e-fundresearch: Which benchmark do you adhere to?
Wouters: FTSE Eurofirst 300 Total Return Index.
e-fundresearch: Are you also responsible for other funds at the moment?
Wouters: I also manage segregated portfolios under the same strategy.
e-fundresearch: What is the total volume that you manage in all your funds?
Wouters: €595 million across all portfolios including the Fund (as at 31 May 2011).
e-fundresearch: Regarding the performance: which performance did you achieve since the beginning of the year and in the years 2006-2010? Absolutely and relatively to the relevant benchmark?
Source: JOHCM/Bloomberg. Retail share class in euros. NAV per share monthly return calculated net of fees.
Benchmark: FTSE Eurofirst 300 TR, net income reinvested, adjusted, in euros.
e-fundresearch: How content are you with your own performance in the last years and this year?
Wouters: Pleasingly, the Fund performed very strongly in 2010 in outperforming the index by 14.8%. Consistent with our bottom-up investment process, the Fund’s significant outperformance was primarily generated by stock selection, although the portfolio’s significant overweight exposure to the consumer goods sector and its very limited weighting within financials both added considerable value.
One of the particularly encouraging aspects of this outperformance was that it took place in markets which were largely flat until November. This followed on the back of 2009 when the Fund was able to outperform significantly despite not owning any banks and being underweight commodity stocks, both of which rallied strong in the early stages of the stock market recovery.
For the year to date, the Fund is up 1.6% on the benchmark, which represents a satisfying level of outperformance.
e-fundresearch: How are you able to deliver added value for your investors with your performance?
Wouters: We prefer companies that generate sustainable and highly predictable (i.e. defensive) cash flows, that are preferably low in capital intensity (high and sustainable return on capital employed) and which are simultaneously significantly undervalued (low price-to-free cash flow multiple) on an absolute basis. This ‘value-quality’ combination, over time, leads to positive absolute and relative performance. We continue to find a number of opportunities that satisfy these criteria and believe the Fund is well placed to deliver outperformance in 2011.
e-fundresearch: How long have you been a fund manager already?
Wouters: I moved into a fund manager role when I joined J O Hambro Capital Management in 2003. My previous experience on the buy-side was as an investment analyst with Lansdowne Partners.
I started my career as an equity analyst in 1990 in Belgium and came to London in 1995 to join the Dutch equity research team at Smith New Court Europe (now Merrill Lynch). From 1997 until 2001, I worked as a sell-side analyst, focusing on European media and then global software.
e-fundresearch: What were your biggest successes and your biggest disappointments in your career as fund manager?
Wouters: All fund managers want to deliver outperformance for their clients. I am therefore proud of the Fund’s record of significant outperformance versus the benchmark and peer group since August 2008 when I assumed lead fund management responsibility.
The toughest situation I have dealt with as a fund manager was the Fund’s underperformance in 2008, before I became lead manager. All fund managers have to deal with underperformance at some point in their careers, but, encouragingly, sticking faithfully to our investment process enabled us to turn performance around and ensured the Fund performed strongly in the second half of 2008.
e-fundresearch: What kind of capital market situation do we have at the moment? How do you act in this environment?
Wouters: As a bottom-up stock picker, I am interested in stock-specifics rather than the macro environment. Clearly, the European sovereign debt issue is weighing on investor sentiment at the moment, but my focus remains on identifying the companies that satisfy our investment requirements as outlined above.
e-fundresearch: What are the special challenges in this environment?
Wouters: Not to get distracted by the macro noise and, as alluded to above, remain faithful to your long-standing investment process.
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?
Wouters: To keep delivering long-term outperformance by identifying significantly undervalued companies, buying into these companies at the right valuation and exhibiting the necessary patience to ensure that this value is ultimately realised.
e-fundresearch: Do you model yourself on someone? Any ideals?
Wouters: There is no individual investor whom I model my investment approach on. Generally, though, I tend to respect investors who manage concentrated portfolios containing high conviction investment ideas that are supported by a strong analytical understanding of each stock.
e-fundresearch: What motivates you in your job?
Wouters: The intellectual challenge. Many factors can influence a share price. That means you have to have a broad understanding of the world and keep up to speed with news, politics, technological and demographic trends and the many other influences that can affect a company’s success.
e-fundresearch: What else do you want to achieve or do you have any further aims as a fund manager?
Wouters: To keep proving that our investment process works over the long term.
e-fundresearch: What other profession would you have taken interest in, apart from becoming a fund manager?
Wouters: I really enjoyed working on the sell-side. Had I not joined the buy-side, I would have remained in that field.
e-fundresearch: Thank you for the interview!