For the latest Pub Club, I meet Kasim Zafar, portfolio manager at the boutique London wealth manager EQ Investors, writes Ted Monroe. We meet at The Hydrant, a pub that stands only a few yards from Monument and whose name and interior décor is a nod to the Great Fire of London in 1666, which began in nearby Pudding Lane.
Three and a half centuries on, surrounded by ‘hydrant’ beer taps, a fire hose handrail and other reassuring safety paraphernalia, we are tucked into a booth and comfortably ordering food and ales. The traumas of Pudding Lane seem quite distant.
I ask Zafar how he got started in the industry. ‘I remember being interviewed for my first job by a veteran fund manager, who asked if I was intimidated by the fact that I’d be working with millionaires,’ he says. ‘I replied that the excitement lay in compounding that up to multimillionaires. I got the job offer the next day.’
Today, in EQ Investors Zafar has found a company that has harnessed his ambitions.
‘Here at EQ our ethos is to be the best, not the biggest,’ he says. ‘We pride ourselves on placing the interests of clients ahead of all other considerations, rather than simply targeting profits or what’s economical for the business. Our approach is much more holistic than that.’
In addition to his other duties as co-chair of the fund selection committee and portfolio manager for the company’s absolute return, cautious, adventurous and high octane portfolios, Zafar is also heavily involved in impact investing at EQ. It is no surprise that as my burger and chips arrive, he has opted for something greener.
Zafar talks me through how he began integrating impact solutions at EQ. ‘My colleague, Damien [Lardoux], and I began a project that took around nine months, where we applied our understanding of impact investing to the sustainable and responsible investing (SRI) spaces,’ he explains.
‘We devised a rigorous evaluation process to assess how "impactful" fund managers were being with the investment process they were applying.’
He adds: ‘For every fund manager, we created a matrix of SRI/sustainability criteria and the method by which managers dealt with them, such as negative screening, positive screening and everything in between. The idea was to build up an overall picture of the space using this scoring method. It was pleasing to then be able to see the gradation between "light and dark green", to which it is often referred. After that, we could see some funds were ethical but performance was bad, so there needed to be a marriage between good performance and ethical investments.’
As the meal comes to a close, we touch briefly on investment themes. I ask Zafar what industries are currently piquing his interest.
‘We like technology,’ he says. ‘When you look around, much of the hardware story has been done. We all have smartphones and tablets; mobile computing is taken for granted, so largely, we are all now connected. There are however, still significant developments ongoing, such as cloud storage, and no doubt there will be occasional infrastructure improvements, but there are still huge growth opportunities from connected devices.’
For example? ‘I can now control my central heating and unlock my car using my smartphone, so where this will all lead to is very exciting. Potentially even more exciting is the software side of technology.
‘The Millennial generation, which is (or soon will be) the biggest consumer group on the planet, is different to the generation before. There is less emphasis on ownership and greater freedom enjoyed with a "pay as you go platform". Services like streaming music, movies and other subscription-based content providers now have the hardware infrastructure available through which to deliver content. We see good growth opportunities here.’
Finally, I ask Zafar about EQ’s macroeconomic outlook. Will a Chinese bonfire spread to affect the global economy as some commentators have cautioned? Or are we merely in the frying pan, not yet near the fire?
‘At a headline level, we see the main drivers of markets recently having been China and oil,’ he says.
‘We are less concerned about a hard landing in China than most seem to have been. We have done some extensive research into the country and believe that while the road will be bumpy, the transition from an industrial powerhouse to a consumer led economy is well under way,’ he adds. ‘Consequently, we believe there are going to be a number of winners and losers, not just in Asia but across the globe as we adjust away from China’s insatiable demand for raw materials over the last decade or more.’