e-fundresearch: Which benchmark do you adhere to?
Knobloch: The fund’s benchmark is: MSCI Europe Small Cap index since January 1 2009. Before it was the HSBC European Small Cap index.
Sector and country weightings are solely the result of the fund management team’s careful and rigorous stock selection process according to a well-structured and in-depth bottom-up stock-picking approach.
e-fundresearch: Are you also responsible for other funds at the moment?
Knobloch: Yes, see below.
e-fundresearch: What is the total volume that you manage in all your funds?
Knobloch: The Small Cap team manages also 14 segregated mandates with AUM of EUR1,202m.
e-fundresearch: Regarding the performance: which performance did you achieve since the beginning of the year and in the years 2003-2008? Absolutely and relatively to the relevant benchmark?
Knobloch: As end of February 2009 the performance was -2.75 % (Benchmark -4.33%), outperformance +1.58%
e-fundresearch: How content are you with your own performance in the last years and this year?
Knobloch: We are quite happy with the alpha-generation of the fund since we took over the responsibility in July 2006. Certainly, we could have avoided some mistakes, but we generated this alpha without taking too much risk, i.e. no position of the portfolio exceeded 2% of the fund.
e-fundresearch: How are you able to deliver added value for your investors with your performance?
Knobloch: The core of the investment approach is to identify companies that are experiencing an acceleration in relative profit growth not yet fully recognised by the market. As such, we look for growth stocks at the right price and value stocks with a catalyst for change using a rigorous three-stage investment process within a proven analytical framework (Pictet’s G4).
e-fundresearch: How long have you been a fund manager already?
Knobloch: I took the responsibility of Portfolio management in 1993, when I moved to Pictet.
e-fundresearch: What were your biggest successes and your biggest disappointments in your career as fund manager?
Knobloch: My biggest success was my strong track record when I managed a German equity fund for Pictet from 1993 to 2000. Out of 7 years the fund had 5 years a strong outperformance and in the difficult year 2000 an outperformance of more then 10%. My biggest disappointment was the management of a global technology fund, where we made the mistake to invest in private-equity, which destroyed the performance of the fund in 2002.
e-fundresearch: What kind of capital market situation do we have at the moment? How do you act in this environment?
Knobloch: We live in a very interesting time, historical unique, with huge consequences on the equity market environment. I believe that the cost of capital will not any more be so cheap like it used to be the last 20 years. Additionally, most companies will not anymore see the high margins they used to generate during the last cycle. We need to get used to low returns on capital, on higher cost of capital and therefore on lower expected returns on equity investments.
e-fundresearch: What are the special challenges in this environment?
Knobloch: To withstand to invest in so called bombed-out stocks if they can not survive a long lasting depression. There are many value traps on the market.
e-fundresearch: What objectives do you have till the end of the year and in the mid term for the upcoming 3 to 5 years?
Knobloch: We think that our portfolio is well suited in this environment, we have a combination of stocks with healthy balance-sheets and triggers even in a bad macro-economic environment. It is difficult to predict the market performance this year, but we are confident that we can continue to beat the market by at least 3%. Once this crisis is over, maybe in 2-3 years, we are convinced that the surviving companies will emerge even stronger then before, probably with more pricing power. Equities might then become the only alternative in a high inflation environment.
e-fundresearch: Do you model yourself on someone? Any ideals?
Knobloch: Tiger Woods. He is a hard working, and despite his success relatively modest.
e-fundresearch: What motivates you in your job?
Knobloch: The intellectual challenge we face every day to be ahead of the market.
e-fundresearch: What else do you want to achieve or do you have any further aims as a fund manager?
Knobloch: Our team works really well together, the right chemistry and different philosophies and background seem to be a good source for success. We know that we can generate absolute performance even in the worst market conditions.
e-fundresearch: What other profession would you have taken interest in, apart from becoming a fund manager?
Knobloch: A doctor (medicine) or a professor in Economics.
e-fundresearch: Thank you for the interview!