When I started fund analysis it was still a relatively obscure discipline, but has since gained much deserved credo through the rise in governance and regulation.
Firstly, through the FSA’s Retail Distribution Review, which will shake-up how investment providers work with advisers and how advisers serve customers. Secondly, through ‘Treating Customers Fairly’, which sets out increased levels of responsibility for how funds are sold to investors and how they perform afterwards.
Why did you choose a career in Fund Analysis?
When I graduated from university I wasn’t anywhere near top of my class and at the time, as now, there were too many graduates for too few opportunities. I started out as a ‘temp’ for Scottish Widows, one of the biggest employers in Scotland.
Arguably you could say I fell into Finance but later discovered fund analysis in the financial adviser sector. Now, I am back at Scottish Widows (Lloyds) but this time things are very different.
What is a typical day like for you?
When I am setting up a new monitoring platform, it can be organised chaos to begin with. A monitoring platform is much like any multi-manager product, just a lot bigger. Instead of adding and subtracting funds through asset allocation, it’s all about ensuring the platform has the right balance of funds for our customers. It’s about diversification and creating a competitive proposition.
In monitoring, we track performance, risk, sales activity and other metrics for over 1,000 funds, and inform the business as necessary. There is so much to do from the cost-benefit of new systems, speaking to linked fund managers, answering day to day queries, identifying stakeholder needs; not to mention understanding the funds themselves. The sheer size of the current platform makes it quite a different challenge to those I’ve created before. Being able to adapt is a must.
As things settle down then good fund analysis is all about the framework – looking at the whole platform top-down. This starts with checking your quantitative screening and the overall shape of the platform by flagging key movements, preparing regular reports and engaging the business. The framework then supports the existing business, governance and proposition development. To be effective in monitoring any large platform means being disciplined and avoiding fire fighting at all costs.
Why is fund governance important?
Fund governance is all about understanding the way funds are set up and run. It’s about checking whether fund managers follow mandates correctly and perform in a manner expected. For example, how much risk are they taking, are there unusual investment patterns or significant changes in the fund composition or process? The objectives of mutual fund managers cannot be easily aligned to individual clients. Therefore, a huge element of trust is created between customers and providers and we need to monitor funds on behalf of our clients.
What do you enjoy most about your job?
I knew from my academic days that I was not really a ‘numbers’ person (I actually wanted to go to art college and become an artist). It’s my creative side that provides a different perspective when attributing data, developing methodology, solving problems or finding solutions.
Pragmatically speaking I try to understand the logic behind the metric more than the maths. It is early days but what I am currently enjoying is bringing innovative fund analysis into a traditional setting. What I enjoy the most is solving puzzles or complex queries – ‘root-cause analysis’.
What have you found to be most rewarding?
Thinking back I would say my favourite role was working for a small consultancy in my 20s, selecting funds and allocating assets, holistically, for clients. There was the huge responsibility of choosing the right funds and asset mix for the client, to work with the adviser to ensure needs and the right return-risk profile was met. However, there was also the huge satisfaction when you got it right.
I have learned so much since then but even now I look back and can say truthfully that the service we offered imbued many of the features being proposed today.
What would you like to achieve in the future?
My long-term aim hasn’t really changed since first analysing funds in 2000, I still want to run a multi-manager fund or consultancy one day and bring together what I’ve learned. My immediate ambition is to introduce a ‘game-changer’ into the fund platform space.
Academically, I hope to pass exams set by the Chartered Institute for Securities & Investment (CISI) and the Chartered Financial Analyst (CFA) professional bodies; and at 37 I still like to think I can achieve a doctorate one day. Lastly I try to support CISI, as an external specialist and member of the Scottish CISI committee, and hope to do more in the future. All this and hopefully to relocate to the North West coast of Scotland, for a loch-side view and perhaps a return to the adviser sector.
What are your interests outside of work?
I still like to paint; although I can’t remember the last time I did. In addition I love classic cars and I am still working on my old race car for some long overdue track time. I do genuinely enjoy fund analysis and I have a long running research paper covering investment behaviour and buying patterns, which I hope to publish soon.
Do you have any advice for anyone wanting to get into the industry?
A good fund analyst needs to have a broad range of skills:
- Investment management and economic understanding.
- Feel for the marketplace and customer trends.
- Be quantitatively proficient.
- Understand the human element in portfolio management.
- Have plenty of curiosity and a healthy dose of lateral thinking.
- Be objective, professional and ethical at all times.
Initially try out a range of research roles, while studying with a relevant body like the CISI or the CFA, find a fund analysis team and work your way up. Go the extra mile by learning both professionally and academically, logging continuous professional development through a recognised scheme. Lastly, if you are really interested in fund analysis then perhaps consider an easier path down south.