Experience pays off

Paolo Biamino, head of Fund Selection of Euromobiliare SGR, was named Italy’s personality of the year by his peers.

Paolo Biamino heads a team of four other generalist fund selectors who oversee in total some €18bn of AUM.

However, he adds that his own knowledge has been developing in the area of absolute return strategies, and that today the majority of Euromobiliare’s portfolio management is invested in total return strategies and liquid alternatives.

Being part of the Credem group, Euromobiliare SGR serves all the distribution channels of the group including the multimanager and the financial adviser networks.

Biamino, who also sits on the company’s Investment, Risk Management and Product Development Committees, says the core of the team’s selection activities is in qualitative analysis.

“While we rely on a solid quantitative background, the qualitative side of the analysis is a very important one for us. One of the distinguishing aspects of our process is portfolio analysis.

“Since 2008, we have analysed 500 Ucits funds from a large number of asset management companies. Each analysis was concluded with a comprehensive due diligence report.

“We hold more than 400 meetings with investment managers per year and often travel in Europe and in the US,” Biamino explains.

The fund selector head adds that Euromobiliare SGR is one of Italy’s biggest investors in balanced and flexible funds as well as alternative Ucits.

More generally, Biamino says that their average investor risk profile is a low-to-medium one, and that the ideal fund is one offering good protection from downside risks.

Another crucial factor is that Biamino is solely responsible for the fund selection unit and does not manage clients’ portfolios as the company decided to split the fund selection unit from portfolio management following the global financial crisis that started with the credit crunch in 2007.

When it comes to valuing the performance of the funds that are being assessed, Biamino says that his team focuses on the value that a particular fund can add to its peers already on his list.

The quantitative analysis is mainly used to track managers’ behaviour in different market conditions.

“Our due diligence pivots on three key parameters: consistency between the fund’s declared objectives and the tools to achieve them, investment process transparency and liquidity of investments,” he says.

Biamino says his team maintains a lookout in particular for two qualitative red flags and one quantitative one.

“Style drift and continuous liquidity decrease are the two qualitative red flags that scare us the most. As per the quantitative side, disregard of the expected risk profile is our biggest worry. While we tolerate low performance,
we don’t do so with volatility,” Biamino explains.

The team he leads is also directly involved in all aspects of sub-advisories, from product development to manager selection and ongoing monitoring.

“We have a privileged eye on product innovation across Europe and are part of the effort to bring it to our clients in a timely manner. On the other hand, portfolio monitoring allows us to deepen our knowledge of specific issues that are relevant to fund selection as well,” he concludes.

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