MARKETING - The PRIDE Magazine by Liontrust - Flipbook - Page 4
INS I G HT
What makes a fund manager?
Liontrust’s Head of Multi-Asset John Husselbee explores what it takes to become
a successful fund manager, and outlines what he looks for before he’ll part with
your investment.
JOHN HUSSELBEE
Having been a fund selector for the
best part of three decades, a large part
of my career has been spent trying
to understand what makes a good
fund manager.
At first glance, many people might point
to performance as the essential ingredient
and over the long term this seems a fair
assessment, despite all the warnings
about past performance being no
guarantee of future success. Ultimately,
a fund manager who produces good
returns for investors over a long timeframe
has earned his or her money.
Over the years, however, I have come
to see the importance of looking beyond
the numbers: even the best managers
can suffer tough periods and very few
can point to an unblemished record of
beating the stock market year after year.
Assessing managers has to be about
more than just hard data and, for
me, fund selection is about blending
quantitative aspects – like performance
and risk – with ‘softer’ qualitative
4 - THE P R I DE - Issue 1 Winter 2017
considerations such as the culture
of where someone works and the
motivations of the individual. You could
describe this as combining the art and
science of fund selection, which means
not only crunching the numbers but also
meeting the people behind them.
I have come to see the
importance of looking
beyond the numbers.
An obvious place to start when assessing
managers is their investment process,
which sets out how they intend to run
your money. I’m a staunch believer
that while consistency of performance
is ultimately impossible, consistency of
process is vital. If someone believes in
how they run money, they should keep
to this process whatever is happening
in the stock market. Anyone changing
their approach to suit conditions will
raise concerns, as conviction is a vital
factor when selecting fund managers.
Culture is another important element but
as with many of these softer qualities,
there is no right or wrong approach
here. Ultimately, different people will
thrive in different environments: some
might prefer a larger organisation with
plenty of support and oversight, for
example, while others work better if left
to their own devices.
While factors like experience, process
and culture all go into the manager
selection mix, for me these do not go far
enough in evaluating what separates
the elite from the rest.
Many people applying for a new
job are asked to complete some kind
of personality test and while some
might dismiss this profiling, I believe
it is worthy of exploration. The MyersBriggs Type Indicator (MBTI) proposes
16 psychological types and one of the
major differentiators underlying these is
between extroversion and introversion.
I suggest both can be useful traits for
an investment manager: the latter can
make for a strong analytical individual
while the former can be associated with
strategic thinking and leadership.
Other important factors I have identified
over the years include curiosity and
open-mindedness, passion, ambition
and a great desire to win. At the same
time, natural cynicism and continually
questioning the market can also
be important as managers with the
courage to take contrarian positions are
often among the most successful.
This shows that a wide range of traits
come together to make a good fund
manager and over the coming issues of
The Pride, we will examine some of these
in more detail as we look to discover
ideal profiles.