The Oppy is commemorating some prominent NYU Stern alumni with our ‘Graduate’ series. Each month, we’ll interview notable alum that have made an impact on their community and industry.
Kevin McNally is the Portfolio Manager of Clough Finn Investment Partners LP, a long/short hedge fund investing in closed-end funds (CEFs) and exchange traded funds (ETFs). He has over 27 years of industry experience focusing exclusively on these markets. Prior to joining Clough Capital Partners LP in 2014, he served as the Director of Closed-End Funds at ALPS Fund Services, Inc. from 2003 to 2014, where he was instrumental in launching approximately $13 billion in total assets of CEFs in 14 funds. Prior to that, Mr. McNally was Director of ETF and Closed-End Fund Research at Smith Barney, a division of Citigroup Global Markets, Inc. from 1998 to 2003, where he is credited with writing some of the first research reports on ETFs for the retail investor. He was also Director of ETF and Closed-End Fund Marketing at Morgan Stanley Dean Witter Discover & Co. from 1997 to 1998. Previously, he was an Analyst covering US equity funds in the Mutual Fund Research Department at Merrill Lynch, Pierce, Fenner, & Smith, Inc. from 1994 to 1997, and also was Manager of the Closed-End Fund Marketing Department at Prudential Securities from 1992 to 1994. Mr. McNally received a B.A. from the University of Massachusetts at Amherst in 1991 and an MBA in Finance from New York University’s Stern School of Business in 1998. He resides in Hingham, Massachusetts with his wife and three children, but is looking forward to being an empty nester as soon as possible.
Hi, Kevin! Tell us about your position at Clough Capital Partners and how your MBA helped you on your career journey.
I am currently a portfolio manager at Clough Capital and have been so since 2014. Really, my entire career was a build-up to becoming a portfolio manager. Without question, my MBA was a critical part of the base I had to build.
Could you go into a little more detail about how your career was a build-up to becoming portfolio manager?
Not by design, but my career brought me to a very specialized niche – closed-end funds (CEFs). Niches can definitely work in one’s favor as generalists have a hard time being differentiated. The risk is that there is a very fine line between a niche and a pigeon hole. A one-trick pony in a deflating specialty can spell disaster. In my case, most strategists and the media were calling for the death of closed-end funds. Most of my competition left closed-end funds to follow the booming ETF market. This didn’t make sense to me as ETFs are super-efficient and thus need less analysis (try writing a meaningful report on the difference between three S&P 500 ETFs). ETFs are also the lowest margin business in asset management (and on the whole, the most over-rated). I persevered in the CEF space and am one of the last ones standing. It also doesn’t hurt being a big fish in a small pond!
What was your favorite professor/class at Stern and why?
There were so many that were great, but I would say it is between Ed Melnick – Stats or Stephen Bersey – Advanced Financial Modelling. Professor Melnick would always apply his expertise to examples in casinos, which kept it interesting. I think my entire class would agree that having a guru like Professor Bersey teach us was the highlight of our educational careers.
If there’s one thing you could change about your experience as an MBA, what would it be?
Nothing, really. We had a great class, and everyone became extremely close. We are all still friends 22 years later.
Did you do your MBA full or part-time? What was the most challenging part of that journey for you? Any tips for our students today?
I did the Executive MBA in Finance. To me, it was the best way to do it. We would learn things on Saturday that were immediately applicable to our jobs. We could implement on the fly. It made me significantly better at my job.
Many of our graduating MBAs are about to start recruitment. What do you think are the most important characteristics and qualities of top candidates in today’s job market?
Great question. From my point of view, it’s coming across as someone who is going to fit in. Obviously, everyone is going to have a great resume – they’re coming from Stern! I like to see candidates that are going to be easy to work with and willing to learn. I think it is very off-putting when a candidate is trying to be a knowallogist. You are a candidate, not someone who is supposed to know more than us about what we do. Be eager, but modest. Show that you can listen and learn. Ask a thoughtful question and be interested in the answer.
What are some of the biggest changes you’ve seen in the finance industry since the start of the pandemic and in this current economic climate?
The finance industry was already going through massive changes prior to the pandemic. Consolidation on the buy-and-sell sides was leading to layoffs. Survival through the pandemic will require more consolidation. The regulatory environment has been difficult since 2008, and only improved moderately under the Trump administration (see MiFID II). Many jobs were in secular decline already and the Covid lockdown will be the final nail in the coffin. Covid will change how we do business forever across the economy, long after the pandemic is a distant memory.
How is that changing the job market?
Roles, such as trading and sales, will never be the same. Research is changing rapidly, too. That said, I still believe finance is the greatest industry in the world and is still a wise career decision.
What are your thoughts on the current stock market trends? (This interview was held prior to the more recent market volatility.)
One of my mentors used to say, “may you live in interesting times.” I guess his wish for me came true!
Anyone who thinks they have a grasp on how the pandemic will affect the long-term economy or the true effect of the liquidity central banks are pumping into the economy is a fool. It is truly wise to know that we know nothing right now. Be nimble and ready to adapt as the future landscape starts to unfold.
Some solid advice from a wicked, wicked, wicked (self-described with three “wickeds”) prominent portfolio manager at Clough Capital and Stern alum, Kevin Mc Nally. All joking aside, that insight has resonated with me, and hopefully will with some of our finance folks at Stern too. We appreciate your time, Kevin!