This is the first blog. I hope it is the first of many to come, as I embark upon a new chapter in my career. Previous chapters in my work have been framed by different employers, from consulting to asset management. As a trainee barrister I was taught of the master/servant relationship of employment law; a description of the relationship I often thought archaic but certainly one that captured a degree of constraint around what one could or could not say when engaging in the work-based environment. Not that I was bursting to speak out on particularly controversial topics, but nonetheless being an employee meant the topic of discussion had at least to be linked to the relevance of one’s position. As an independent, freelance consultant I am free of such strictures and it is my hope that I can bring through these blogs some of my original thinking on the investment world of today.
The world of investing is a fascinating place. When I first started out over 25 years ago and had my initial introductions to the different characters in the investment system, I wondered how long it would take me to understand everything and speak with complete confidence about the workings of the financial ecosystem. In those early days I met individuals displaying such confidence and insight to their respective field, I always thought there must be an absolute truth to the “dos” and “do nots” of investing. It took quite a few years before I realised that there are very few absolutes, notwithstanding no lack of shortage of individuals with such strong conviction in their views. I believe these two elements are key to what keeps the industry interesting to me: an ever-evolving environment which requires a constant learning to keep up and the colour of the characters in the business.
Early in my working years, I recall entering a CFA competition which asked members to write a submission on the question “is investing and art or science?”. I remember being pleased with the article I penned but suffice to say I didn’t win! It would be interesting to revisit that article today to reflect on my views at the time. If I did have conviction at the time and was swayed one way or the other – art or science – the intervening years in the industry and experiences of different investing techniques and style of management, have diminished any belief that the question can be answered through a binary view. That said, the years between my starting out and where I find myself today have brought forth a new range of investing techniques and with it an expanded lexicon. Pick up a magazine on pension fund investing today and you’ll be met with a plethora of three letter acronyms – LDI, CDI, ILS, ESG, to name but a few. Add into the mix a new focus on factor-based investing underpinned by the psychological behaviours of investors, algorithmic trading or machine learning and it is clear that whilst the principles of investing two decades ago may still be embedded and relevant, there is still lots to learn.
Perhaps the single most significant development in recent years is the recognition of the impact investment has on society and whilst this has been reflected in many different names like SRI, ESG or sustainable investing, at the heart of the debate is the recognition that investors have an obligation to use capital wisely and as owners of companies, positively influence the behaviours of those entities via engagement and use of votes at AGMs. Coupled with a heightened focus on the governance structures of institutional owners, there seems to be an ever-growing professionalism about how money is managed and to what purposes it is put to work.
In coming blogs I hope to explore some of the themes I have touched on here but in greater depth. Although I have always felt the investing industry to feel small, it is diverse with lots of different elements which I look forward to discussing and analysing here.
As I mentioned at the start, this is my first, tentative step into the world of blogging and I have no doubt I am make many rooky errors. So I welcome all feedback – positive and negative and would love to hear from you.
