To his credit, Thomas has no doubts about retail

Credit Suisse Asset Management is new to the retail market, having only just launched a series of funds aimed at the private investor.

The response from the market, however, has been "overwhelming", ac-cording to the group. Credit Suisse expected around 400 planners to attend its launch, but more than 1,200 across Australia turned up.

It was a foray that the group had been preparing for quite a while. A year ago, it recruited Brian Thomas, with his 21 years of industry experience at the likes

Credit Suisse Asset Management is new to the retail market, having only just launched a series of funds aimed at the private investor.

The response from the market, however, has been "overwhelming", ac-cording to the group. Credit Suisse expected around 400 planners to attend its launch, but more than 1,200 across Australia turned up.

It was a foray that the group had been preparing for quite a while. A year ago, it recruited Brian Thomas, with his 21 years of industry experience at the likes of Macquarie Bank and the NRMA, to spearhead its drive into retail distribution.

It also had its well-honed investment approach to fall back on. De-scribed as "Investing in Quality", this style has stood it in good stead in the wholesale market, helping it amass more than $8 billion in funds under management since it opened shop in Australia in 1990.

"It's an approach that allows Credit Suisse to make an unusual claim. Rather than being focussed in one or two real areas of expertise, we have good credentials across all the major asset classes," says Tho-mas, who is now head of retail funds.

"Our philosophy is simple. We buy and hold quality, liquid invest-ments and we believe that this approach will produce the best results over time," he adds.

Credit Suisse's equities team was formed in 1992, after it poached what was then one of the top performing equities team from Westpac. It has managed to keep the team intact, losing only one member, only because he retired. The team's overall style hasn't changed much ei-ther, except for some slight refinements over the years.

When it comes to Australian equities, Thomas says Credit Suisse is basically a "bottom up" stock picker, adding: "Traditional growth or value labels do not fit us that well."

Because the group usually takes a three year view of a stock, it has stock turnover of about 25 per cent a year, which is fairly low by industry standards.

Credit Suisse's local equities team of 12 people applies its own rig-orous in-house fundamental analysis to about 120 liquid stocks, nar-rowing these down to a portfolio of 20 to 30 stocks (currently 30).

Companies are chosen on the basis of liquidity, future earnings pros-pects and current valuations, but Thomas views Credit Suisse's abil-ity to assess management quality as its key strength.

He says the group believes that liquid stocks hold up better in times of negative markets or crashes. Nonetheless, its liquidity filters still allow it to take positions in some smaller stocks such as Aus-trim and Pacifica, but never in large weightings.

Illustrating how Credit Suisse operates, Thomas says it reweighted to BHP a few months ago based on its assessment of the resources group's new management.

"In many ways this was a "value" decision, but our management quality filter was a big factor," Thomas says.

"Our continued overweighting of Telstra reflects our belief in its growth potential, and excellent cash flow, despite a relatively high price to earnings ratio."

He adds that the Australian equities operation is becoming increas-ingly globally driven and is streamlining its international informa-tion flows.

Each departmental head reports both geographically and on a func-tional level which allows them to make local decisions after discuss-ing global trends.

"It is all about looking at what is happening around the world and getting good research, as opposed to hearsay. It gives us a definite competitive advantage," Thomas says.

Credit Suisse's investments in Australian shares has returned 15.18 per cent a year over a five year period. During the same time, its international equities have grown by 22.48 per cent annually.

International equity investments are done in conjunction with inde-pendent US-based fund manager Capital International, thanks to a re-lationship that stretches back to the investment team's days at West-pac.

Credit Suisse sets the country parameters and currency hedging while Capital takes care of international stock selection.

Capital's investment style is broadly similar to Credit Suisse's in that it relies heavily on stock picking and fundamental analysis. However, Capital uses a multi-portfolio manager system which Thomas describes as unique.

"It has six, highly experienced portfolio managers who each make their own decisions and these are combined into one portfolio to re-duce risk. Each is rewarded on the strength of their individual deci-sion making" he says.

Capital has a large research budget and made 17,000 research visits in over 62 countries last year.

Nonetheless, Thomas notes that other international funds managed by Credit Suisse could be introduced in the future to complement those run with Capital.

About two years ago, Credit Suisse changed the way it managed prop-erty trusts to bring it more in line with its equity style and it hasn't looked back since.

In the two years to end February 1999, it was ranked by Intech as the third best performing wholesale property trust in Australia.

It now has just over $400 million invested in property, and only in listed securities.

Its two property experts work very closely with its equity team, us-ing similar techniques to narrow their choice of property stocks down to between 17 and 27.

When it comes to fixed interest, Credit Suisse's style differs to that for equities and, according to Thomas, appropriately so. This is because it is harder to outperform the index in this area.

"Australia's economic performance has meant that the spread between our bond yields and the US has narrowed to 30 points - a long cry from the 600 points or greater in our 'banana republic' days. This makes it increasingly sensible to look at international fixed inter-est products," he says.

"Rather than concentrating on duration bets alone - that is trying to accurately pick interest movements - we look at duration, slope, credit and relative value to produce long-term above average perform-ance with below average risk," he adds.

On the back of this style, Credit Suisse's Australian fixed interest investments have returned 10.05 per cent annually over five years and 11.98 per cent over three.

Thomas says every quarter, Credit Suisse holds a formalised invest-ment meeting where each of its key heads puts together a paper on their areas of responsibility.

"From that we look at what will happen in the next 12 months and get three different forecasts. One would be the most likely scenario," says Thomas.

In addition to helping Credit Suisse set the asset allocation and po-sitioning for its balanced fund, these meetings allow it to work out its "big picture" strategy - and then to decide which industries it should be looking at.

Looking to the future, Thomas says Credit Suisse plans to launch sev-eral new products aimed squarely at the adviser market, possibly in June.

The new offerings will include a cash management trust, wrap services and a "mezzanine" product for those who can make a minimum investment of about $100,000.

He says Credit Suisse is serious about financial planners and has set up a team of seven people to service this market. It recently brought Clayton Coplestone on board from Tyndall to spearhead its adviser marketing effort.

It would appear that Credit Suisse has plenty more up its sleave and, as Thomas says: "Just watch this space."

Ends