Equities – Young turks myth makes way for the new breed

The notion of “young turks” being given huge amounts of money to play with appears to be a myth in world of funds management the world over. However, each market has its “yuppie puppies”. Zilla Efrat spoke to three of Australia’s rising stars.

Recent research by US-based Morningstar has shown the image of fund

managers as young upwardly mobile professionals to be nothing more than a

myth.

Indeed, the research house found that the average age for fund managers is 44 and that for every US fund manager in the 20s, there's at least one in the 50s.

Of course American "whiz kids" exist. Some companies such as Fidelity Investments and Aim Management are still known for handing billion-dollar stock portfolios to managers barely in their 30s, or even younger.

Indeed, Erin Sullivan, 29, manages the $3.37 billion Fidelity Aggressive

Growth Fund and Rob Shelton, 29, is the co-manager of the $19 billion Aim

Value Fund.

However, other fund managers in Morningstar's sampling were Martin Whitman,

74, who runs Third Avenue Value Fund, and Roy Papp, 71, who runs a group of

stock funds.

While there are rising stars in the Australian funds management market, the experts say this country's industry is very much more team orientated.

Indeed, Van Eyk Research associate director Rashmi Mehrotra says the emphasis here is sharpened on the investment process and on institutionalising star talents. That said, however, she stresses that funds management remains very much a "people business" in Australia.

According to the pundits, the average age of Australian fund managers is between 35 and 45 years old.

ASSIRT research manager Patrick Bennett notes that most of the country's most respected fund managers "have been around the track", have well established track records, and are aged 40-plus.

"I would be weary of a 22 year old who was given lots of money to experiment with," he says.

Deidre Keown, planning and communications manager at Morningstar in Australia, concurs. "It is very hard to get a star rating in our system if the fund manager does not act as a team," she says.

Running high on energy

At 34, Mercantile Mutual Investment Management's Ben Griffiths is one of the most experienced in MercMut's investment team. But he is also the youngest.

He has direct responsibility for just over $500 million and has been managing three equities portfolios - one for Mercantile Mutual and two on behalf of external clients - for almost two years. He is also the analyst responsible for the gold, energy and building materials sectors.

While Griffiths is the youngest of all Mercantile Mutual's portfolio managers, he has more experience in the industry than many of his colleagues - 13 years in all.

His love of the stock market began when he started dabbling in shares while still at high school and it has grown ever since. His first job was as a trading floor operator at the Australian Stock Exchange. Three years later he joined the late Credit Lyonnais May Mellor as an institutional dealer before moving into bullion banking with Mase Westpac in 1990.

Griffiths joined Mercantile Mutual as a dealer, and a part-time gold analyst, at the beginning of gold rally in 1993 and believes that he is the right age for his stage of development.

"I'm young and enthusiastic enough to run on high energy and, yet, I can still apply years of experience in this business," he says, noting that his age enables him to remain flexible and to think quickly on his feet.

Griffiths believes there is little room for young mavericks in this business.

"Those kind of stories may make good press, but in this day and age, the controls are stringent in this and other organisations," he says.

"For example, the size of the investment any portfolio manager can make in shares or commodities is tightly controlled."

He says he operates in "a strong cohesive team environment" where Mercantile Mutual's "price for growth model" is strictly adhered to when making decisions.

Looking ahead, he sees himself growing the funds under his management, widening his marketing role and, ultimately, moving into a senior management position at Mercantile Mutual Investment Management.

The art of performance

BT executive vice president Crispin Murray, 30, has funds worth $1.6 billion directly under his management.

These include the BT European Growth Fund, a BT offshore fund run out of Dublin and an European investment fund managed on behalf of the Royal Bank of Canada.

Born in Britain, Murray has been running these funds since December, 1997, and has clocked up almost eight years of experience in the industry, nearly three of which were spent with Equitable Life in London. He joined BT five years ago after marrying an Australian and relocating here.

Murray stresses that he is very much part of a closely knit team, adding that he came into a very strong investment culture at BT and has become very much integrated into it.

"The market is too broad for just one individual to handle," he says. "Its more about hard work and the need for someone in the centre to pull everything together. Its not about individual fund managers making big calls."

He adds that at the end of the day, funds management is a long term performance business.

"This is an industry where one's job is based on one's ability to pick a good fund manager. Because of this, one cannot afford to be biased (about age)."

Nonetheless, being young possibly has its advantages when doing his "intensive" job.

Being highly competitive, the international investment market is far more marketing orientated than the domestic market. "There are so many funds out there. You have to go out and sell yours," Murray says.

This means that about two months of the year are travelling. He also works on "quasi-European time" which means hours which can run late into the night.

At the coalface

Amy Somes, 30, manages Perpetual's small cap equities fund of about $101-million. She is also its analyst responsible for the media, engineering and building materials sectors.

Her love of the stock market may have flourished in her youth, but she started her career in the world of accountancy, first at an accounting group and then, after moving from Perth to Sydney, within Perpetual.

Somes has been with Perpetual for eight years, more than six of them on the equities side. She is now only one of three fund managers at Perpetual.

She describes her office as being young with an average age of about 32 and an equities head in his mid-30s.

Nonetheless, age has never been an issue for Somes who sees herself very much as part of a team at Perpetual.

"Everyone works together," she says, noting that this is always within the guidelines of Perpetual's value orientated investment philosophy and its conservative parameters.

She loves being at the coalface, and especially getting out and about to see companies and their management. She can visit anywhere between three and fifteen companies a week, but new arrival Elizabeth, six months old, may slow the pace of her travelling down for a while.

Somes expects to be doing more of the same in the future but, perhaps, running an All Ordinaries benchmark fund and managing more money.