Leading fund selectors Mussie Kidane and Pierre Bonart have said communication has never been more crucial in order for fund managers to stand out from the crowd.
Speaking during a panel session at trade body ALFI’s 2017 conference in Luxembourg, Kidane, who is head of fund selection at Pictet, said he is pushing to have more face-to-face meetings.
This is while Bonart, who is head of long-only management at Edmond de Rothschild AM, wants managers to get their ideas across without slipping into sales patter or clichés.
Kidane said: ‘We are in a trust business, clients trust us with their life savings and it’s important to really know the people we are handling. I have to see the fund managers face to face and ask myself if I would give my own money to them - if there is any doubt then that’s a no go for me.’
Bonart said fund managers need to have spark and a passion if they want selectors to take them seriously. ‘People are good at doing maths but bad at explaining ideas. Sometimes they are bad marketers and don’t explain their ideas well.
‘When the process is too polished we feel it and it’s boring. We need to feel the commitment and the energy, it’s not the only criteria but we need to feel it, if I don’t feel something I won’t trust them.’
From a transparency standpoint, Kidane said the asset management industry improved since the financial crisis but more work is needed.
‘I have seen a tremendous evolution, and what happened in 2008 was also a big catalyst for that. We are not in the business of trading funds,’ he said.
‘We try to find partners we can invest with and then stick to them. The oldest fund we have has been there for 16 years, which was there before I started at the bank, as we like to stick with investments for the long term.’
Adding to this, Bonart said access to information makes the selection process a lot easier. ‘Of course, we expect to have communication, as time and information are very costly. It takes at least a day to understand what a team are doing in detail.
‘Sometimes their communication skills are poor and their response to due diligences questions are also poor. But they could be brilliant on the asset management side, so we do differentiate in some cases.’
Bonart also said if there is one lesson he has learned during his career it’s that you cannot be romanced by an individual fund manager or team. ‘You can’t fall in love with the asset managers, there will obviously be a human bias there, but there always has to be a focus on what could go wrong.’