of technology booms: capital misallocation, demand assumptions, and timing risks.

●[00:20:31]Comparing AI infrastructure spending with railroad and fiber-optic buildouts across history.

●[00:22:44]The AI prisoner's dilemma and why competition drives aggressive capital expenditures.

●[00:25:38]Jerry Neumann on value capture, competition, and why great technologies do not always produce great investments.

●[00:27:51]The dot-com fiber buildout, overcapacity, and how later innovators benefited from subsidized infrastructure.

●[00:33:48]Why AI may differ from previous cycles due to the dominance of well-capitalized incumbents.

●[00:36:44]David Haber on compute demand, data center utilization, and the economics behind current AI investment.

●[00:38:33]Vertical integration, competitive advantages, and how major technology companies are positioning for AI leadership.

●[00:44:06]Whether application-layer companies can survive alongside powerful infrastructure and model providers.

●[00:47:06]David Haber on enterprise AI applications, vertical software opportunities, and context-driven value creation.

●[00:49:53]Revenue growth, valuation expectations, and the sustainability of AI business models.

●[00:57:00]Open AI growth projections, demand assumptions, and the risks of extrapolating future adoption.

●[01:00:05]Aaron’s framework for analyzing the AI investment stack and its four primary layers.

●[01:06:39]The shipping container analogy and where value ultimately accumulates in transformative technologies.

●[01:12:30]Platform companies, hyper scaler investment strategies, and the defensive motivations behind AI spending.

●[01:46:13]Final investment principles, frameworks, and key takeaways for evaluating opportunities across the AI ecosystem.

Geopolitical change, product disruption, and technological transformation have all made this the most complicated moment in history to navigate capital markets. CAIA Association spent the last 12 months finding out why. After convening 120 global executives across eight financial centers we're proud to introduce: The World Rewired, a blueprint for the decade ahead. In this episode, we unpack the three structural shifts at its core with four practitioners who were in the room  with us, including Sebastian Mallaby, Stuart Wrigley, Yingwen Chin, and Muneera Aldossary.

Guests:

Sebastian Mallaby, Paul A. Volcker Senior Fellow in International Economics, Council on Foreign Relations

Stuart Wrigley, Partner, Head of Asia Pacific and Head of Capital Formation and Strategy International, Sixth Street

Yingwen Chin, Partner - Private Markets IDD, Albourne Partners

Muneera Aldossary, CEO & Board Member, Franklin Templeton, Saudi Arabia

⁠Episode Sources⁠

(00:00) Artificial intelligence as a transformational force, with adaptability and curiosity as enduring traits of successful investors.

(01:36) Traditional capital allocation models are becoming outdated amid rapid innovation in products, technology, and investment approaches.

(06:40) Global roundtables with industry leaders reveal interconnected themes pointing to a systemic rewiring of capital markets.

(18:28) Introduction of three major shifts: macro (geopolitics), industry (market convergence), and organizational (talent and AI).

(18:28) Geopolitics moves from background noise to a central driver of capital flows and investment decision-making.

(25:45) Geopolitical considerations become embedded in underwriting, with firms building internal expertise and advisory capabilities.

(30:22) Long-duration investments such as venture capital and infrastructure require deeper integration of political and regulatory analysis.

(35:05) Emergence of new centers of capital, particularly in the Middle East and Asia, driven by sovereign wealth funds.

(40:42) Growing debate around US exceptionalism and the potential for a more multipolar global financial system.

(46:58) The convergence of public and private markets reshapes investment access, structures, and asset class boundaries.

(49:43) Rapid product innovation raises concerns around investor education, alignment, and long-term suitability.

(55:34) Industry consolidation and the rise of multi-strategy platforms alter competition and access to top-tier opportunities.

(01:02:12) Organizational shifts driven by technology redistribute tasks and reshape roles within investment firms.

(01:06:09) Adaptability, intellectual curiosity, and cross-disciplinary thinking emerge as critical traits for investment professionals.

(01:09:53) Concerns around AI reducing critical thinking and eliminating traditional entry-level training pathways.

(01:13:40) AI impacts all levels of the workforce, increasing the importance of judgment, relationships, and credibility.

(01:18:34) Shift from technical skill-based training toward systems thinking, communication, and leadership capabilities

What happens when asset owners stop managing asset classes and start managing the whole fund? How do portfolios change, and how does the industry reorient their business models around them? In this episode, a practical sequel to Season 1's introduction, we break down how TPA changes investment processes, how portfolios differ under an SAA framework, and what this means for external managers. With insights from CPP Investments, NZ Super, Blue Owl, and Capital Group, the conversation highlights how partnership, transparency, and solution-oriented relationships reshape the manager-investor relationship in a TPA world.

Guests:

• Geoffrey Rubin, Chief Investment Strategist, Total Portfolio Management, CPP Investment Board
• Charles Hyde, Head of Asset Allocation, New Zealand Superannuation Fund
• Eugene Podkaminer, Institutional Solutions, Capital Group
• James Clarke, Senior Managing Director, Global Head of Institutional Capital, Blue Owl Capital

⁠Episode Sources

Listen in for a live recording of CAIA’s Capital Decanted Podcast that was hosted in New York City—where the conversation goes beyond surface-level takes to explore the deeper forces shaping capital allocation. Hosted by CAIA’s John Bowman and Aaron Filbeck, the podcast brings together leading voices in asset management to challenge perspectives and unpack today’s most important industry shifts.Guests:

Taylor Robinson, Partner, Lexington Partners

Kim Lew, President and CEO, Columbia Investment Management Company

Elizabeth Burton, Chief Strategist, Fortress Investment Group

Reed Rayman, Partner, Apollo Global Management

In every tech supercycle, investors are good at identifying disruptive technologies, but bad at picking the winners. AI is no different, except for the pace and velocity of growth, investment, and hype. And this time the incumbents are leading the charge. This episode works through how to separate the hype from who actually captures the enterprise value, walking through four layers of the AI investment stack, and which of these layers will exist independently or get absorbed. Joined by Kai Wu of Sparkline Capital, Jerry Neumann, retired VC investor and writer, and David Haber of a16z, we synthesize views and research to explore this very complex topic.

