Interview with Mark Page, Co-Manager of the Artemis European Opportunities Fund

On a personal level Mark feels he has the best job in the world, he likes meeting people who invest in his fund, he likes meeting owners of companies and he is super competitive wanting to do the best for his investors

There is a strong argument that 2008 was a unique point in investment history where everything was so beaten up that to make money was very easy. Now as we return to a ‘new norm’ making money is much harder.

If we step away from the crowd, money can be made but like everything it is about identifying the right stock. Investing in Woolworths because it was cheap doesn’t necessarily bring success. As we have seen with the likes of Tesco’s there is much more to a stock than meets the eye and the reality is that for most people it is much easier to allow an expert to choose the investments.

This in itself brings challenges. How does an investor choose the right fund? Investment houses tend to promote their star funds, or last year’s success and for investors it is very easy to invest based on last year’s performance.

The danger of a star manager is all too apparent when that manager leaves because the fund is their fund and without them what happens?

At we catch up with some of the leading managers in the industry to understand how they approach investing.

In this interview we talk to Mark Page of Artemis Fund Manager. He co-manages their European Opportunities Fund. “Going back to your teenage years, did you always want to be a fund manager? If you did what route did you take and when did you first assume your first management role? If you didn’t, why did you end up in fund management and again what route did you take and when did you first assume your first management role?”

Mark explained that he had grown up in an environment where his father managed money for clients and in part not wanting to follow in his father’s footsteps he decided that fund management wasn’t the route for him.

However, he did go down the equity sales route of fund management. He quickly felt that although the job was more glamourous and the money better he wanted to be the decision maker, and hence his route into fund management.

He joined Schroders in January 1990 working with Matthew Dobbs managing a small UK mandates for Japanese pension funds. Mark explained that sometimes where you go in life is to do with luck and what were initially small mandates grew quickly to include a European mandate where he was managing $3 billion US dollars.

From Schroders he moved to LV= and then Artemis. “With over 20 years’ experience in the industry, what motivates you daily, yearly and for the long term?”

Mark explained he had worked at Schroders for 11 years and then LV= for 9 years. At LV= the European mandate was a small part of the overall franchise, and moving to Artemis it was a bigger part of the overall franchise.

On a personal level Mark feels he has the best job in the world, he likes meeting people who invest in his fund, he likes meeting owners of companies and he is super competitive wanting to do the best for his investors (he recently completed a half marathon in Kenya).

The performance of the fund is important; being able to meet people who invest in his fund shows how much those investors mean to Mark, but also he personally invests in the fund so his interests are aligned to those investors.

His competitive nature means he is constantly checking performance to make sure the fund is performing above the benchmark, and his peer group.

So not only is performance a real motivator but also the fact that he loves his job, and Mark feels these two factors go hand in hand. “With over 20 years fund management experience you will have experienced the dotcom bubble, 9.11, global financial meltdown and near collapse of Europe (although this is not necessarily over). Going back over your career can you think of any major mistakes you made, what you have learnt and how has this been used to mould what you do today (and going forward)?”

Mark explained that he isn’t a high risk investor and therefore doesn’t feel he has made any major mistakes.

However, investing is about learning and he used an example of when he was at LV=. Because he didn’t have exposure to a particular sector he used an ETF to gain exposure to the automobile sector. A big chunk of this was VW whose price had been inflated by Porsche bidding for them. He then sold out of the ETF prior to the bid with a view to picking individual stocks. In the short term he had to cover the subsequent lack of VW in the fund but long term being out of the sector would have been better.

Learning from this he accepts that short term not chasing the market can hurt but over the long he believes focusing on picking the best companies irrespective of the index will deliver the stronger returns. “How would you describe your style of management? The industry talks about value managers, growth mangers, contrarians etc. For the average investor what does this mean? And how does your style make you stand out as different in the market?”

His style probably leans more towards the growth side but he said the area is grey – who is to say a company with a Price to Earnings Ratio of 30 times is growth or value? Just because a company is cheap it doesn’t mean it isn’t a growth company.

Mark’s style is about finding those companies that grow their earnings year by year. It is the power of compounding that he believes will drive the returns over the long term. He explained that one of his best holdings is Roche which some may see as expensive but as long as he believes they can continue to grow earnings then he sees this as a good company to invest in. “Many commentators say that the global financial crisis was a unique event, and a game changer going forward. Particularly as we don’t know the consequences of QE, how long we will remain in a low interest environment etc. If this is the case then everything we have learnt about investing goes out of the window because we just don’t know what will happen? There is also an argument that any manager could make money in the last five years, however going forward only the good managers will shine. What is your view, and do you feel you need to adapt your style to reflect this new environment?”

A consequence of QE is that it has driven the value of everything up, there is a vast pool of money chasing stocks. Mark feels that the style of management means that this doesn’t really affect them, fundamentally it goes back to looking for companies that can grow their earnings whatever the environment.

Mark is looking to keep pace with the market as it goes up but also protect on the downside. He explained that as a consequence of QE five years ago he estimated returns of 13 / 14% a year, now this is around 6%. It is not a bad figure and compared to other asset classes it makes equities attractive.

Mark also argues that good managers should be able to find a path through this environment, and good stock pickers will shine. “For personal investors we have seen the collapse in share price of banks and now supermarkets, does this highlight that without the research it is much harder for them to invest directly in shares?”

Mark doesn’t think it is harder for personal investors and in fact he pointed out that many good fund managers were caught out. Research is as important for the personal investor as it is for the fund manager. One big difference for the personal investor is that they can have a longer time frame (say 20 years) if they believe in a sector or company as long as they are patient and prepared to sit and wait. It is much harder for a fund manager to take this approach. There is therefore room for both in this environment. “There remains an argument that active fund managers particularly in the US rarely over the long term outperform the index. For personal investors looking at funds what do you feel they need to look at both from choosing active over passive, and more importantly looking at the investment style of an active manager?”

Only a quarter of managers will outperform the index so investors need to understand the fund managers style and be happy to follow that even if that style goes out of favour for a short period of time.

Investing in the index is cheaper but you are buying everything in that index whether you want it or not. “Connected with the question above. Some funds have become victims of their own success where the size of assets impact future returns. Do you believe size can be a problem or that a good manager can deliver consistent outperformance over the longer term irrespective of the size of their fund?”

This depends on your brief, if you are constrained to smaller companies, recovery stories etc then naturally your opportunity set is restricted as your fund grows in size. With something like Mark’s fund as the fund gets bigger some of the smaller companies drop out of the opportunity set. So as long as the opportunities remain the size of the fund doesn’t matter. “Shortermism remains a problem, investors want returns quickly and in reality they sell when the market is falling and buy when the market is rising. How long should investors look to hold investments and what would be your best tip to investing.”

Mark explained this is a worry, investors tend to focus on short term results. They see 20 / 30% returns one year and think this will happen again but it can be down 10% the next year. His view is that investors need to take a longer term view and not worry about the point they are buying in at. They should be happy to constantly add to their holding whether at a dip or rise as it smooths out over time.

Trying to guess the inflection point is a dangerous game because at the point you think it will rise there is also a chance that it could continue to fall! “Finally, with a crystal ball to the future (which of course we don’t have), what do you feel are the challenges facing investors, and in reality do you think these have changed or will change?”

The time to invest in Europe was back in 2011, however only now are investors looking at Europe. So expecting the same returns is a challenge for investors. There is also the transition to normality which may be painful for investors. One other thing that worries Mark and that is the potential impact of a slowdown in China to the global economy and in particular Europe.

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