Podcast Summary

Podcast: The Investor With Joel Palathinkal
Episode: Harshad Lalit: Rockefeller Capital
Date: September 26, 2025
Guest: Harshad Lalit, Quantitative Equity Analyst, Rockefeller Capital
Host: Dr. Joel Palathinkal

Episode Overview

This episode of The Investor features Harshad Lalit from Rockefeller Capital, exploring the intersection of technical backgrounds and finance, career transitions, and the evolution and quantitative integration of ESG (Environmental, Social, and Governance) and impact investing. Harshad details his unique path from aerospace engineering and a PhD in combustion physics to institutional investing, emphasizing the rising importance and measurable value of ESG criteria, both in public and private equity. The episode also provides hands-on advice for career changers and a comprehensive walkthrough of ESG-driven investment strategies and their real-world performance.

Career Journey: From Engineering to Quantitative Finance

Early Life and Education ([02:14])

• Background: Grew up in New Delhi, India; comes from a family of lawyers.
• Academic Choices:
  • "It wasn't like the stereotypical engineer or doctor in the house. They wanted me to be a lawyer, but, yeah, I had no interest in law." – Harshad [02:49]
  • Chose science in high school; pursued mechanical engineering as an undergraduate.
  • Childhood interest in aerospace and "movies like Top Gun" inspired him to complete a master's in aerospace engineering at USC, and a PhD in combustion physics at Purdue.

Transition to Finance ([05:20])

• Introduction to machine learning and AI during PhD; realized applicability in finance (credit risk modeling, quantitative investing).
• "My interest in the field just grew naturally...it wasn't a forced transition." – Harshad [05:59]
• Took the CFA exams to deepen financial knowledge.
• Moved from engineering to working at Rockefeller Capital, specializing in systematic and impact-based investment.

Trends in Talent Crossing Over to Finance ([06:19]–[08:17])

• Notably, many physics and engineering PhDs enter private equity and finance.
• "With the advent of more and more data and these technologies like machine learning, AI... you can have different applications in finance like credit risk modeling or fraud modeling." – Harshad [06:57]
• Financial firms are increasingly "almost like a tech company," hiring engineers and data scientists alongside traditional finance professionals.

Rockefeller Capital and Evolving Investment Strategies

Firm History and Shift to Quant Strategies ([08:39])

• Rockefeller Capital originated as a family office for the Rockefellers, now with broader institutional investor engagement.
• Recent infusion of hedge fund capital prompted expansion into more systematic and quantitative investment strategies.
• "We thought of why not applying a quantitative approach to investing. So those are going to be two streams… in the company." – Harshad [10:45]

Advice for Transitioning from Tech to Finance

Potential Roles ([11:22])

• Harshad outlines three main quant roles:
  1. High-speed trading programming roles (low-latency coding, algorithmic trading).
  2. Quant researcher supporting portfolio managers (providing alternative data, quantitative insights).
  3. Launching your own systematic strategies (algorithm-driven portfolios).

Key Application & Interview Tips ([13:42])

• Firms value experience handling and managing large datasets.
• "If you have personal projects...a website of all your projects...on GitHub, if you have any code repositories, you can showcase that..." – Harshad [13:53]
• Tailor your skills and portfolio to the firm’s focus areas (e.g., providing ESG models if relevant).
• The future of hiring may resemble coding challenges or quant strategy submissions, as with platforms like Quantopian.

Notable Segment

"You can actually share like this cool analytics...it's kind of like a dashboard that you can send with your portfolio strategy...that would be more relevant than looking at an over-embellished resume." – Joel [15:40]

The PhD Process: Insights and Parallels to Startups

Describing the Academic Gauntlet ([17:08])

• PhD journey includes qualifier exams, proposal exam, and dissertation defense.
• "[Doing a PhD is] like setting up your own startup...you don’t have help; you only have yourself…" – Harshad [18:50]
• Importance of publishing, conferences, and gaining external validation.
• Funding and sponsorship for research is essential and mirrors raising venture investment.

Commercialization and IP ([22:41])

• Universities may commercialize technology developed during research, but there are "strings attached" related to IP ownership.
• Industry-sponsored research creates mutually beneficial pathways for commercializing academic discoveries.

