Fund manager's comment/Robert Burdett
Our team has now been at Credit Suisse for two months, during which time we have been researching and putting together our portfolios for the recent launch of our business.
Having received over 220 questionnaires, we carried out over 100 one-to-one meetings or conference calls during this time, focusing on a combination of managers we know well and those passing specific performance filters.
With no live portfolios to manage, we have been able to concentrate solely on research and it has been both interesting and rewarding to see so many managers in such a short period of time. So what are the observations during this intensive research?
At an industry level change continues at an ever more rapid rate. A quarter of all asset management businesses based in the UK and Europe experienced some kind of corporate activity during 2000.
This can cause displacement among fund managers and analyst teams, and so it is of little surprise to see that almost a quarter of all UK authorised funds experienced a change in manager in 2000.
This change reflects a trend towards two types of organisation. First, global giants seeking to dominate by resources, generally separating analyst and fund manager roles with the aim of employing specialists in each discipline. Second, so-called investment boutiques are becoming more common, often offering hedge funds as well as long-only funds. These companies tend to offer an investment style that seeks absolute returns rather than relative to an index.
The interests of the investor and fund manager are perhaps more closely aligned. It is not only the bonus of the manager that is tied to the fund's performance, but often salary, general wealth, pension and reputation that rests on the performance record of the boutique fund.
In the middle ground there are many groups deciding what to do in this new era.
Talking to so many managers, dominant investment themes were absent. Rallies are expected to be short-lived and sold into and collapses seem to find floors. Poor corporate news is being taken less badly by the market however, and many of the managers we spoke to expect the next year or so to be the true opportunity for the nimble stock picker to dominate the performance charts.
After the recent domination of the value manager, following the growth style's rise and fall, and the era of the blue-chip manager before that, going forward nimbleness and experience are expected to be important.
Over the coming months, we will see how effective the interest rate cuts fare as medicine for the economies of the world and news will undoubtedly be mixed. However, the skilled manager should be able to perform well in such a trading market.
• Interest rate have been cut.
• Stockpicking opportunities.
• Boutique managers eye absolute returns.
What made financial headlines over the weekend?
Compared to 6% of 55-64 years olds
Sam Gold and Doug Abbott to take reins
Bionic advice for private clients