The White Horse in the City’s Exchange Square is slap bang in the right location for thirsty office workers and Pub Clubbers alike, writes Eleanor Mahmoud. Situated at the bottom of a collection of high-rise modern buildings, it is light and airy.
Housed in one of those nearby offices is Matthew Stanesby, investment director at Close Brothers Asset Management. He jokes that this is not in fact his local pub because his younger colleagues don’t invite him out on their raucous Friday nights. Today it’s quite the opposite however – a sleepy Monday lunchtime, where the pub is quiet and the weather outside is dull.
Stanesby works in a team of five in a pure research capacity. He has been at Close Brothers for 11 years, but having spent nine years each at both Mercer Investments and Aon Hewitt previously, Stanesby brings a distinctively institutional mindset to the team.
‘The biggest difference between working with institutional pension fund clients and private clients is the timescale, both in terms of investment horizon and speed of decision making,’ he says, before explaining that in consulting you often have more time to make decisions.
‘Private clients can be more tactical with their investment decisions.’
After a bizarre encounter with the waiting staff, who tried to explain what the dish ‘Rumbledethumps’ was, we cleared our way through the confusion and successfully placed our orders. (Hint: the staff were none the wiser until the kitchen told them it was simply the name of the vegetarian gratin dish).
Stanesby’s team generates a core list of around 130 funds, within which there is fairly low turnover.
‘You have to remember that with a typical holding period of three years plus, it’s important to ride out short-term noise,’ he explains. ‘A good fund is one that performs as you would expect, not necessarily one that performs well all of the time.’
After some quick maths, Stanesby estimates the team held over 500 meetings with fund managers last year. I utilise my equally quick math skills and comment that averages more than 10 a week, to which
‘It’s a lot, but essentially for new ideas they have to convince us what’s different about their fund.’
We tuck into our lunch and despite the earlier confusion we receive the right dishes – fishcakes with a side of chunky chips for Stanesby and classic winter warmer sausage cassoulet and mash for myself.
Stanesby explains that Close Brothers Asset Management prides itself on the blending of passives in portfolios and the use of boutique fund houses – he refers to the asset allocation changes as ‘evolutionary not revolutionary’.
With this in mind, I want to ascertain what areas he is interested in this year.
‘Within fixed income, we have been looking further afield to find areas that we actually want to invest in. At the moment this includes global credit funds, asset backed funds and emerging market debt.’
He continues: ‘We’re also very much interested in the alternatives space and finding non-correlated assets. The multi-asset absolute return sector has picked up recently and so has activity in the style premia space – areas which used to be more institutional.’
As long as a manager can satisfy Stanesby‘s desire to know what is different about their fund, he keeps an open-minded.
‘I’ve been contacted by quite a few non-UK fund groups trying to break into the UK. I think they use my institutional background as a link and it’s a great source of new ideas for us.
Glass half full:
‘Emerging markets. They are relatively cheap and in a far better place than they were in the 1990s and early 2000s. The economies are more robust and they are far less dollar sensitive.’
Glass half empty:
‘The withdrawal of quantitative easing – increased bond issuance with fewer buyers may prove troublesome.'