Emma Wall: Hello, and welcome to Amsterdam. I'm Emma Wall and we're here at the Morningstar European Fund Manager of the Year Awards to reveal who the best three fund managers in Europe are.
Thorsten, congratulations on winning European Equity Fund Manager of the Year. It's been a very challenging time for European equities post the recession. What have been the main drivers of your performance?
Thorsten Paarman: I think what helped us lot is that we have a very broad investment universe, about 1,000 stocks we look at, and we take a lot of small bets in various stocks and we avoided the macro pitfalls that happened in 2014.
Wall: And where are you seeing, now that Europe, its fortunes have turned around, where are you seeing the greatest opportunities for investors growth?
Paarman: I think when you look at our portfolio you'll find quite a few opportunities in the cyclical area of the market. On the other hand, we favor some of the most stable defensive stocks as well. So it's a good balance and a good mix of individual companies that overall adds to a good performance potential.
Wall: And geographically if you had to pick just one stock market in Europe that you were most positive about, where would you choose?
Paarman: Again looking at it from a bottom-up perspective, it's Scandinavia at the moment.
Wall: And what about somewhere that you're perhaps avoiding because opportunities aren’t quite as rife?
Paarman: We have a lot of risks that we look at and we still feel that in the energy and the raw material sector, the risks are higher than the reward potential we've seen.
Wall: Thorsten, thank you very much.
Paarman: My pleasure. Thank you very much.
Wall: Wojciech, congratulations on winning Global Equity Fund Manager of the Year.
Wojciech Stanislawski: Thank you so much.
Wall: And what do you think have been the key drivers of your outperformance over the last couple of years?
Stanislawski: Well, it's clearly the earnings growth that we have been able to deliver in our portfolios.
Wall: And looking forward, where do you see the greatest opportunities globally for investors?
Stanislawski: Probably if you look at overall in the markets, there China is clearly a very interesting place to eventually put some money in. Certainly the European equities do represent certain opportunities and maybe for those who like a bit of risk, Japan, who knows.
Wall: And perhaps looking there where you are moving out of where you are crystalizing gains and sort of reducing exposure, where would they be? Be U.S. for example.
Stanislawski: U.S. is relatively tough market these days as it went up of course a lot over the last four or five years and the valuation are not that attractive any more. So this market is pretty difficult.
Wall: And how much do macro geopolitical risks influence your decision making. Or was it very much a bottom-up approach?
Stanislawski: It is clearly a bottom-up approach. We do not really look at macro.
Wall: Wojciech, thank you very much and congratulations.
Stanislawski: Thank you.
Wall: Xavier, congratulations on the award.
Xavier Baraton: Thank you. Thank you, Emma.
Wall: So the fixed income team has done incredibly well this year with two funds actually and they are running for this award. Why do you think that your fixed income team at HSBC has outperformed so well?
Baraton: Well, it was certainly a pleasure to have two nominees tonight and of course, it's always better to win. I think it reflects a spectacular year. It was a difficult year in fixed income, a lot of discrepancy across asset classes, segments, but also within each segment with some managers doing badly and some others succeeding to sell this choppy seas. I think it's the rigor of our process and the fact that around the winner, Philippe Igigabel for the Euro High Yield Fund, there is a team. So there is a lot of arms and pairs of hands helping in great research primarily.
Our fund is very bottom-up, active fundamental and also his colleagues contributing to various alpha sources. That’s really how we collectively gather all these alpha sources which over time lead us to generate very satisfying return and also risk-adjusted performance which is I think really the marker of what we try to achieve in the fixed income platform.
Wall: Of course, looking at 2015, there have been real game changers for fixed income in Europe, namely, finally getting some QE. Draghi doing exactly what it does take in order to boost the economies. How is that going to affect performance going forward? Where are you seeing the opportunities because of QE?
Baraton: I think more than ever portfolio managers will have to be nimble. The success will probably lie in adjusting positions, be very realistic about the valuations. I think across all these risky asset classes, high-yield EMD, it's not all clearly about beta management, it's really about alpha and issuer selection, be extremely selective. So it's not getting any easier.
Yields are low you know and the yields build the future return. So it's not necessarily a good omen. But at the same time, we think that there is room for alpha generation because of the volatility, because of the fact that issuers are very different and that’s really what our team is focused on.
Wall: Xavier, thank you very much.
Baraton: Thank you so much.
Wall: I'm Emma Wall for Morningstar. Thank you for watching.
