What’s your role at Federated Hermes?
I’ve been at Federated Hermes for 10 years as an analyst and portfolio manager. Currently I’m a portfolio manager on two equity strategies here at Federated Hermes. I’m the lead manager on our Sustainable Global Equity Fund and co-manager on the Impact Opportunities Equity Fund.
How did you get started in your career?
I started my career on the graduate programme at Scottish Widows Investment Partnership (SWIP) where I initially analysed US equities. During my time there, I also enjoyed spells covering Japanese and UK equities. Those formative years were instrumental in developing my investment approach and in particular the experience of 2007-09, during the Global Financial Crisis (GFC), which really instilled in me the importance of portfolio construction, diversification, and risk.
What do you enjoy most about your current role?
There’s a lot I enjoy about my role, but perhaps I’ll highlight two things. Firstly, the variety is hard to beat. Whether that stems from different investment themes, or technological progress, or macro shifts, or just individual stocks. There is always new information to process, which influences the stocks we own and in what size. Secondly, as an investor focused on impact and sustainability, I’m fortunate to see close-up the real-world progress that these companies are driving. From innovation in energy efficiency, to ground-breaking medical devices and new drug discovery, the pace of change is incredible and there is cause for optimism despite the challenges.
How would you characterise your style as an investor?
In the portfolios we have a quality bias, and that has been consistent. At the same time, we have a relatively diversified portfolio, and over the cycle those exposures will change. So, I would describe my style as pragmatic. Ultimately, every investment should be considered in the context of the price you are paying. So, whether the stock is cheap or expensive, whether it is value or growth, it’s important to avoid an overly-prescriptive approach to investments. We also recognise that the size of the investment opportunity varies across the cycle, and we need to manage risk to ensure we’ve got dry powder for when that opportunity is largest.
When you're considering making an investment, what key metrics or attributes do you look for the most?
The metrics I look for when considering making an investment vary according to theme, stock, geography and so on, but one key attribute is competitive advantage. We use frameworks like Porter’s 5 Forces to evaluate this. We also consult a whole variety of information sources; we’ll speak to competitors, industry experts, brokers, and the companies themselves to understand the magnitude and durability of that competitive advantage.
As an investor focused on impact and sustainability, I’m fortunate to see close-up the real-world progress that these companies are driving.
Same question as above but for exits from the portfolio: what would trigger a sale or an exit of a holding?
It’s a good question and as important an element of the investment process as for buying. We consider what the likely triggers may be for any sale prior to the initial purchase, and update this during the holding period. This is a pre-mortem exercise. In other words, forecasting what might go wrong or why the investment might deviate from our thesis. By identifying these risks at the outset, we are more likely to sell in a timely manner if that scenario unfolds. It helps us to remain objective and overcome any ownership bias or endowment effect.
What are the strengths of the Sustainable Global Equity team?
Above all else, I think our strength lies in a healthy team dynamic. We enjoy what we do, we’re curious, we love discussing ideas, and we have a flat structure where everyone’s views are heard. When we were building out the team, we took a lot of time to ensure we were recruiting individuals with different experiences and perspectives, in order to achieve cognitive diversity and avoid an echo chamber environment when discussing investments. In terms of portfolio management, I’m lucky to be supported by both Henry Biddle and Ingrid Kukuljan, and between us we have very complementary experiences across regions and sectors.
Given the current market and macroeconomic backdrop, how should investors position themselves in the coming months?
In the short term we expect macro considerations to remain the primary driver. Most notably, inflation trends, central bank policy and the consequence of tightening on the broader economy. Given all the macro factors at play, we advocate for diversification; both sector and factor exposures. We also expect greater dispersion in performance at a stock level and that should favour active managers. Over the medium and longer term we see a lot of potential in themes like energy efficiency due to a combination of high prices and the re-prioritisation of energy security.
What's special about sustainable investing? Why should investors consider adding an allocation to their portfolios?
In short, many of the biggest investment opportunities in the market today relate to sustainability. Consumer spending habits are shifting, the regulatory backdrop has intensified, and government stimulus is increasingly directed towards green initiatives. One only needs to look at the auto industry – the seismic shifts in the industry away from internal combustion engines to electric – for an example of this. There is both demand pull from consumers as well as regulatory push, and the lure of incentives. As a lens on the market, therefore, we believe a considered sustainable investing approach can offer investors an attractive risk-reward.
What are your interests outside of work?
I try to keep active, which includes playing a few sports (badly!) and commuting to work on my bike. I’m also a music fan, so I try to get to a few gigs and am looking forward to seeing Blur & Pulp play in the UK this Summer.