For now, ABN Amro Investment Solutions sticks firmly with active managers. But how does Couvreur go about his quest to find the long-term outperformers?
“We use a very classic process,” he says. “We start by analysing how much a fund has outperformed its benchmark and peers compared with the risk it has taken.”
His team pays special attention to drawdowns and how quickly a fund recovers. “We do not like to lose money. If there is a long streak of underperformance, that earns negative points.”
If a fund passes this first step, then it undergoes a more detailed, qualitative analysis. “The philosophy of a fund is very important. I know it sounds standard but if you do not know why what you are doing is or is not working, there is a problem,” he says. “The investment process is also very important. The different steps should all be supported by research. We also try to make sure there is value added in each of the elements. We have lengthy conversations with all stakeholders about this.”
This means Couvreur’s team does not just talk to the manager but the wider team, analysts, traders and risk managers.
“We always travel to meet the management team before we invest, spending half a day on the investment side and another half-day on the operational side. Altogether, we spend about 100 man hours on each new fund. Spending an hour with each member of the analyst team is something we do. This enables us to judge the input of the different members of the team,” he says.
While Couvreur has a strong conviction about the added value active managers can offer, he does not have a preference for a specific style.
“It is possible to generate alpha in different ways. We have both star managers and funds with a team approach,” he says. “We have some funds that are highly dependent on one manager but that does not mean he is completely on his own, even though the decision-making process is only him.”