Danny Truell (1963-2019): five decisions that made the modern Wellcome
Danny Truell, who died this week, served as Wellcome's Chief Investment Officer (CIO) for more than a decade and helped make Wellcome what it is today. Nick Moakes, Wellcome's current CIO, pays tribute to Danny's brilliance.
In 2005, Wellcome started selling certain assets in its investment portfolio. A new chief investment officer was responding to warning signs he thought he saw in the markets. Few others thought an ill wind was coming, but he backed his own judgement.
As a result, when the international banking crisis hit in 2008, Wellcome was in a relatively strong position, with far fewer assets that would be vulnerable in the crash. There was no need to sell at distressed prices, nor to make deep cuts in charitable spending or staff numbers as had happened in the early 2000s. Decisions taken over the previous three years had protected Wellcome and its mission of improving health.
That new chief investment officer was Danny Truell, who died on 30 September 2019.
Danny had worked at the Coal Board, SG Warburg and Goldman Sachs before joining Wellcome, and said his fascination with financial markets began in childhood when his father bought him a share-trading game. Danny loved the intellectual challenge of managing a portfolio like Wellcome’s, plotting a forward course despite financial headwinds and, occasionally, full-blown tempests.
He was brilliant at seeing the big picture. Details he left for others to work out, but he maintained an impressive record of anticipating the markets and coming up with a flood of bold, often left-field ideas to make the most of any situation. His goal at Wellcome was always "to maximise our take from global GDP to maximise our spend on the mission".
In the words of Wellcome’s current director, Jeremy Farrar: "Danny Truell has been one of the most remarkable people to have served Wellcome. His contributions have been pivotal to making Wellcome what it is today."
Decision one: Trust a world-class in-house team
Originally, Wellcome was set up as a charitable trust to fund non-commercial research to improve health, using profits from the pharmaceutical company left by Sir Henry Wellcome when he died in 1936. When the company was sold in 1995, the charity used the considerable proceeds to build up an investment portfolio that would finance all of its charitable spending in future.
Until 2005, these investments were largely controlled by a committee of Wellcome Governors and outside experts. External consultants were paid substantial fees to manage the portfolio, which at the time held a large proportion of its investments in UK assets.
Danny changed all that. Almost the first thing he did at Wellcome was to make sure that decisions about investments would now sit with him and his team. He fired the outside consultants, hired in talented people to manage more of the portfolio directly, and began restructuring Wellcome’s holdings to be more global, more concentrated and more long-term.
Decision two: Use your triple A credit rating to issue bonds
In 2006, Wellcome became the first charitable foundation to issue a bond. There was considerable resistance to the idea within Wellcome, but Danny persuaded the Governors that it was the right thing to do.
It set a precedent for more bonds from Wellcome, which has maintained a triple A credit rating throughout. Essentially, by borrowing money at a fixed low rate of interest for a specific period of time, Wellcome gains by making bigger returns on that money than we have to pay back to the bondholders.
Decision three: Sell before the financial crisis hits
Danny saw signs of the 2008 global economic crash coming when few others did. More than that, his strategy of selling vulnerable assets and holding more than usual in cash protected Wellcome. If he’d been wrong about the crash, Wellcome would have performed rather worse than its peers. As it turned out, if he hadn’t acted when he did, Wellcome would have lost billions.
Decision four: Buy before the financial crisis ends
It would have been easy to stick to the policy of keeping a relatively high proportion of the portfolio in cash until the crisis was definitively over. Danny, however, seized the moment to change course. His team at Wellcome started buying up public equity, even as the markets were still falling in late 2008 and early 2009. Stocks bought during that time have contributed significantly to the outstanding performance of the investment portfolio over the next decade.
Decision five: Don’t put all your eggs in one currency
Before 2009, Wellcome’s investment portfolio was measured in Pounds Sterling. With the UK economy vulnerable to the financial crisis, Danny recognised this was an unnecessary risk. Deciding to hold less in sterling and more in US dollars helped protect the portfolio during the 2008 crisis, and again in 2016 when the UK voted to leave the European Union. Reflecting this strategy, the portfolio has been measured in a 50:50 blend of Sterling and US Dollars since 2009.
The day after the unexpected result of the Brexit referendum, with the markets in shock and the pound tumbling, Wellcome lost $1 billion in a single day. But the Investment team had prepared by holding even less in Sterling. The drastic change in exchange rate meant Wellcome also gained £1 billion in value, ending slightly up overall in the 50:50 blended currency.
A far-reaching legacy
Danny stepped down as chief investment officer in 2016 for health reasons. He continued to contribute to Wellcome’s investment strategies and the leadership of the organisation more widely.
His legacy reaches beyond the Investment Division – for example, his commitment to a long-term approach to investing led to his involvement in the World Economic Forum, a relationship Wellcome is now using to put health issues like drug-resistant infections and climate change higher up the global agenda.
He was also a champion of diversity at Wellcome and beyond. A staunch believer in meritocracy, he recognised that it only works if everyone gets an opportunity to show their merits to the full. Another of his big ideas was to start a graduate scheme at Wellcome that would bring in people with different perspectives and backgrounds. He was one of the loudest advocates in the organisation for making Diversity and Inclusion a priority area in 2016.
Danny was a mercurial character – the sheer number of ideas he came up with every day meant those around him had to be prepared to shoot down the crazier ones. His best ideas were truly ground-breaking though, and the impact he had at Wellcome will never be forgotten.
Working with his team, colleagues across Wellcome, Directors and Governors, Danny enabled incredible growth in our resources and in our ambitions to improve health by helping great ideas to thrive.