Hortense Bioy
Director of Passive Strategies & Sustainability Research, Europe @ Morningstar

Hortense Bioy is Director of Passive Strategies & Sustainability Research, Europe at Morningstar where she leads a team that provides independent research on ETFs and index funds and also spearheads Morningstar’s ESG thought-leadership agenda in the region.

Hortense sat down with Jobs in ETFs in advance of the upcoming Inside ETFs Growth Strategy Summit at FundForum International to discuss her career, work-life balance and the greatest challenge on the horizon for ETFs.

… ESG is a fascinating field still in its infancy, which I believe has the potential to shape a new form of capitalism, one centred around stakeholders rather than just shareholders.

Jobs in ETFs (JIE): From M&A Analyst and Bloomberg News TV Presenter to your current role as Director of Passive Strategies and Sustainability Research Europe at Morningstar, explain briefly your career moves and how they have shaped you.

Hortense Bioy: I started my career as an M&A analyst at Société Générale in Hong Kong after graduating with a master’s degree in Finance. For the next part of my career, I was a financial journalist with Bloomberg before coming to Morningstar in 2010. In between my time at Société Générale and Bloomberg, I passed the CFA in globe trotting style passing Level 1 in Hong Kong, Level 2 in Tokyo and Level 3 in Buenos Aires, which is like a world tour!

When I joined Morningstar as an equity ETF analyst in 2010, I knew very little about passive investing. Low-cost funds that track the market just made sense to me. Two and a half years later, I was promoted to head of the European ETF team, managing five analysts.

In November 2017, my remit expanded to sustainability research and the past 18 months have been the most intense and rewarding of my career. ESG is a fascinating field still in its infancy, which I believe has the potential to shape a new form of capitalism, one centred around stakeholders rather than just shareholders.

JIE: Having graduated in France, worked in Hong Kong and now based in London, how does an international perspective help in your day to day?

Hortense: My traveling experience has certainly made me more adaptable, open-minded, pragmatic and streetwise. I’m sensitive to other people’s cultures and ways of thinking. These are qualities that I have found to be important in the workplace. Travelling by myself has also taught me that opportunities are everywhere. You just have to open your eyes and look for them.

JIE: What have you found, personally, to be the most challenging aspect of your career?

Hortense: The biggest challenge for me is balancing my career and my family. I know it sounds cliché but I have three children. Fortunately, I have a hands-on and supportive husband though he still calls me “part-time mum”, which hurts a bit.

JIE: What is work-life balance for you and how do you achieve it?

Hortense: You can’t have it all at the same time. I travelled in my twenties, which was fun. Then I got married and had children. Now I have a busy job. I work every evening from home after a full day in the office. I do that not because I am forced to, but because I am passionate about what I do. It is hard to focus on my personal life. Fortunately, Morningstar allows me to work from home a couple of days a week when I’m not travelling and they also get the importance of being flexible, which is priceless.

JIE: Did you ever sit down and plan out your career?

Hortense: I’ve transitioned from role to role organically. I’m not a planner and didn’t plan to travel or move around the globe. I am lucky to have moved careers a few times, from investment banking, to journalism, to passive fund research and to ESG research.

JIE: What is the greatest challenge on the horizon for ETFs?

Hortense: The greatest challenge for ETFs (and the fund industry in general) is their lack of flexibility. Here I am referring to the underlying strategies, be they active or passive. We are moving towards personalisation and we see this through people wanting increasingly customised solutions. People have different values and preferences. For example, people want to exclude certain stocks that are not aligned with their values. ETF providers can’t create solutions that will meet every person’s needs. In that sense, funds lack flexibility. In the US and Australia, SMAs, separately managed accounts, are becoming increasingly popular but they aren’t particularly tax efficient in Europe.

JIE: Looking forward what are you most excited about for the ETF community?

Hortense: What I really like about the ETF industry is that it’s growing – the same can’t be said about other areas of finance. Also, there’s constant innovation. It’s a young and dynamic market that attracts a lot of new talent, which in turn has made it a great space to work in and to watch evolve.

JIE: ETF inspirations – a person, a product or a moment that left a mark?

Hortense: Jack Bogle – even though he was a vocal critic of ETFs. He likened ETFs to a beautiful shotgun, they are great for hunting but they are also great for inflicting harm as well. He was referring to the intraday trading feature of ETFs which can create the temptation for investors to trade frequently.

JIE: What is the best bit of advice you’ve received in your career?

Hortense: I can’t think of one thing in particular, but a quote from Ernest Hemingway that my manager told me once has helped me with my writing; “The first draft of anything is shit.”

JIE: Is having a mentor important?

Hortense: Mentorship is important, but I don’t feel I have ever had a mentor. I think it’s about finding the right one, which isn’t just about you putting your hand up, but also about the mentor deciding that they will mentor you. It has to be beneficial for both parties.

JIE: What advice would you give to people starting out in the ETF industry today?

Hortense: Work hard, make mistakes and learn fast. It’s important to ask for help, ask questions and get out there. Challenge yourself and put yourself out of your comfort zone, it’s the only way to progress.

JIE: I’m sure the images of Notre Dame in flames, April 15, shocked you. The connection that so many of us, in France and beyond, have with this unique cultural icon resulted in an overwhelming and instant reaction to support the rebuild. Is it somewhat ironic that our seas are drowning in plastic and yet progress on this and other environmental issues often feels pedestrian? Do we need an equally impactful image of a destructive climate change event to shock us into instant unified response or do you already see significant and sustained progress from an ESG investment perspective?

Hortense: A huge climate crisis with economic effects similar to those the world experienced after the 2008 financial crisis might accelerate change, but this may not be desirable. The transition to a low-carbon economy can’t happen too fast because the social cost would be too high. Look at what’s happening in France with the yellow vests movement.

Regardless of this, I think it is ironic that a building burning down can raise over a billion euros overnight, but the cash suddenly dries up for other causes.

JIE: You will be speaking at the upcoming ETF Summit at FundForum International. Can you tell us something about the topic without giving it all away and what does it mean for ETFs to feature strongly at FundForum International?

Hortense: I’ll be speaking about the importance of looking under the hood of ETFs. Understanding index construction is crucial. I’ll talk about smart beta, ESG and the various biases that investors need to consider when building portfolios with non-plain-vanilla ETFs.

FundForum International is a key event and ETFs have become such a big part of the fund landscape that they have to be addressed.

ETFs are still surrounded by misunderstanding and misconceptions. There is still a great need for investor education, especially about the mechanics of ETFs and the liquidity aspect. People are confused by the fact that most ETF trading in Europe occurs over the counter.