In this series of short profiles, we ask leading fund managers to defend their investment strategies, reveal the biggest risks to the bull market, tell us their unpopular investment opinions, discuss what they'd never buy, and recount the best piece of advice they’ve ever been given.
This week our interviewee is Nina Yu, co-portfolio manager of Seilern Europa, which has a Morningstar Medalist Rating of Gold.
Describe Your Investment Strategy
At Seilern, we have a particular way of investing that involves buying high quality businesses with sustainable growth and holding them for a long time. At the heart of this style is the principle that over time, earnings growth will drive share prices. With this in mind we are looking for companies that can grow their earnings at the highest rate possible, with the caveat that we want them to do this in a sustainable way. Although this strategy is very simple, it is not easy and we dedicate significant resources and time to researching these companies and to building concentrated funds that can stand the test of time.
What are the Biggest Investment Opportunities in 2024?
The judgement on the best investment opportunities will always tie up with one’s investment philosophy, strategy, and risk tolerance. Based on our long-term horizon and quality growth style, the biggest investment opportunities in 2024 are likely similar to the best ones for 2023 and 2022 and 2021, etc. We put a lot of effort into measuring investment opportunities over long periods, which makes accounting for these opportunities over a calendar year less relevant. In recent years, we have found that quality companies that have ridden secular trends such as digitalisation, artificial intelligence, or broadly technology, health and sustainability have tended to be good investment opportunities.
What are the Biggest Risks to the Current Bull Market?
As is often the case with the end of a bull market, the biggest risks are usually not the ones that are on everybody’s lips. I think Covid has also taught us something about unknown risks. Also, different investment styles will look at risk differently. To us, the biggest risk is a permanent loss of capital. So, our focus is much less on predicting what will happen, but on building resilient portfolios that have the best chance to weather all different storms. As my colleague Quentin said in one of his newsletters, our goal is to create “a fund for all seasons”.
Who is the Most Inspiring Person You've Worked With and Why?
I find most people I’ve worked with are inspiring in some way. Probably because having worked with lots of people with quite different background and cultures, from Beijing to Paris to London, you really see the same valuable human spirit everywhere, like the passion they have for what they do, the resilience they show in tough times, the courage to stand for what they believe in, and the kindness they extend to others. Sometimes it is as simple as the joy they share with those around them. These experiences have inspired and enriched my life.
What, if Any, Investments Would Fit Into the 'Buy and Hold Forever' Category?
I’d first modify the category to “buy and hold for long term”. Businesses that can fit in this category would be ones in which we can develop a certain amount of conviction in the sustainability and quality of its earnings growth. Typically, that means they have durable competitive advantages and benefit from secular trends.
What Would You Never Invest in?
As a quality growth investor, I would not invest in something that I deem not quality growth.
How Worried Should Active Managers Be About the Future?
I guess that a dynamic balance exists between the different management styles – active, passive or something in between. They cater to different investor demands in different circumstances. Probably more importantly, passive investing, despite being a sound strategy, is essentially a free rider. They largely rely on an efficient market driven by active participation. Without enough active managers, market efficiency will suffer, which will undoubtedly impact all investing styles.
At the end of day, nobody knows what the future holds. In investing, you confront that fact every single day. And that is also the fun of it! You learn to be thorough and to be prepared, but you also learn to embrace the uncertainty and worry less on things you have no control over.
What Unpopular Investment Opinions Do You Have?
We should think more, think more clearly, and speak less about our opinions.
Has Crypto's Resilience Surprised You? And Will We See a Crypto ETF in the UK?
It depends on what you mean by crypto. From a technological perspective, cryptography has existed for a long time. DLT (distributed ledger technology) along with the blockchain are relatively new technologies, but were still born more than a decade ago. They are great innovations, so I wouldn’t be surprised by the resilience and continuous development of the technology. They are still at early stages with many challenges to overcome. But what that means for cryptocurrencies and cryptocurrency ETF’s, I do not know. These types of investments fall squarely outside of our core philosophy.
Does Asset Management Have a Role in Promoting Social Mobility?
Social mobility is essential for the health and sustainability of society. The asset management industry is certainly no exception. Social mobility benefits the industry, because it creates a system where the most qualified and talented people, regardless of their background can contribute their talents to the industry.
Have you Ever Engaged With a Company and Been Particularly Pleased (or Disappointed) by the Outcome?
Yes. Researching a company is, to some extent, like figuring out a puzzle. Engaging with a company directly is sometimes a great way to help finding a missing piece. But a “pleasing” outcome, or a successful interaction, takes two sides. You need to ask good questions and be a good listener and the company also needs to be open and willing to engage. Occasionally, it can be disappointing when a company talks a lot without saying anything. But that too teaches you something.
What's the Best Bit of Advice You've Ever Been Given, Personal and Professional?
This may sound banal, but the one that has had the most practical impact is probably “have you tried turning it off and on again?”.
What Does Your Life Outside of Fund Management Look Like?
I’m very fortunate and grateful to have a loving family with two young kids. I wonder if children are nature’s most sacred gift? They are so energetic, full of life and joy. I very much enjoy creating and growing together with them.