ESG & Impact Investing: Strategies, Performance, and Integration

Why ESG Matters ([25:34])

• At Rockefeller, investment decisions integrate quantitative (systematic) analysis with both financial and ESG metrics.
• Stocks undergo ESG review; the team can veto investments with significant ESG risks.

Historical Shift ([25:34]–[35:00])

• Contrasting views:
  • Milton Friedman: Profit maximization should be the sole purpose of a company.
  • Howard Bowen: Companies must consider social and environmental responsibilities (corporate social responsibility/CSR).
• The concept of the "triple bottom line" incorporates not just profit, but also social and environmental outcomes.

Empirical Evidence ([35:00])

• Several key papers show strong ESG practices correlate with:
  • Outperformance during financial crises (e.g., 2008, COVID-19).
  • Higher risk-adjusted returns and Sharpe ratios for both public and private equity.
  • ESG Leaders indices consistently outperform broad market indices over the past decade.
• "ESG is real...you will end up with higher returns and it is beneficial to investors." – Harshad [38:20]

Global and Asset Class Trends ([40:30])

• Flows into sustainable funds have risen dramatically, both in public and private markets (Morningstar, Bain Capital reports).
• ESG adoption is surging globally, with even BlackRock cloning ETFs with an ESG tilt.

Integrating ESG into Quantitative Models ([41:50])

• Traditional investing considers only financial data; advanced models also incorporate ESG metrics.
• "Just the final takeaway, if...SoftBank...had looked at governance risks [with WeWork], then it would not have put an extreme valuation of $47 billion on WeWork." – Harshad [43:00]

Audience Q&A Highlights

Algorithmic Strategies in Private Equity ([44:26])

Audience: "Is algorithmic ESG-based selection possible in private markets?"
Harshad: "The challenge is that things are not showcased...algorithmic approaches to private equity are still not common. It's mostly...in public equities." [45:27]

Social Stock Exchanges & International Expansion ([47:34])

Question: On India's planned social stock exchange. Harshad: "If BlackRock is committed to having an ESG tilt...then it's high time others do it as well. Things are moving pretty fast...Covid has also been a tipping point..." [48:20]

ESG Comparison: Health Care and SDOH ([49:39])

Audience (Smitha): Compares ESG to "social determinants of health" in healthcare. Harshad: "Our ESG team looks at social metrics like the one you mentioned...if any of these metrics show a red flag, you can adjust the rate of return that you expect from the company." [50:57]

Notable Quotes

• "Traditionally...people who transitioned from a physics background into finance were mostly doing option pricing...Now, you have different applications in finance like credit risk modeling, fraud modeling..." – Harshad [06:57]
• "It's probably like setting up your own startup...you put a lot of hours into the idea, coming up with something new...it's probably constructing your own startup." – Harshad [18:50 & 23:24]
• "If you invest in ESG companies which have a good ESG profile, you will end up with higher returns and it is beneficial to investors." – Harshad [38:20]
• "If...SoftBank...had looked at governance risks...with WeWork, it would not have put an extreme valuation of $47 billion on WeWork." – Harshad [43:00]

Key Timestamps

• 02:14: Harshad’s background and family influence
• 05:20: Entry into finance via machine learning, AI
• 08:39: Rockefeller Capital's recent strategic shift
• 11:22: Types of quant roles for tech-to-finance transitions
• 13:42: Interview and project/portfolio-building advice
• 17:08: PhD process and parallels with startups
• 22:41: Intellectual property and commercialization in academia
• 25:34: ESG investing, major historical figures, and research evidence
• 35:00: Empirical evidence supporting ESG as a return enhancer
• 40:30: Market trends in sustainable fund inflows
• 41:50: ESG in quantitative investing, WeWork case
• 44:26: Q&A: Algorithmic strategies in private equity
• 47:34: Q&A: Social stock exchanges (India example)
• 49:39: Q&A: ESG parallels to health industry SDOH metrics

Conclusion

This episode offers a rich, practitioner’s look at how technical expertise, ESG principles, and systematic investing are blending to redefine institutional capital allocation. Harshad provides actionable advice for career-switchers and compelling data showing ESG integration's concrete benefits, delivering insight relevant to allocators, technical professionals, and impact-focused investors alike.