“When a fund manager says he is a pure bottom-up manager who can’t be bothered taking macro data into account, I tend to be a little bit sceptical,” he says. “Even if you are a stockpicker rather than an asset allocator, you need to have an idea of the macro forces and how these could impact the companies you invest in. Only a manager specialised within a single sector could possibly get away with just a bottom-up approach.”
Big is better
Viviani also has a preference for large, established fund houses because they tend to run funds supported by a large backroom staff.
“My experience tells me that, in the long run, funds with a strong research and analysis capability usually outperform funds where the portfolio manager takes all the decisions. I prefer funds with a structured and well-disciplined investment process, where every member of the team has their own specific role.”
Consequently, boutiques and star managers are not quite his thing. “I prefer a large manager over a boutique. To me, it’s vital for asset managers to have the right capacity and resources, and not be dependent on one person. A star manager can be right for a time, but it’s not likely he always will be. That’s my personal experience.”
"On the long run, funds with a strong research and analysis capability usually outperform funds where the portfolio manager takes all the decisions"
Despite these reservations, Viviani occasionally invests in boutiques, though he never allocates a large percentage of his portfolio to them.
“If I come across a small boutique that’s focused on a specific geographical area or asset class, it could be interesting for us as a satellite holding. It’s difficult to see why I would invest in a global bond fund run by a boutique, but a specialised fund could work.”
Viviani has strong preferences as to how he wants his fund managers organised. But as far as their style is concerned, he is agnostic, or rather, opportunistic: “There’s no specific style I prefer. It depends on the macro view we have at a certain point in time.”
Pure and simple
Viviani prefers “pure” funds with a narrow mandate within his fixed income bucket because he demands a clear overview of exposure, risk and performance attribution.
“I have a preference for funds with specific duration and yield curve positioning versus all maturity funds.”
But depending on macroeconomic conditions, he sometimes deviates from this preference. “In periods of rising yields, we prefer using unconstrained bond funds because they can short duration. The same goes for long/short equity. In sideway markets, these funds usually outperform directional long-only products. But in a bull market I always prefer directional products, so we only invest in such funds opportunistically.”