e-fundresearch.com: What is the current size of the fund?
Nicholas Williams: €160,3 Mio per 31.March 2014.
e-fundresearch.com: Do you also manage other funds or mandates? What is the total amount of assets you manage currently?
Nicholas Williams: I also manage the Baring Europe Select Trust with a total fund size of € 1.436,2 Mio per 31. March 2014.
e-fundresearch.com: How long have you been in the business as a fund manager?
Nicholas Williams: I have an investment experience of 24 years, and have been a fund manager of European equity funds for over 21 years.
e-fundresearch.com: What are the main steps in your investment process and in which area is your competitive edge to add value to investors?
Nicholas Williams: Our process is constructed to combine bottom-up Growth at a Reasonable Price stock selection with a disciplined risk control which begins at the stock selection stage. Our view is that in smaller companies much the most important driver of share price performance is stock-specific news flow, in other words good analysis of the companies we are interested in can result in identifying opportunities resulting in strong share price developments.
At the same time smaller companies are potentially risky: we manage this risk primarily by favouring investment in companies with strong balance sheets and high returns, where we try to understand the strategy and the shareholder-friendliness of the management team, with the ultimate aim of ensuring our portfolio is biased towards companies which have resilience in the face of economic shocks and downturns, but are also under-valued and where catalysts exist to drive share price performance.
As a result our process combines initial screening of the investment universe with a subsequent cycle of thorough company meetings prior to and after any investment. We regularly review our holdings and use a price target discipline both to promote profit-taking when price targets are hit and a stop-loss discipline should any of our investments fail to perform. As a result we think our competitive edge resides in a combination of our disciplined stock-selection process, with a clear understanding of how and why the companies we are investing in are undervalued and will see this under-valuation disappear, combined with the stock specific risk controls.
e-fundresearch.com: How many positions does the portfolio usually contain and what is the average holding period of an investment?
Nicholas Williams: The portfolio has 100 stocks, and the average holding period is currently over 15 months.
e-fundresearch.com: To which extent does fund size impact the efficiency and effectiveness of your investment strategy?
Nicholas Williams: In smaller companies fund size matters, however, our smaller companies’ funds still have capacity for further growth before any impact on the efficiency of our investment strategy would happen.
e-fundresearch.com: In which market environment does your investment strategy deliver the best results?
Nicholas Williams: Given our bottom-up investment process our best relative returns should occur in those periods when stock-specific factors are the key drivers of share price performance, while our bias towards relatively high quality companies with strong balance sheets and high returns should help ensure a relatively resilient performance in periods of market weakness.
e-fundresearch.com: Which benchmark is most relevant and how should investors compare the fund vs. benchmarks or peer groups?
Nicholas Williams: The most relevant benchmark is the MSCI Europe Smaller Companies index. Our target is to out-perform this index over the long-term, while also generating a less volatile return than that of the index. As a result a key target for us is that the risk-adjusted return over the long term should be attractive compared to that of the benchmark. Relative to the peer group we would hope that achieving our risk-adjusted return target will result in a very competitive return over the long term.
e-fundresearch.com: Which performance did you achieve for the fund YTD and over the past five calendar years in absolute terms and relative to relevant benchmark or other reference indices?
Nicholas Williams: Performance (€ per 31. March 2014) fund: YTD 5,3 %, benchmark (MSCI Europe Small Caps Total Gross Index) 6,2%.
e-fundresearch.com: What motivates you in your job?
Nicholas Williams: I like a lot of different parts of my job: learning about companies, meeting management teams, the discussion of ideas with my colleagues and the intellectual challenge of constructing and managing a portfolio. The key motivating factor, however, is that this is a competitive industry and I enjoy competition and trying to do as well as possible in terms of peer group and benchmark-relative returns.
e-fundresearch.com: Which other profession would you have considered apart from becoming a fund manager?
Nicholas Williams: A professional tennis player, except I am not good enough, or a writer.
e-fundresearch.com: Thank You!