Selectors discuss the quality of managers, Asia and strategy platforms
The latest roundup of fund selector views elicits comment on manager quality, consistency and transparency, the state of China and Japan, and the dangers of following a trend.
Quality of manager crucial
Name: Ansgar Guseck
Title: Head of portfolio management
How long does Sauren hold funds, and what is most important in a manager, except for performance?
There is no set rule for holding periods. Our oldest holding is a fund we bought in 1999, now closed to new investors, with low assets under management. If a fund manager leaves, or gets too large, we would sell it. If a manager disappoints us [we would sell].
You really need to have a good understanding of the risks you are taking in the portfolio and what kind of strategies the manager is employing, so you can know how much time you should give him.
A manager should be able to explain every single line item in the portfolio – how they analyse it, how they identified it, where their advantage is compared to competitors. How do they size the position and where is the exit? Our main criteria is the quality of the manager.
Name: Christian Hille
Title: Head of multi-asset
Company: DWS Investments
Apart from performance, what are the most important qualities in a fund manager?
Consistency and transparency. There is a limit to how far transparency can go, but if you are a strategic investor in a fund, you should be able to see everything going on.
If you take a niche asset class like convertible bonds, a lot of fund managers mix convertibles with currency management and very few have pure convertible alpha. I want a fund strategy with a much more stringent approach to management.
If a manager underperforms in a weak market, but you expect that, then that can be okay. If, however, he starts underperforming because he has a currency overlay [you did not expect], or other such matters, then that is disappointing.
China and japan in demand
Name: Max Gottschalk
Title: Head of Asia, senior managing director
Company: Gottex Fund Management
Base: Hong Kong
Gottex’s acquisition of Asia’s Penjing Asset Management awaits regulatory approval. What is the deal’s rationale from an investment objective?
I think overall developing across the region there has been increased appetite and interest for more specialised products, such as products out of China and Japan.
The benefits of working together with Penjing is we can benefit from an interest among Asian investors in hedge funds, and in general provide them a better product range. This includes Asian fund of funds products.
Having a global platform helps [the Penjing] team to engage with clients in Europe, with whom they maybe could not talk in the past.