In this series of short profiles, we ask leading fund managers to defend their investment strategies, reveal their views on cryptocurrency, and tell us what they'd never buy.
This time our interviewee is Virginia Nordback, Portfolio Manager at Man GLG, where she manages the Morningstar 3-star rated Man GLG Pan-European Equity Growth fund and the 5-globe rated Man GLG RI Global Sustainable Growth fund.
Which Sector Shows The Biggest Promise in 2022?
I’m not a sector picker, but a stock picker. For me and my team, sector allocation is an outcome of our fundamental stock picking.
What's The Biggest Economic Risk Today?
In my view, inflation. It’s an ongoing risk, which may force central banks around the world into taking severe mitigatory action that ultimately raises the prospect of stagflation or a recession.
Inflation was already high going into the year, and the Russian invasion of Ukraine and the resulting sanctions are further disrupting supply chains and leading to higher energy prices. All this has the potential to hurt consumer spending appetite and dampen corporate economic confidence - putting pressure on economic growth. I believe that general earnings growth will be more difficult to come by in the coming quarters as companies grapple with fading volumes, less support from operating leverage, and inflationary cost pressures, resulting in margin compression.
Describe Your Investment Strategy
We run a concentrated and long-term oriented global portfolio. I’m focused on identifying the strongest companies in our investable universe. Strength is defined by a set of key attributes that, if present, should confer companies with the staying power and ability to outperform in the long-term. Characteristics that I look for in our investments include competitive leadership, with products that are differentiated - that gives companies the ability to raise prices without losing market share.
Secondly, I look for companies that enjoy tailwinds from structural trends and have certain levers they can pull to maintain control of their growth opportunities. Thirdly, they must have strong profitability and solid balance sheets. This means they have in my view the staying power to weather even uncertain economic environments. Finally, I view good sustainable practices as a pre-requisite for staying power.
Which Famous Investor Do You Admire?
A business professional in the wider sense: Andre Agassi, and how he overcame difficulties and setbacks. There’s one passage in his autobiography which describes how at the end of a training session, on the way home, he asked to stop the car, jumped out and ran the remainder because he felt that he hadn’t given it his all during practice. I find that inspiring - it reminds me that success has to come from within.
Name Your Favourite "Forever Stock"
ASML, a leading equipment supplier to the semiconductor industry. It is a company that, in my view, has made itself an indispensable component of technological advancement. It has a dominant market position, especially in the high-performance spectrum of chips, and I can’t currently see an alternative technology that could replace it at scale.
There are also substantial barriers of entry into this market, as ASML has spent more than a decade (and billions of euros in investment) on its pioneering EUV (Extreme Ultraviolet) lithography technology. As a result, it enjoys a collaborative relationship with its customers – meaning it has strong revenue visibility and a leading market position that’s also reflected in its strong margins.
What Would You Never Invest In?
My investment team avoids the bank and energy sectors because in my view they are too dependent on external factors and the macro environment. We like companies that can chart their own growth stories without being a hostage to circumstance.
Growth or Value?
Growth all the way! Value is about exploiting a one-time correction in valuation, a one-off mean reversion. Growth is about building something with a long-term vision. We can be invested over many years and enjoy the improving economics as companies fulfil their potential.
House or Pension?
House. It is tangible, in my control, I can even make changes to it to adapt to my needs. I can live in it or rent it out. As an investment, rents are also inflation adjusted, which is important in the current environment.
What Are Your Thoughts on Crypto?
Crypto does not fall within my investment universe and isn’t an asset class I’ve spent much time looking into, so I’ll leave comments on this to others.
What Can be Done to Increase Diversity in Fund Management?
We need to increase diversity at the earliest stages of the employment ladder. This also relies upon changing the perception of the industry, so people see it as an inclusive and attractive career option regardless of their background. We’ve made progress in recent years, but there is clearly more that needs to be done.
Have You Ever Engaged With a Company and Been Particularly Proud (or Disappointed) in the Outcome?
We have held several C-suite level discussions with Delivery Hero, a food delivery business, encouraging the company to adopt sustainable packaging. Plastic containers are not only terrible for the environment, but I believe customers are more inclined to use a company if they can do it with a clear conscience. Delivery Hero has since started to make progress in this space by adopting a sustainable packaging programme with set targets. I take great pride in us using our platform as an investor to help bring about targeted, positive change in the companies we back – that’s what active fund management is all about.
What's The Best Bit of Advice You’ve Ever Been Given?
Stay true to what you do – and don’t get distracted. Having a clear strategy and sticking to it is key to longevity.
What Would You Be if You Weren’t a Fund Manager?
I like to grow things and the positive energy that comes from growing things. That might be building businesses, investing in early-stage companies, or applying the idea of growth to a different environment: gardening. So, maybe a garden designer?
