Episode summary
Episode 385: Roy Kuo of Galilei Family Office: Thinking like an Owner in the Family Office Arena
The Fiftyfaces Podcast
· · 23 min · Guests: Roy Kuo
Summary
Roy Kuo says his move from the Church Commissioners to Galilei Family Office reflected a broader shift from endowment investing into faster-moving private wealth, where entrepreneurial clients often bring operating experience and network value as well as capital. He argues that private wealth is increasingly able to access the same quality of opportunities once associated with institutions, especially when clients are first-generation founders or industry specialists.
At Galilei, the portfolio is built on a shared platform with limited customization by risk level rather than bespoke security selection. Roy says the firm is passive in U.S. large-cap equities because active managers have struggled to beat the S&P, but remains active elsewhere, especially in Japan, where he favors activist strategies to improve capital efficiency and corporate governance. He also describes a relatively lower fixed income allocation, with government bonds used dynamically for duration and credit used selectively when spreads are attractive.
He makes the strongest case for liquid alternatives as a real diversifier, not a return-smoothing product. Roy says alternatives around 20% of portfolios have cut volatility meaningfully and helped during stress periods such as the Iran conflict, though he warns that strategies short volatility can fail when markets sell off. He is also pragmatic on currency hedging and sees portable alpha, plus ESG-aware solutions, as increasingly relevant across both private wealth and institutional mandates.
Key takeaways
- Roy Kuo says private wealth is becoming more innovative and is increasingly able to access opportunities once reserved for endowments and foundations.
- Roy Kuo says Galilei uses passive management in U.S. large-cap equities because active managers have struggled to beat the benchmark there.
- Roy Kuo says activist investing in Japan has helped drive roughly 8% annual outperformance versus the benchmark in that sleeve.
- Roy Kuo says alternatives at about 20% of portfolios have cut volatility by about 60% and helped in stress periods like the Iran conflict.
- Roy Kuo says AI and automation may eliminate about 90% of junior staffing needs, which he sees as a major societal problem.
- Roy Kuo says portable alpha can solve benchmark-hugging problems in pensions and endowments while creating room for ESG-compliant solutions.
Notable quotes
“private wealth is just much faster growing area than the endowment space, and it's becoming quite as innovative as what the endowment space had been historically”
“we actually decided to go passive for large-cap US, but then the rest of our portfolio is completely active”
“what we found is that it's just created this huge outperformance versus what a a standard equity manager would do”
“we think that you actually need alternatives in portfolio, definitely liquid alternatives just because you need something that's actually really truly diversifying away from fixed income and equities”
How the episode opens
When currencies are trading kind of two standard deviations wide from the purchasing parity level, that generally within a three-year period they were going to mean revert to some extent. So basically if you just basically held your baseline kind of currency hedging program, but then you moved to be over hedged or under hedged when currencies got to those extremes, then you actually made a profit off of that currency hedge. It wasn't actually designed to be okay, this is going to be a source of profit.
It was actually more like okay, we do some currency hedging. It was going to cost us. How do we pay for it so that the currency hedging kind of pays for itself, right?
So we thought that ended being a kind of clever way of achieving that.
I'm Ethan Devitt and welcome to the 50 Faces Podcast, a podcast committed to revealing the richness and diversity of the world of investment by focusing on its people and their stories. This podcast is kindly supported by Bailey Gifford and GCM Grovner. In a world that moves at an unrelenting pace where the horizons of innovation stretch beyond what the eye can see, Bailey Gifford is driven by curiosity.
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From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- family office investing
- private wealth
- portfolio construction
- liquid alternatives
- currency hedging
Companies and tickers mentioned
- Galilei Family Office
- Church Commissioners
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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The Fiftyfaces Podcast, this episode and its artwork belong to Aoifinn Devitt. Octagon is not affiliated with the show; this page is an independent summary.
