Investment styles not mutually exclusive

Investors should not look at investment styles in isolation, as the categorisation of managers was not intended to put one style forward at the exclusion of the other, according to a top investment manager with Russell Investment Group.

Speaking at the Fidelity Australia equities summit, Russell chief investment officer Asia Pacific Peter Gunning explained: “The definitions were really designed to better attribute performance, they were never specifically designed to say you are a value manager and you are a growth manager and you invest differently and, therefore, the way we put you together is to grab one of each.”

Gunning said the classifications were meant to aid portfolio diversification on the basis of combining different processes.

“When it comes to combining investment managers, we think that first of all you need to pick good ones, obviously ones that have skill and are likely to outperform the market. Secondly, to actually put managers together that are doing different things at different times,” he said.

“So it was meant to be more about process diversification as opposed to I’m a value manager or I’m a growth manager,” Gunning added.

Fidelity International head of Australian equities Paul Taylor agreed that the issue was really about investment processes.

“From an investment manager’s perspective, I guess while we call ourselves one thing or another we generally just like to describe the process and take people through it. We explain how we go about investing in companies, what’s important, and where we see our competitive advantage lies, and then let them decide how they want to look at us,” he said.