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 week our interviewee is Tim Levene, CEO of the Morningstar 5-star rated UK-listed, fintech-focused investment fund Augmentum Fintech (AUGM).
Which Sector Shows the Biggest Promise in 2022?
Of course, I am talking my own book but the structural opportunity for the fintech sector remains significant; with fintech revenue penetration of the global financial services sector in single digits, there is huge headroom for further disruption over the coming year and beyond.
What's the Biggest Economic Risk Today?
Geopolitical instability remains the single biggest risk where we have felt the inflationary impact over recent months. Investors like as much certainty as possible, even if the outlook is not what we would ideally want. We can all adapt our strategy if we know the cards that have been dealt, but when someone keeps changing the decks, that is when the job becomes ever harder.
Describe Your Investment Strategy
Augmentum is the UK’s only publicly listed fintech fund. We aim to generate capital growth over the long term through investment in a diversified portfolio of fast growing, high potential private fintech businesses based predominantly in Europe. We seek exposure to early-stage businesses that have the potential to be category leaders, have strong underlying economics and could become multi billion pound businesses. They should be delivering truly disruptive propositions in the banking, insurance, wealth and asset management sectors as well as those that provide services to underpin the financial services sector
Which Famous Investor Do You Admire?
Any investor that can consistently deliver above average returns for their particular asset class needs to be respected. In the venture capital world, there are a few superstars who have not only delivered incredible returns consistently but are also fundamentally “good people” too. The likes of Bill Gurley (Benchmark Capital), Danny Rimer (Index Ventures) Nigel Morris (QED Investors) and Josh Hannah all come to mind.
Name Your Favourite "Forever Stock"
Alongside owning a sizeable position in Augmentum, as a private markets tech investor, much of my capital is tied up in private companies. Nevertheless, I am always looking at emerging tech companies that list and try to buy them before they hit the hype cycle. The challenge with companies staying private for longer, is the valuation at which they list is a whole lot higher than 10+ years ago. This makes it much harder to find that 10x+ bagger we all aspire for. But I’ve been a holder of Amazon since 2008 and despite trading in and out will always hold a healthy amount.
What Would You Never Invest In?
We are in the business of taking risk, and sometimes need to take a contrarian view to find that outsized return. However, I am incredibly aware of avoiding fads - there is no shortage of FOMO in the venture industry and it’s my job to ensure the team remain objective, disciplined with a high bar around our investments, investing in companies with substance and transformative potential, rather than just sizzle. We have invested in less 0.3% of all the investment opportunities we have assessed in recent years.
Growth or Value?
Growth. However, we are living in a market where growth stocks can also represent some compelling value. With discounts at 30%+ for growth focus investment trusts such as Augmentum, there is a strong case for investors underweight in growth to look to selectively take advantage of the pricing disconnect.
House or Pension?
House. If I do my job properly then I should not need to rely on a pension to secure my financial future.
Crypto: Brilliant or Bad?
Potentially brilliant but yet to proven at scale across multiple use cases. It is our job to stay ahead of the curve on technologies with transformative potential in the financial services sector. We believe there are a number of blockchain applications that hold promise across trading, digital currencies and payments.
What Can be Done to Improve Diversity in Fund Management?
As an industry, Venture Capital and Private Equity has made great strides in recent years in improving its diversity profile but there is still a huge amount to do. It is an industry where we are seeing a new generation of diverse young talent develop in real numbers, but it will take another 5-10 years for the impact to be felt at the senior level. We also have in our industry several non-profit organisations such as Diversity.vc focused on making our industry more diverse and inclusive.
Have you Ever Engaged with a Company and Been Particularly Proud (or Disappointed) in the Outcome?
I invested in interactive investor in 2015 when it is fair to say that most in the VC community regarded ii as a “digital dinosaur” which had been around for a while but had failed to get to true scale. It was a contrarian investment, but it was clear that there was an opportunity for a lower cost, digital-first challenger to compete head on with Hargreaves Lansdown. We bought 10% of the company for £2m and over a period of seven years the management team did an extraordinary job to grow it both organically and through acquisition. The business was sold to Abrdn in 2022 for £1.5bn.
What’s the Best Advice You’ve Ever Been Given?
“The biggest risk of all is not taking one.”
What Would You be if You Weren’t a Fund Manager?
I’ve been an entrepreneur since 1998. Before starting Augmentum I was involved in founding a number of companies, including Flutter.com (which merged with Betfair in 2001) and juice bar chain Crussh. I love helping to build businesses and working with talented entrepreneurs. It makes the job I do hard to beat.
