"I'm looking for managers who add value and who are doing something different". Private bank MeesPierson recently launched its first fund of funds. Angele Spiteri Paris talks to investment manager Jason Robilliard to find out more about his approach to manager selection...
Wealth management, says Jason Robilliard, is about making big calls quickly and it can take courage to hold the responsibility for people’s financial wellbeing.
Robilliard is an investment manager stationed in Guernsey at MeesPierson, which is a Netherlands-based private bank for high net worth individuals.
He’s made a few of these big calls in his career and managed to dodge a bullet or two.
Robilliard joined MeesPierson Asset Management, the investment management arm of the bank, in 2006 and now runs the bank’s first multi-asset fund – the Diversified Opportunities Fund – launched in April this year.
The fund was launched off the back of success in the bank’s discretionary management ability – a “portfolio of funds management” service – which has seen three years of solid returns since its launch.
For Robilliard, one of the most important aspects of his job is building a strong relationship with fund managers. It is thanks to these relationships that he can afford to make the big calls he speaks about.
“For example, having built up a strong rapport with a particular property fund manager, I was able to get a sense that things were not looking good in 2007 and this allowed me to extricate myself from the commercial property market before it caved in,” says Robilliard.
Other sectors he got out of before disaster struck were government bonds and emerging market debt, he says. But Robilliard is still a big believer in the emerging markets story. As a proof of this he has direct exposure to Russia and China and is currently looking at Brazil as a commodity play.
He is also considering investing in gold and potentially mining stocks as well.
“It’s about trying to keep an eye on everything – new manager capabilities and opportunities. And it’s about making the most of these interesting opportunities without getting too complicated. At the end of the day, you need to be able to explain your holdings to the client with relative ease,” he says.
Some of these new opportunities include thematic plays like forestry and water and direct energy exposure.
At the end of the day, wealth management is about the clients, and in Robilliard’s case, it seems his clients are pretty pleased and he intends to keep them that way.
“I’ve been pleased with the reaction from clients. They lost around 5-10% in 2008 but nowhere near the 40-50% experienced by the markets,” he says. Now, as a result of the tumult experienced in the last few years, Robilliard says clients are looking for a more smooth return profile, which is why he needs to keep trying to preempt the market.
“We’re trying to minismise downside risk,” he says. “As a result of the crisis I am more focused on real returns and on not losing large amounts of money when markets are bad. I’m looking to build protection into the portfolio.” Robilliard is not keen to use the term “absolute return” because he feels it’s too broad a categorisation.
The way the fund is set up allows Robilliard to lock horns with his colleague and assistant investment manager on the fund, Lai Tang, and argue the case for active management.
“It’s about the balance between the active and passive portions of the portfolio. I would say this will be an ongoing debate between me and Lai, who takes care of the ETFs [exchange-traded funds] in the fund. When looking at a new asset class or sector we will each make our arguments for our investment style,” he says. And it seems that, at least for the moment, the target markets in the portfolio support Robilliard and active management.
He says: “Of our 50% equity exposure, only 15% is passive. The rest is active and I don’t see that ratio going up much higher than that. We tend to go passive in the large, efficient markets where it’s difficult to add value using active management.
“In the more peripheral areas of investment, fund managers can add more value. Therefore we use a more active style in these areas because there is a better chance of an active manager outperforming the market.”
When reviewing and choosing active managers, Robilliard says the last three years acted as a good stress test for most investment managers.
These years have been quite a ride – with the massive drop in 2008, after the relatively stable 2007 and then the rally last year.
Robilliard says: “I don’t think we’ll see such extremes in performance for a while yet and so it is interesting and useful to see how active managers performed over this period of time.” He says he’ll look at a manager’s volatility over the last three years, particularly how the manager performed through 2008, the toughest time for performance.
When considering funds and managers for both the MeesPierson fund and for his segregated accounts, Robilliard says the most important feature a manager must have is that he or she must actively manage his or her fund.
He says: “I’m looking for managers who add value and who are doing something different, not who just track an index.
“Graham French at M&G, for example, has a very free approach to investment and has strong views which he puts into practice [French manages the M&G Global Basics Fund]. I like M&G overall because their managers are given a lot of freedom.”
But one must not confuse fund manager freedom with laxness. The risk controls Robilliard has in place are rigourous, he says, and managers are constantly reviewed.
“I am always making sure that managers can react to what’s happening in the market,” he says.
However, Robilliard makes it a point to give managers time. “I give them around 12-18 months to perform and show what they can do,” he says.
Of all the decisions he’s made for his MeesPierson clients, Robilliard says he only had a couple of holdings that went through bad performance.
“One of my holdings performed badly because the manager left. The other was a long/short UK fund that did well in 2008 but didn’t perform in 2009. It didn’t react and I felt it wasn’t prepared to adjust to the prevailing market conditions, which was the reason I had bought it.”
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