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Over the worst of it?

Today we received seven e-mails and four telephone calls asking for meetings. Over the month we have seen 63 such requests. Times are changing and we see this as another indicator of the worst being over.

Fund management marketing people will tend to come out and play when things are going well; when they can talk about successes. Success in beating the benchmark, success in stemming client redemptions, success in achieving a consultant buy-rating, success in having survived. Here at Wasserdicht Pensioenfonds we believe marketing people personify the brand of their companies.

‘Good morning Jan, nice to see you again.' ‘Actually my name is Pieter Mullen and I am the investment director.' He looks at his notes: ‘Ah I am sorry, Jan is my next meeting.' Lucky Jan, I think. He continues while his business card states he is called Arthur from Big Bank subsidiary Hubris Asset Management.

‘As I mentioned over the phone we would like to talk to you about US equity management.' I cannot recall the conversation but give him the benefit of the doubt.

‘Can you let me know how you currently invest?' And there he is with pen poised, clean page with the wrong date in the left hand corner. ‘I think it would be better if you tell me what you do in this field and then we can see if there is a possible match.' A forced smile. He takes out two presentations and begins with the words that make every investment director sigh very deeply. ‘Our firm was founded in...'

‘Arthur, let's go straight to what your firm stands for, how it invests, how it did before Lehman's demise, and how it has done since, ok?' More silence. Arthur tries to find the right page. ‘Well, we are a sort of flexible manager and the aim is to beat the median of managers most of the time.' ‘What does that mean?' ‘It means we don't want to be labelled value or growth. We are not benchmark constrained; we just want to beat the competition.'

‘Arthur, we think a style that is focused on finding earnings growth would be interesting to us, but we do look at the US indices as benchmarks and we are not particularly driven by your competitor rankings. As a pension fund we have to grow and continually meet our pension obligations. Our question here is whether we should stick to beta exposure, or whether you or your competition can deliver us some alpha.'

‘Well we have outperformed the index this year.' ‘So your portfolios were in line with the junk market rally.' ‘No, they were more earnings growth oriented.' ‘Arthur, your portfolio managers are clearly very good and take care in choosing stocks but we take similar amounts of care in selecting managers. We analyse the people and the firms thoroughly.' ‘So do you like value or growth?' ‘We understand both, believe both have considerable merit, but our core philosophy is to avoid the junk.'

Pieter Mullen is investment director at Wasserdicht Pension Funds

 

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