Did you know that the internet was only the 14th most important invention of the 21st century, according to scientists? The top of that list is the iPod, for revolutionising the way we listen to music—light years ahead of the Walkman. Where did I stumble on this nugget of information? At the latest webinar in the Best Advice: Closed-end Fund Forum series. Listen to the related webinar by clicking ‘Play’ below this article.
I was joined by Stephen Macklow-Smith, manager of JPMorgan European Investment Trust (JETG) since 1997, and Brian O’Neill, manager of Henderson Global Trust (HGL) since 1983. Between the two of them, they bring some 70 years’ investing experience, making them excellent panellists for our discussion.
The discussion centred on why it is that longevity is an advantage as a fund manager. O’Neill was quick to point out that experiencing both a bull and bear market is a definite plus. Sounds obvious, right? But it’s about more than just being long in the tooth…
We talked about why there is a higher average tenure among managers of investment trusts than open-ended funds. I was interested to hear O’Neill deliberate on some technical reasons for this; Macklow-Smith agreed but also cited the close relationship that a fund manager has with investors in an investment trust, and how much this helps through harder times, prompting better investor loyalty.
Macklow-Smith believes that, while markets change, the way investors react is very similar throughout time. Indeed, a number of investment processes include a behavioural finance element for that very reason. So we then talked about how investment processes need to adapt to changing market conditions and when it’s right to adapt.
We discussed how these managers’ experience helped instil a greater sense of calm in highly volatile markets, and having the confidence to stand out from the crowd. We also touched on the importance of not becoming anchored in one’s beliefs over a particular stock, or sector or market, a factor which longevity of experience can bring.
It was a lively discussion, full of other little gems of knowledge. We even learned why it is that O’Neill doesn’t hold Warren Buffet in high regard as a great investor.