In almost every respect, a huge amount separates the City of the 21st century from post-Soviet Bulgaria. Linking the two is Milena Ivanova, who arrived from Eastern Europe in the early 1990s to begin her professional life in the UK on a Yorkshire fruit farm. She then steadily worked her way up the ranks of the financial sector, a career culminating in the launch of Monogram Capital alongside former Goldman Sachs colleague Paul Marson last year.
If her life story and career progression stand out in an industry still dominated by old-fashioned privilege, then that exceptionalism is reflected in the company’s business model. This largely breaks with a well-tested model of luxe exclusivity to put an egalitarian unitised fund at its centre.
While the company is offering segregated accounts for portfolios above £5 million, the Luxembourg-domiciled Sicav Monogram fund will remain the primary focus of the company’s lean and fat-free staff of five, which Ivanova says she will not need to add to until the company reaches around £1 billion in assets.
‘We wanted to have a very clean and simple business,’ she says of the entirely self-funded venture. ‘And independent – very independent. The more you add complexity, the more that can go wrong.
‘A lot of people I know questioned what we were doing. The majority of boutiques are obviously pitching themselves to ultra-high net worth [clients] but we were quite definite that we wanted as many people as possible to be able to access it, and that helps us stand out.
We really mean this – I am not just saying it – having a fund is extremely egalitarian, and is the only way we could do this properly.
‘Many clients are too small for segregated portfolios, and they need asset management too. We have an asymmetric risk profile focusing on downside limitation, which is as appropriate for Sipp assets as it is for charity mandates or for the very rich.
‘[It] is a quick and easy way to offer what we do. We are on a number of direct-to-client and IFA platforms, and have had it approved for many tax wrappers – Sipps, ISAs, offshore bonds. We have already had a large national IFA business add it to their buy-list and a number of large discretionary managers taking an interest.’
Ivanova and Marson – chief executive and chief investment officer respectively – worked together for many years at Goldman Sachs Private Wealth Management, where he was global chief investment officer outside the US.
She says both had reached a point in their careers where they were feeling a little ‘disillusioned’ and having ‘stayed in touch, on and off,’ seized the opportunity to do something new after Ivanova parted company from Signia Wealth, where she had been managing director, in 2013.
The launch of the business followed a year-long gestation during which ‘an awful lot of my friends
helped me out, even to the point of letting me borrow
their office space’.
‘[Between us] we have worked at every level of the industry from large to small to medium [sized companies] and we have seen the limitations of all of them, and felt we had the chance to build something how we wanted.’
The relative simplicity of the small business is an echo of the investment model the company has designed to underlie its portfolios, which draws on their time together at Goldman Sachs.
‘The way we manage money is very slow. We have a low turnover. A lot of boutiques are launched by people who have come out of banks and are essentially client managers, but we have been doing this for a long time.’
The house divides client portfolios into four 25% allocations, two of which target capital growth, one capital preservation and one income.
One growth strategy is divided between cash, US equities and emerging market equities while the second is weighted between cash, US equities and developed equities ex-US.
The defensive allocation weights between cash, investment grade bonds and gold, while income weights between cash, investment grade and high yield.
Asset class calls are informed by relative price momentum factors based on average market pricing over any given 12-month period, with some stylistic input allowing the managers to account for secondary factors, such as market cap.
Security selection is excluded as a source of alpha, with exposure taken via exchange traded funds and derivatives.
‘It’s not a black box and we do have a qualitative input, but it is a model, and it helps to take some of the emotion out of investment. There is an assumption that risk tolerance is stable when in fact it changes quite a lot depending on what is happening around you. When things are stressful, a hormone called cortisol is released, which makes people become more adverse to risk. If you have a model, it’s something that you can refer back to.’
Even during periods of intense volatility, the model output is extremely stable. During August’s four-year peak in the Vix, the model approached a sell US equity/move into cash signal, but never quite got there.
Over the nine months since launch, the model has recommended only one change, switching partially out of US equity and into developed equity early in the year. This gives a current 50% investment grade, 25% US equity, 25% developed equity breakdown.
‘We don’t believe anyone can forecast. We try to be more like a meteorologist. When we have a particular wind speed or air pressure, we can say there is a particular probability of an outcome.’
A life story as diverse as Ivanova’s would certainly seem to defy the usefulness of forecasting. Born in Soviet Bulgaria in the early 1970s, opportunities for exposure to Western culture were limited to nonexistent.
Always with an independent and entrepreneurial streak, she taught herself English in addition to the state-sanctioned French taught in schools. With the demise of the Soviet Union in her late teens, she jumped at the chance to work abroad when she discovered a UK work placement programme in the early 1990s.
‘It was really the first opportunity to come to the West – it wasn’t like there were opportunities to visit Germany or Canada, this really was all there was – so I came out for a summer job before I went to university. It was quite a brave thing to do, and I was leaving behind a pretty good life.’
Nonetheless, it kindled her taste for new experiences, and after returning at the end of the summer she managed to arrange a visa to take a private English language course the following year.
‘I wanted to continue my studies [in the UK] and after that was over I literally just opened the Yellow Pages and sent off my paperwork to potential colleges.
‘Overseas students back then were charged around £5,000 in tuition, which may as well have been £5 million to me then. I had nothing, so I was seeking sponsorship until a friend told me about the European Business School, which had a scholarship in English.
‘I had never used a computer at that point, so my boyfriend and now husband showed me how to use a word processor and I applied.
‘The scholarship was just for the fees so for several years my life was just work, work, work, study, study, study.
‘Once I graduated, the only people who would get you a working visa back then were the overseas banks. I thought I would have zero chance, but I managed to get an interview with Goldman and won a placement in asset management.’