Watch the full interview with Freddy
Married, 3 children
Started at JM Finn
Bembridge, Isle of Wight
Birdsong by Sebastian Faulks
Tangled earphones/Loud coughing
As chair of the stock selection committee, can you explain why more international stocks are being followed?
Although the FTSE 100 includes companies that generate the majority of their earnings from overseas the index has a bias towards certain sectors, namely oil/gas, mining, banks and pharmaceuticals, as the index is constructed on a market cap basis. Together these sectors make up nearly 40% of the index but an investor is very limited in what they can buy – for example you can buy BP or Royal Dutch Shell for oil exposure, or GlaxoSmithKline and AstraZeneca for your pharma exposure. In today’s world we feel this approach
is dated and sub-optimal. We want to invest in the best companies for clients on a global basis and managers are free to choose if they wish to get exposure via quality third party fund managers or buying individual stocks themselves. We have shifted our approach towards overseas investments over the last few years, especially since the Brexit vote in 2016.
You were named as a one of the Top 40 under 40 investment managers last year; what makes a good investment manager in your view?
Investment managers here have the dual role of being the relationship manager and investment manager for clients. We think this is important to ensure clients receive a bespoke service and for them to know that it is their investment manager who is accountable for each part of the service they receive. A good investment manager therefore needs to excel at multi-tasking and prioritising their day to day requirements. I also think a good manager needs to be a good listener. Listening to clients, listening to company executives and listening to colleagues. We receive vast quantities of information each day from many sources and it is vital to try and absorb it, process it and act on it to ensure we make the right decisions for clients. Finally, it would be remiss of me not to mention having a good team of people around you and I am fortunate to have this.
As a stock picker do you lament the rise of passive, or index tracking, investments?
I do not actually. I think passive investments have a role to play for certain types of strategy due to their simplicity and low cost. I do worry however that the meteoric rise in passive investments over the last nine years may exacerbate market falls in a recessionary environment. That said, this should play into the hands of active managers to outperform in tricky market conditions. I also believe that active fund management has actually benefited too from the rise in passive investments as it has led to a significant reduction in pseudo-tracking funds which I call the ‘mediocre middle’. As investors, we have a better range of active funds to choose from.
What makes a good active investment manager?
A good active manager in my view needs to be oblivious to the short term noise of the market. You need to have the courage of one’s convictions and take a long term view when picking investments. However, a good manager must also be prepared to admit when they are wrong and act quickly to resolve the mistake – this is easier said than done mind you! One particular situation in my own career where this happened was investing in Yell Group (the owner of Yellow Pages) about 10 years ago. We realised we made a mistake and crystallised a small loss soon after meeting management. The company subsequently went bust.