Exclusive interview with Charlie Viola, Executive Chair, Adviser & Founding Partner of Viola Private Wealth
Global Investment Insights
with Charlie Viola, Executive Chair, Adviser & Founding Partner, Viola Private Wealth
Charlie Viola is the Executive Chair, Adviser and Founding Partner at Viola Private Wealth. He specialises in advising high-net-worth individuals, family offices and institutional investors, as well as managing significant portfolios with a focus on delivering tailored and high-touch services.
Prior to founding Viola Private Wealth, Charlie was a Partner and Managing Director at Pitcher Partners Sydney Wealth Management, where he was instrumental in growing the business from less than A$50 million in AUM in 2001 to over A$3.5 billion by 2022, personally managing over A$2 billion in AUM.
Recognised as a leader in the industry, Charlie is consistently ranked on Barron’s Top 100 Australian advisers list.
In this exclusive interview with Global Investment Institute, Charlie discusses Viola Private Wealth’s approach to asset allocation, changing market conditions, assessing and managing risks, generating reliable income and the growing role of alternative investments in portfolios.
Q. Can you outline your approach to asset allocation and how you implement guard rails into your process that enable you to deal with changing market conditions?
A. Like most, we believe that asset allocation, along with asset quality, are the most important elements to building our clients’ portfolios. We have built out a specific process, called the Core Squared approach, where we in effect group clients’ money into three distinct buckets:
Core assets – being shares, bonds, cash and similar assets.
Core alternatives sleeve – which are the evergreen and semi liquid alternate assets, ensuring we give clients exposure to those high quality private equity, private credit, infrastructure style assets at all times and through the cycle.
Satellite alternatives – which we give clients exposure to, as and when opportunities in the alternatives space come up. This will usually be co-investment or closed end opportunities that we like.
We retain parameters in terms of how much we want in any one asset class as most would do, but importantly, we look to deploy over time, especially in equities, into opportunity and weakness. This approach has driven the strong outcomes we are well known for.
Q. Being entrusted with managing large sums of client capital, how do you assess and manage risks to investable capital, without becoming overly reactive?
A. We have a fairly defined process in terms of how we allocate. For private debt, private credit, private equity, infrastructure and similar assets, we will allocate the neutral positions early when onboarding client capital. We will generally only ever allocate a portion of our equities components at the start of the client journey and look to allocate the rest over time.
We are big on having ‘dry powder’ to be able to take advantage of opportunities, whether it be new investment opportunities or market weakness.
We believe that diversity and asset allocation is extremely important. As such, we always have a base mix of assets early and we will typically over/under apex asset classes based on what is going on in the world.
Q. How do you manage the ever-present need to generate reliable income for clients whilst preserving their capital for the long-term, particularly in a more uncertain and volatile investment environment?
A. We don’t think about it quite in this way. Instead, we start by making good investment decisions first, and then the outcome of that is the way the return gets delivered.
Traditionally, most portfolios are going to punch out 5-6% average yields. We have a disciplined process around how much we use real assets (infrastructure in the main) and private credit (high quality, lower risk options) which will do some of the heavy lifting in generating income. Then, as we begin deploying in equities, we will naturally start to generate more revenue flow.
Income will always flow from high quality assets. We generally don’t have an over allocation to hugely illiquid PE or closed end funds. We will have some, however we have a bias for evergreen as the money-on-money return has traditionally been better.
What we do produce religiously for clients though is a revenue schedule. We provide a forecast of portfolio revenue on an annual basis, ensuring clients know exactly what income to expect. If that is not enough to cover their living expenses for the upcoming year, we will adjust how much cash they need or increase our allocations to those bigger income producing assets.
Asset quality and diversity always comes first.
Q. Why are alternatives becoming a growing allocation in client portfolios and what role do they play in your investment strategy in pursuit of client objectives?
A. We will typically allocate circa 35-40% to what people would call alternatives (effectively investments that are not shares, bonds or cash).
Noting, the use of the word alternatives makes them sound exotic, they aren’t. They are normal, good quality assets wrapped in a less liquid format, sometimes. We want to reduce portfolio volatility and increase the level of assured return, thus this is best done from real assets and asset-backed investments.
Alternatives are becoming more popular because they are more accessible and the barrier to entry has reduced significantly. It was once for institutional, family office or the very wealthy only, now alternatives are available to most through funds in an accessible format.
Q. What alternatives investments are you preferencing currently? How do you identify, source and access best-in-class alternative investments and what challenges have you faced in the process?
A. We have a deep due diligence process we follow before we start committing client capital to funds.
We probably haven’t changed much over the years, and we were an early mover in the private market space. We continue to like infrastructure and private credit in the lower risk space, and we like private equity and private equity secondaries. We continue to use industrial property, where the manager can add value.
For private equity, we have an almost 50/50 split between using closed ended, capital call funds and evergreen funds.
Charlie Viola, Executive Chair, Adviser & Founding Partner, Viola Private Wealth
Charlie is the Executive Chair, Adviser and Founding Partner at Viola Private Wealth, with over 24 years of experience in investment management.
Charlie specialises in advising high-net-worth individuals, family offices and institutional investors, as well as managing significant portfolios with a focus on delivering tailored and high-touch services.
Prior to founding Viola Private Wealth, Charlie was a Partner and Managing Director at Pitcher Partners Sydney Wealth Management, where he was instrumental in growing the business from less than $50 million in AUM in 2001 to over $3.5 billion by 2022, personally managing over $2 billion in AUM.
At Viola Private Wealth, Charlie ensures clients benefit from exclusive investment opportunities and strategic, long-term wealth planning. His client-centric approach emphasises education and trust, key elements in achieving exceptional outcomes.
Recognised as a leader in the industry, Charlie is consistently ranked on Barron’s Top 100 Australian advisers list. Under Charlie’s leadership, Viola Private Wealth sets the standard for excellence in servicing high-net-worth clients and families.
In addition to his role at Viola Private Wealth, Charlie serves as a Non-Executive Director of the Wests Tigers NRL club, and Autism Awareness Australia (a wonderful NFP charity which looks to better the lives all people living with autism and the families that love them), further demonstrating his leadership and commitment to diverse organisational success.
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