Behavioral Finance, Impact and Tech Investing

Global Chief Investment Officer
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Last week on our podcast, we had two great guests with very different foci.


The first guest, Ron Albahary, Chief Investment Officer of the Threshold Group, a $3.3 billion registered investment advisor (RIA) founded as the Russell Family office, relayed how he has embraced behavioral finance extensively at Threshold, with a special focus on impact investing


The second guest, Beeneet Kothari, founder of Tekne Capital Management, focuses on the technology sector, and we had an interesting discussion on valuations in the Internet space. 


Behavioral Finance and Impact Investing


Ron Albahary outlined the four areas where he uses behavioral finance in managing client outcomes:


  • Transparency in Personal Biases: Albahary talked about the behavioral mentalities that each of his team members brings to the table and how being aware of team dynamics and biases helps them understand how they approach different decisions in their portfolios.
  • Understanding Manager Biases: Albahary suggested the biggest problem he has found with active managers is their overconfidence in their abilities and how due diligence helps manage behavioral biases in their portfolios. 
  • Client Communications: Albahary talked through an example of a simple framing issue in communication with a client: “You have $20 million; would a 10% loss be acceptable?” The client said yes. But when the question was framed as “Would you be comfortable losing $2 million?” the client said no. Using clear communications with clients is one way Threshold helps manage portfolios to achieve their clients’ goals. 
  • Mental Accounts for Structuring Portfolios Geared toward Impact: For many clients interested in impact investing, Threshold has started utilizing a concept of mental accounting to better frame investments geared toward impact. Listening to the bucket approach of mental accounts was an interesting way to manage toward outcomes. 


Albahary’s team does a lot of work on impact investing for clients. This discussion was worth having to understand how an RIA moves investors toward having an impact with their investments and how they change portfolio structures to help investors achieve these goals. 


Albahary and I talked off the air about how all the political conversations currently happening are accelerating interest in impact investing—which is an interesting commentary on today’s state of affairs. 


Tech investing: Searching for Profitable Growth


In the second half of the podcast, I talked with a fellow Wharton graduate. Beeneet Kothari now runs a technology fund that is focused on the impact of the Internet. He believes some of the largest companies today are still selling at very reasonable valuations, given their growth profile. He contrasted these large tech companies with some slower-growing consumer staples companies that are selling at similar multiples, but without any growth. 


Kothari made some very interesting points about ride-sharing programs in emerging markets such as China and India. Emerging markets often leapfrog the developed world by embracing new technologies. An example is the adoption of mobile phones in emerging markets that goes beyond PCs or landlines. 


One of the largest expenditures people make—outside their homes—is in cars. Kothari sees the ride-sharing services in countries such as China and India replacing the need for these consumers to own their own cars—which makes for smaller expenditures. And with car companies adding more wear and tear to cars than when people owned them individually, Kothari doesn’t see this as actually lowering net car demand—and he ventured to look into his crystal ball to suggest that we will sell more cars globally in 2027 than in 2017. 


Kothari looks for profitable growth opportunities—companies that can drive growth but in a profitable way. He remarked how easy it is for technology companies to transition across their traditional platforms into things like payments, investment management and other services. This will be one of the more interesting developments over the coming years, and I appreciate Kothari sharing his perspective on the tech world as it stands today. 


Listen to the full podcast:


Important Risks Related to this Article

Investments in emerging, offshore or frontier markets are generally less liquid and less efficient than investments in developed markets and are subject to additional risks, such as risks of adverse governmental regulation and intervention or political developments.

For more investing insights, check out our Economic & Market Outlook


About the Contributor
Global Chief Investment Officer
Follow Jeremy Schwartz

Jeremy Schwartz has served as our Global Chief Investment Officer since November 2021 and leads WisdomTree’s investment strategy team in the construction of WisdomTree’s equity Indexes, quantitative active strategies and multi-asset Model Portfolios. Jeremy joined WisdomTree in May 2005 as a Senior Analyst, adding Deputy Director of Research to his responsibilities in February 2007. He served as Director of Research from October 2008 to October 2018 and as Global Head of Research from November 2018 to November 2021. Before joining WisdomTree, he was a head research assistant for Professor Jeremy Siegel and, in 2022, became his co-author on the sixth edition of the book Stocks for the Long Run. Jeremy is also co-author of the Financial Analysts Journal paper “What Happened to the Original Stocks in the S&P 500?” He received his B.S. in economics from The Wharton School of the University of Pennsylvania and hosts the Wharton Business Radio program Behind the Markets on SiriusXM 132. Jeremy is a member of the CFA Society of Philadelphia.