Guests:

Kai Wu, Founder & CIO, Sparkline Capital 

Jerry Neumann, retired VC investor and writer

David Haber, General Partner, a16z

⁠Episode Sources

Key Points From This Episode:

●[00:00:00]Kai Wu on the current stage of the AI infrastructure buildout and adoption cycle.

●[00:04:13]Introduction to investing across the AI stack and the challenge of capturing value from technological revolutions.

●[00:11:18]Historical technology cycles, hype cycles, and lessons from past paradigm shifts.

●[00:15:57]The “historical autopsy” of technology booms: capital misallocation, demand assumptions, and timing risks.

●[00:20:31]Comparing AI infrastructure spending with railroad and fiber-optic buildouts across history.

●[00:22:44]The AI prisoner's dilemma and why competition drives aggressive capital expenditures.

●[00:25:38]Jerry Neumann on value capture, competition, and why great technologies do not always produce great investments.

●[00:27:51]The dot-com fiber buildout, overcapacity, and how later innovators benefited from subsidized infrastructure.

●[00:33:48]Why AI may differ from previous cycles due to the dominance of well-capitalized incumbents.

●[00:36:44]David Haber on compute demand, data center utilization, and the economics behind current AI investment.

●[00:38:33]Vertical integration, competitive advantages, and how major technology companies are positioning for AI leadership.

●[00:44:06]Whether application-layer companies can survive alongside powerful infrastructure and model providers.

●[00:47:06]David Haber on enterprise AI applications, vertical software opportunities, and context-driven value creation.

●[00:49:53]Revenue growth, valuation expectations, and the sustainability of AI business models.

●[00:57:00]Open AI growth projections, demand assumptions, and the risks of extrapolating future adoption.

●[01:00:05]Aaron’s framework for analyzing the AI investment stack and its four primary layers.

●[01:06:39]The shipping container analogy and where value ultimately accumulates in transformative technologies.

●[01:12:30]Platform companies, hyper scaler investment strategies, and the defensive motivations behind AI spending.

●[01:46:13]Final investment principles, frameworks, and key takeaways for evaluating opportunities across the AI ecosystem.

Unprecedented geopolitical instability, the invasion of AI, and the convergence of public and private markets are causing a system-level reset for the investment profession. An endowment CEO, a global private capital partner, a Chief Investment Strategist, and a secondaries veteran walk into a room and each is experiencing and responding to this reset differently. Join CAIA Association on June 16 for our first live version of its signature Capital Decanted Show. With the help of these industry leaders and friends and a whole lot of fun and surprises, we'll try to bring clarity to what many have deemed the most challenging time in their career to allocate capital.

Register here!

Geopolitical change, product disruption, and technological transformation have all made this the most complicated moment in history to navigate capital markets. CAIA Association spent the last 12 months finding out why. After convening 120 global executives across eight financial centers we're proud to introduce: The World Rewired, a blueprint for the decade ahead. In this episode, we unpack the three structural shifts at its core with four practitioners who were in the room  with us, including Sebastian Mallaby, Stuart Wrigley, Yingwen Chin, and Muneera Aldossary.

Guests:

Sebastian Mallaby, Paul A. Volcker Senior Fellow in International Economics, Council on Foreign Relations

Stuart Wrigley, Partner, Head of Asia Pacific and Head of Capital Formation and Strategy International, Sixth Street

Yingwen Chin, Partner - Private Markets IDD, Albourne Partners

Muneera Aldossary, CEO & Board Member, Franklin Templeton, Saudi Arabia

Episode Sources

(00:00) Artificial intelligence as a transformational force, with adaptability and curiosity as enduring traits of successful investors.

(01:36) Traditional capital allocation models are becoming outdated amid rapid innovation in products, technology, and investment approaches.

(06:40) Global roundtables with industry leaders reveal interconnected themes pointing to a systemic rewiring of capital markets.

(18:28) Introduction of three major shifts: macro (geopolitics), industry (market convergence), and organizational (talent and AI).

(18:28) Geopolitics moves from background noise to a central driver of capital flows and investment decision-making.

(25:45) Geopolitical considerations become embedded in underwriting, with firms building internal expertise and advisory capabilities.

(30:22) Long-duration investments such as venture capital and infrastructure require deeper integration of political and regulatory analysis.

(35:05) Emergence of new centers of capital, particularly in the Middle East and Asia, driven by sovereign wealth funds.

(40:42) Growing debate around US exceptionalism and the potential for a more multipolar global financial system.

(46:58) The convergence of public and private markets reshapes investment access, structures, and asset class boundaries.

(49:43) Rapid product innovation raises concerns around investor education, alignment, and long-term suitability.

(55:34) Industry consolidation and the rise of multi-strategy platforms alter competition and access to top-tier opportunities.

(01:02:12) Organizational shifts driven by technology redistribute tasks and reshape roles within investment firms.

(01:06:09) Adaptability, intellectual curiosity, and cross-disciplinary thinking emerge as critical traits for investment professionals.

(01:09:53) Concerns around AI reducing critical thinking and eliminating traditional entry-level training pathways.

(01:13:40) AI impacts all levels of the workforce, increasing the importance of judgment, relationships, and credibility.

(01:18:34) Shift from technical skill-based training toward systems thinking, communication, and leadership capabilities