The next instalment of Rising Stars sees Harry Havelock-Allan, fund research manager at Arbuthnot Latham, speak to ETF Stream about his biggest influences, the need for more accurate data in asset management and the crucial role ETFs play in efficient portfolio management.
Havelock-Allan started his career in multi-asset at Jupiter Asset Management before joining Arthbunot Latham in 2017 as a research coordinator in the fund research team. He has since spent seven years at the firm.
How did you get into fund selection?
My first role in investing was on the Jupiter Asset Management summer internship programme back in 2016, fresh from my Theology degree at Durham. I was assigned to the Merlin fund-of-funds team headed by John Chatfeild-Roberts in the week of the Brexit Referendum. As a fully independent multi-asset team, the summer was filled with manager meetings and analysis from across the asset class spectrum. It was hard not to be taken with such a broad introduction to capital markets through some of the best fund managers around at such an exciting time.
I joined Arbuthnot Latham as a research coordinator to assist in fund research across asset classes and to assist our investment committee. Similar to Jupiter AM, Arbuthnot Latham is global and independent in its investment remit, with a slightly greater allocation to alternatives to get stuck into. My time at Jupiter showed me the excitement in both the qualitative and quantitative aspects of fund selection within the context of wider portfolio management and Arbuthnot Latham has been a great place to explore it for almost seven years.
Who are your biggest influences?
There are probably four key influences I can think of. As the people who brought me into the industry and for their patience and kindness to a very green graduate that summer, I must acknowledge and thank the Merlin team at Jupiter AM – John, Algy, Alastair, Amanda and David. Similarly, the mentorship and guidance I received from my colleagues at Arbuthnot, particularly Eren Osman and Peter Doherty on the investment committee, have been the most formative influence on me and my career.
Working with a committee structure, the radical open-mindedness espoused by Ray Dalio in Principals certainly influences the way I approach our committee meetings and research team discussions.
On a more personal note, my parents have been the greatest influence on my professional life. Both working in the same industry – the law – and therefore offering little help for CFA revision, I learnt from their example all the other important lessons about professional life from decision-making to diplomacy.
What role do you play within your team?
I work in the research team within the private bank’s investment management division and oversee our research into third-party commingled funds. It’s a broad remit and covers all our asset classes and fund structures (UCITS funds, NMPIs and ETFs). We have a macro-led investment process which sees me working closely with our head of investment research (Peter), head of strategy (Jason), our portfolio risk and analytics team (Abdul) and the various sub-asset class research pods and analysts with whom research projects are run. Alongside this, I work on the portfolio management teams for our sustainable and absolute return investment services.
I am very lucky in that my role allows me to work with a large number of people in our team not just on fund research, which is the core of my job, but also on top-down and bottom-up idea generation, asset allocation modelling, attribution, internal and external presentation – most of the key points of an investment portfolio lifecycle. Having a wholistic understanding of where an investment will sit and what it needs to do is essential to delivering on one’s investment thesis with targeted research.
What is a particular area of interest or something you enjoy within ETFs?
Bridging portfolio strategy and fund selection can be a delicate task. The most important question is ‘how can we add value?’. What I like about ETFs is they can provide viable and efficient solutions to both strategy and fund selection.
For example, where a core market to which we want exposure has a poor track record of providing stock selection alpha consistently over time (the US is a popular example), we may take a core-satellite approach with an ETF forming the anchoring position with reliable market beta as a base to opportunistically trade style, sectors and factors around the edges.
Our macro-led process often leads us to implement shorter-term trades to capture perceived dislocations. ETFs are often the perfect way to isolate a certain theme and efficiently add active risk to a relative return portfolio. Over the past 18 months, we have made good use of fixed income and commodity ETFs to trade key-rate durations and specific commodities as the inflation and interest rate narrative has gripped markets. The variety, simplicity and speed of execution make them a powerful investment and portfolio management tool.
What type of investor do you see yourself as?
One might think a macro-led process leads to a short-term investment horizon and high turnover, but that is far from the case. As a committee, we are certainly opportunistic when we need to be but always with our focus on the long-term goals and ambitions of our clients.
Having conviction in our research (and the rigour to regularly review it) gives us the confidence to back our thesis and underlying managers. I see my role as requiring me to be deliberate in the way I invest, presenting the investment committee with a clear explanation of where and how we expect to make or lose money.
It may sound obvious, but understanding and isolating those drivers is vital for good risk management. ETFs can be great at simplifying part of that equation.
What would you change about the asset management industry?
For good decisions to be made, the information input must be accurate. The efficiency and standardisation of portfolio data still has a long way to go. This is particularly obvious in the sustainability landscape where consistency in nomenclature and methodologies simply does not exist.
ETFs have been a great help with the openness they provide a portfolio manager and are helping to drive the demand for greater disclosures from active fund managers. The launch of active ETFs is a good step in this direction.
