Nature/Nurture: Barings’ Williams on the shift from poetry to balance sheets

With his passion for literature and curiosity about the world, Nick Williams developed a diligent, questioning approach to managing money, writes John Husselbee

Barings’ Nick Williams is the latest in our series of interviewees for this column whose early life pointed in an entirely different direction to fund management or, more specifically, European small-cap equities.

On the all-important nature-versus-nurture question, he is another of a generation of managers from a non-financial background and falls very much on the former side of the argument.

Our small sample of managers interviewed over the past few months have degrees as diverse as aeronautical engineering, classics and metallurgy – a far cry from the uniform financial qualifications held by so many of today’s city intake.

Williams discovered a love of reading at school that has never left him and eventually studied English literature at Oxford. Studying literature offers very little in the way of preparation for a city career, although he says the basic ability to absorb information has proved essential when researching and analysing companies.

“What I see from the many CVs that come across my desk today are typically similar high-level financial and economic qualifications and many seem to have been part of investment clubs since their earliest years in preparation for a city career,” he says.

“But beyond being able to read a balance sheet, which is actually fairly rules-based, what is not always evident is the curiosity, ambition, competitive streak and basic capacity for hard work that I feel are necessary to be a successful fund manager.”

From interviewing Williams, and glancing at his track record on the Baring Europe Select Trust, it is clear he possesses these attributes in spades. The son of a diplomat, he had an enjoyably peripatetic youth, spending the first few weeks of his life on a boat bound for the Philippines. He boarded at Winchester College in Hampshire, but holidayed abroad as his father held posts across Europe, the Middle East and Asia. He considered India home in his early years and spent a gap year there before university.

After his degree initially pointed towards a career in publishing, financial motivations pushed him into a private client role at Stock Group, the investment arm of British & Commonwealth Merchant Bank, and Williams has never looked back.

With financial issues engulfing British & Commonwealth Merchant Bank a few months after he joined Stock Group, he moved with his boss to Fleming Private Asset Management.

While learning many useful lessons from the private client side – including a focus on absolute rather than benchmark risk and the importance of capital preservation – Williams was always more passionate about the money management part of his role than the relationship-building.

He had the opportunity to analyse international equities at Fleming and moved to Singer & Friedlander in 1993 to research European stock ideas for portfolios. He rose up the ranks quickly – taking on fund management responsibilities before age 30 – and was ultimately appointed head of the European desk and a member of the firm’s investment policy committee.

Barings was among Williams’ major competitors – with Crispin Odey and then Mark Pignatelli running European Select – and he jumped at the chance to move across and take on the fund in 2004, especially with Singers undergoing major cost-cutting at that point. He also felt his own investment style, honed over a decade at Singer & Friedlander, fitted in well with Barings’ quality growth at a reasonable price approach. Europe Select had a strong track record under previous managers and in such a performance-based industry, Williams believes fear of failure has to be a key part of a manager’s make-up.

“One of the main aspects of a fund management career is the visibility of success or failure: you are basically judged day to day,” he adds. “If you have a good year, it is not acceptable to pat yourself on the back and think the job is done; you have to be thinking about the next year.”

Having run money for the best part of 25 years, Williams says curiosity and continually questioning the market is another prerequisite for success. If people are getting over-excited about a company or sector and he cannot understand why, he will typically stay away.

After an education largely spent picking apart great works of literature, Williams now turns this forensic eye to balance sheet strength and profits rather than poetic rhyme and metre.

CV

1993: Started working at Singer & Friedlander, researching European stocks.

2004: Took over management of the Baring Europe Select Trust.

2011: Barings UK Smaller Companies trust, run by Williams, is shut.

2013: The Baring European Opportunities Fund is launched, run by Williams and Colin Riddles.