Ownership changes but focus remains the same

Tony Munson, investment director of Fortis Private Investment Management, speaks to Frances Hughes.

Q: When did Fortis Private Investment Management officially launch?

A: Our history is very recent. We came into the picture when Fortis acquired Dryden Wealth Management in October 2005. But Fortis’s history as a group dates back to 1720. Fortis Private Investment Management is part of the group’s expansion plans. As a newcomer to investment management in the UK, the first step was acquiring Dryden.

Q: How is your strategy focused? And has this changed?

A: We have been focusing on the individual for a long time. The only thing that has changed over the years is our increasing use of alternative investments, like hedge funds and structured products. And second, in the aftermath of the bear market we began to focus our efforts on absolute return, as opposed to relative return.

Q: To whom do Fortis’s services appeal?

A: In its wider sense there are two distinct streams: “old” money and “entrepreneurial”, or “new”, money. Old money is attracted to tradition and roots; new money is attracted to the fact we are making use of new assets and using alternative strategies. Older money is mainly concerned with preservation of wealth and an income derived from that; new money is more of a risk-taker – but measured risk, not completely haphazard. They don’t really want an income now; it is more about growth.

We are seeing more entrepreneurial money. The older money already has professionals in place and tends not to move unless the fund manager moves or if they are not happy with the results. New money tends to be new introductions or cash introductions.

Q: How many clients do you have?

A: 6,000.

Q: What is the average investment?

A: There is a huge range. At the lower end we are seeing people testing us with 100,000; at the higher end it is 5m or thereabouts. We have got to do just as good a job for each of them. The average could be between 300,000 and 500,000.

Q: How much do you have in funds under management?

A: 2bn.

Q: What services and products do you offer?

A: We are still in the throes of completing the integration of ourselves into Fortis. We are sticking to our knitting of basic investment management on a discretionary, advisory or execution-only basis. Increasingly over the coming months we will be offering private banking services and Sipps [self-invested personal pensions]. It is a “watch this space” story.

Q: Which services are the most popular?

A: At the moment the most demanded services are Sipps and inheritance tax portfolios – both of which we do, but we have not wrapped them up as products yet. They are not currently available as standalone products but they are available to existing clients.

Q: How important is asset allocation?

A: It is extremely important. It is the obvious link with the client profiling exercise. It is a natural sequence. We design an asset allocation structure for each client through discussions and interviews with them. We then establish their aims, objectives and attitude to risk. After exploring these answers we will suggest an asset allocation profile, but stressing the realities. We try to present a realistic picture so the client walks away with reasonable expectations.

Q: What asset classes do you include in the portfolios?

A: Top-level ones. Fixed interest and equities, both domestic and overseas. Under the alternatives heading the main one is structured products, alongside some use of hedge funds and limited use of commodity funds, and also property.

Q: In what are you overweight or underweight now?

A: The past few days have been quite testing but, touch wood, we have passed that test. We think fixed interest is still over-valued. We are using alternatives as a risk-reduction component. The main thrust is equities and we still like emerging markets. Only recently have we been reasonably positive about the prospects for Japan. We spent 10 years with no exposure to it at all. It is only in the past three years that we have done, and this has been increasing steadily.

Q: Have there been any major changes over the past year?

A: We have been overweight in Europe and emerging Europe, but only recently have we been reining that back, in light of reasonable profits not being made. Also, we would rather hold cash than fixed interest, which has been chased to absurd levels by pension funds over the past couple of years.

Q: How do you go about researching funds?

A: We have been running a number of portfolios exclusively in collectives over the past 10 years. We have built up a network of contacts. It is very important to keep track of fund managers.

Because we have been doing it for so long, we don’t have to start with a blank sheet of paper. We aim to make 200 contacts [interviews] a year. Last year we probably more than doubled that. It is with a view to maintaining as well as investing. We need to make sure the wheel is not wobbling on the bicycle.

Our research ends up being focused on particular fund managers. We are quite focused on keeping funds down to a manageable universe and it is so much easier if there is a bit of a track record.

Q: How do you come up with investment ideas?

A: From receiving research material from external sources, plus original research material from our own analysts, economists and strategists. It is our job to shut the door on funds that don’t pass the criteria and do for our clients what we would do for ourselves. We have got to have conviction. There are too many funds out there and we want to sort the wheat from the chaff.

Q: How long do you tend to keep a fund?

A: As long as it is doing its job. The manager can regard us as long-term holders as long as he continues to perform, not just over the first quarter though. In the main it is over a three-year rolling period.

Q: Is there anything that makes you especially different from other investment management companies?

A: If I had to say one thing I would say it is that the people involved in our investment decision-making are the same people who run the portfolios. This means we are rather more responsible.

There is no ivory tower of investment ideas pushed into the portfolio, so as a client you get to speak to the person who had the idea and the buck stops with the person running your portfolio. Having no divide makes things a lot more transparent for the client. That is the key thing we are doing: demystifying and showing people we are good value for money.

Tony Munson is investment director at Fortis Private Investment Management in London. He has 20 years’ experience in managing international portfolios and his career at Fortis began when the group acquired Dryden Wealth Management in 2005. Before Dryden he was with Matheson Investment Management and, before that, he was a founding member of Binder Hamlyn Investment Management. He is also a Fellow of the Securities Institute.