SVM Asset Management global investment director Neil Veitch speaks to Square Mile's Richard Romer-Lee, discussing the emotional roller-coaster of being a fund manager and working for a boutique company...
How would you describe the role of a fund manager?
It's an emotional roller-coaster. You can be and are judged at the end of every day. There's no hiding place. You can be right for all the wrong reasons and wrong for all the right ones. There's lots of luck involved and it's easy to be labelled an idiot.
To beat the market you have to do things that are uncomfortable and therefore always open yourself up to criticism. When things do go well, you are always wondering can they last, what happens next. I find I tend to make more mistakes when things are going well - it's a classic for the job, overconfidence.
What are the advantages of working in a boutique asset management company?
Less bureaucracy, less need for meetings about meetings, fewer accounts to manage - all of which mean more time to focus on running money. We don't feel the need to build models for every single company - just the ones core to our portfolios. In a big company, when analysts come up with ideas, I would worry it would be harder to access liquidity.
How did you get into fund management?
With great difficulty. It's what I've always wanted to do - not for intellectual challenge, rather because I am competitive and like numbers. A TV programme called Capital City about traders made it look exciting - plus some characters drove Porsches. With no connections with the industry I studied economics at university and did a masters in investment. I applied for jobs along the way but found it tough to get in.
I was eventually hired as an analyst working in the Isle of Man. Living there required a bit of an adjustment - it felt Presbyterian and austere even for a Scot. As the only UK national in the team - which managed money for a family office that had relocated from Hong Kong as they were nervous about the handover to China - I covered UK and Europe. We had no benchmarks and did some exciting stuff.
What's your view on the importance of ESG?
It should be an integral component of a fund manager's analysis. It's even more important in digital and knowledge-based businesses where assets tend to be more intangible and reflect human endeavours and enterprise - it's so important to look after that capital. It can make portfolios more defensive, but at the margin. There has been a high correlation between ESG and what are labelled quality companies today.
There's no doubt quality was undervalued - and many strategists' reports highlighted this at the time. My feeling now is perhaps this has swung too far and many stocks with strong ESG credentials have benefitted from the flood of money that has followed them.
The problem with valuation is so much depends on human psychology and the ebbs and flows of the market.
How do you relax?
I read a lot - mainly non-fiction. I usually have several books on the go at once, at the moment they include the first book of Robert Caro's biography of Lyndon Johnson, Nicholas Taleb's Skin in the Game and The Quality of Madness about the Leeds's manager Marcelo Bielsa. I like sport, both playing and watching on TV, I cycle a bit, climb a few Munros and coach youth football.