Solving Under Performance In Investment Teams
Advance Human Solutions today announced it will be offering a new program to asset managers Australia-wide to optimise performance in their investment teams and to improve their research and ratings outcomes.
“SUIT - Solving Underperformance in Investment Teams” is designed to elevate individual and or team investment performance, improve investment forecasting and enhance investment team culture.
Commenting on the launch, Advance Human Solutions Founder and Managing Director, Alexandra White says, “At the best of times, asset managers find themselves struggling to capture the full potential of investment markets and keep their investment teams aligned. This issue has only become more problematic since COVID-19 has disrupted global markets and patterns of work. Further, the instability in the market has only upped the ante on investment managers need to maintain investment team stability in the eyes of the ratings and research community. SUIT was devised as a timely external intervention to tackle this phenomena head-on".
White continues, “I have over 20 years in investment team recruitment in the Australian market working for both domestic and global asset managers. I have been matching analyst and portfolio management skills to unique investment mandates across a broad range of organisational cultures and I bring the aggregated learning from that experience to SUIT".
"As an external interventionist I am poised to identify and resolve the points of friction within an investment team and provide the focus and means to elevate performance. Often the problem is clear but the solution is not visible from within the organisation. It takes a fresh set of eyes and hands to define an impediment and build a response to it. Twenty years analysing investment talent and matching it to employment briefs means I have an established track record of harmonising teams to deliver optimum returns and provide great optics to the investor marketplace".
In a provocatively titled article, “Attention all fund managers, drop the act”. Mercer’s Global Head of Investment Research Deborah Clarke said, ‘My experience allows me to talk about stocks in more depth, and how managers think about their decisions. I also like to focus on their team dynamics. Those softer factors are really quite difficult to explore. A good researcher needs to be something of a psychologist, noting how the team interacts, what motivates them and how they think of themselves within their own firm.’ You generally get a feel for a manager and their approach within the first few minutes of meeting them but Clarke says digging deeper into their strategy and giving them the time, even when it seems like hard work, can often uncover unexpected information”. White says this article was the catalyst that inspired SUITs.
“This article makes a sharp point of the fact that the investment ratings process is forensic and rigorous and investment teams cannot simulate precision. Harmony and focus must exist in the investment team as an organic condition otherwise ’the act’ can be spotted a mile away. This is my sweet-spot, untangling the impediments, unbending the kinks, shifting fixed behaviours and vanquishing historical gripes. I’ve assisted many investment managers out of a state of learned helplessness having been sat 'on the dot' for long sluggish periods of underperformance for the sake of ’team stability’".
"An external force applied to this problem is far more effective than attempting to reconfigure the forces that created the paralysis in the first place.” says White.
Currently Morningstar assesses the key individuals making the investment decisions, as well as the composition of the investment team on the following criteria;
• Is there a clearly articulated investment philosophy and discipline
• Relative size and resources
• Experience levels and the mix and balance of skills within the overall team skillset
• The degree of team stability
• Team members familiarity and ability to articulate the promoted investment philosophy and strategies
• Key person risks
Similarly, Zenith applies the following;
• Does the investment team have sufficient resources to implement its stated investment process?
• What is the depth of experience and track record of the investment team?
• What qualifications does each individual hold?
• How are responsibilities split (stock, sector, mandate/portfolios, committee involvement etc) within the team?
• How many stocks does each analyst cover?
• Do portfolio managers also have stock responsibility?
• Is a succession plan in place and do any key personnel risk issues exist?
• Recent personnel changes and the reasons why?
• What is the frequency and nature of formal and informal meetings within the investment team?
• How are personnel remunerated?
• On the personnel front, Zenith is looking for a well resourced, highly credentialed investment team with a solid track record of value add.
• A spread of responsibility within the team should limit key person risk, whilst an appropriate remuneration structure should incentivise all members of the team.
Lonsec assess;
• Experience, team size, quality, stability, management of key person risk, qualifications, investment ‘culture’ and alignment of interests.
• Contact with both senior and junior members of the investment team.
Says White, “The SUIT process is equally detailed and explicit, it is a deep dive into decisioning, buy, hold, sells and their scale. I explore both the asset manager’s mandate potential, their existing market coverage, performance relative to benchmark and the potential returns available in their hunting grounds. This is not a ‘lite’ process, it is an investigative and responsive solution with the capacity to transform investment performance. SUITS process explores the full scope of the teams investment engagement and where required can explore roles specification, alignment, negotiation and intermediation, deleveraging key man risk, REM and retention.
When asked if there are managers out there who cannot be helped White is cautiously confident, ‘The thing that SUITs leverages very effectively is the will of individuals and collective teams to prevail, nobody wants to be identified with underperformance or face the brutality of survivorship, evolution is on our side’.
For more information, call Alexandra White on 0479 129 566
