What happens to the money? That is the nagging question that pushed Tony Yousefian (pictured) to cross the financial services aisle, as it were, and join the investment management industry. The Beckett Asset Management portfolio manager got his start in financial services in 1984, “at the age of five”, he jokes.
With a Higher National Diploma in economics, he came across a job advert for an insurance company. The prospect of an attractive salary saw him become “a typical life and pensions salesperson”. It was a gig that lasted around 18 months before curiosity got the better of him.
“I was always interested, when we sold these life insurance and pension plans, about what happened to the money. Clients pay into these schemes, but where does it go? How does it grow? Who are these fund managers that everyone keeps talking about, sitting in their ivory towers managing money?”
This disconnect between the sales and fund management processes was how the industry operated in the 1980s and ’90s, he reflects. A lot of emphasis was put on the sales process and servicing clients. It was as if it did not matter where the money went provided the client was fully protected and had a pension.
The message was “just put the money in a managed fund and let the fund manager get on with it. They will look after the client’s investment”
But that was not enough for Yousefian, who left his position with the insurer to set up his own business, which started offering advisory portfolio management to clients in 1987.
Even though the Black Monday crash of October 1987, which saw US markets fall by more than 20% in a single day, could be considered “barely a blip on the charts nowadays”, Yousefian says at the time it felt like “a baptism of fire”.
Throughout the twists and turns of his 30-year career, he has actively forged a path back to what captured his interest and imagination in those early days. “My heart has always been on the investment side of the industry.”
Taking a chance
It was a chance encounter on a train with the investment director of Beckett Investment Management in late 2018 that saw Yousefian join its asset management arm. Prior to that, he had been running his own investment management consultancy, as well as working as a research analyst and senior consultant at ratings agency FundCalibre.
“She said they were looking for a portfolio manager and, in a tongue-in cheek sort of way, I said ‘I’ll do it’.” That light-hearted comment got the ball rolling quickly and an unofficial chat was had within a matter of weeks.
A couple of official meetings later, Yousefian started at Beckett Asset Management in January 2019.
“At the time, we had approximately £400m in assets under management (AUM) and were running traditional managed portfolio services (MPS), using collectives.
“As a team, we were looking to make the business future-proof and ensure that our processes were robust enough so we could manage mass monies and have wider instruments available to use.”
Plotting the course
It was around that time the company started to look at unitising its proposition, an area where Yousefian had experience after undertaking a similar exercise when he worked at OPM Fund Management, which was at that time the discretionary arm of IFA firm Smith & Pinching.
Yousefian was chief investment officer when the company was sold to City Financial Management in April 2013. He moved across with the business before leaving a year later and setting up his own consultancy. “I had already been through that process. I had the roadmap, for want of a better expression.
“We set about looking into unitising the proposition and finally, in January 2021, we launched the Blenheim range of funds managed by Beckett Asset Management.”
The Blenheim funds are used as building blocks for the core model portfolios. The exposure to each fund varies in each model, reflecting a particular risk profile. They are UK equity, overseas equity, diversified fixed income, diversified property, diversified alternatives and ethical opportunities.
“Beckett Asset Management has been running money since the 1980s, so they’ve got a long-term track record in MPS. This was about ensuring we can effectively run a lot more monies under management, keep up with the changing times and can make full use of all the available instruments.”
An added benefit is that it allowed the team to move away from managing money on platforms, which Yousefian describes as “quite difficult to work with”. The proof, as they say, is in the pudding. When he started, AUM sat at £400m. The funds were unitised two years later, with AUM hitting about £500m in February 2021.
“As we speak, we have about £700m. Or at least we did up until a few days ago,” Yousefian says, alluding to the recent market movements with a wry chuckle.
Invaluable insight
No financial services interview is complete without a whistle-stop tour of the subject’s views on a multitude of factors that may (or may not) affect performance. Inflation and coronavirus have been the topics du jour, with rising tensions in eastern Europe and the diminishing appeal of the US more recent additions to the repertoire.
It is, after all, why we interview longstanding figures in financial services, as their experience and expertise are informative and insightful. But a sharp distinction is beginning to emerge, namely between those who have experienced a rising interest rate environment and those who have not.
If you speak to someone who has been managing money for 10 to 15 years, “they have only seen interest rates going in one direction”, he says. “One has to go through different economic cycles to gain a full experience, to stand a reasonable chance of navigating the economic conditions.”
But that does not necessarily mean he thinks the older guard will have a profound advantage. “The cycles we used to go through, with growth being in fashion then value, have narrowed, from peak to trough, because of globalisation, and the way inflation, globally, has been squeezed out of the system.”
While inflation “might be coming back now, to a certain extent”, Yousefian says “that big boom and bust fluctuation is no longer there. You need to be much more dynamic, much more aware of the type of investment that will suit each cycle.”
While the playing field will be new to everyone in 2022 and beyond, Yousefian believes “with all due respect to people who have been in the industry for 10-15 years, you can’t beat experience”.
Speaking out
So, what does his experience tell him about the coming 12 months?
“Notwithstanding geopolitical concerns, which we always have in one nature or another, they seem to be quite heightened at the moment, and without sounding too guarded, I’m cautiously optimistic.”
With a wry smile he adds: “I am never one of those people who hedges my bets. I always say when I have a view. It either comes right or not, and then it is passage of time-approved.”
He says people need to be “fully aware” that the assets and instruments that have performed well in the past will not be the same ones moving forward.
“We have gone from over a decade of low interest rates, quantitative easing and a system awash with cash, to quantitative tightening, higher interest rates and higher inflation.
“With that in mind, we have positioned our own portfolios to benefit from assets which are less likely to be sensitive to interest rate moves. We are looking at areas where there is quite a lot of cyclicality, like the UK.”
Taking the long view
Throughout his career, Yousefian has used a lot of technical analysis to formulate views on major indices, currencies and bond yields over the short, medium and long term.
“We don’t act on our short- and medium-term views unless we have an especially high conviction.”
He adds: “We are, in the short term, actually quite positive about the UK and have been since Boris Johnson’s election in 2019. We have increased our UK allocation but the types of assets we now hold are totally different to 12 months ago.
“We like Japan and Europe but, in the short to medium term, we actually dislike the US. That said, our US exposure has been changed from more growth-oriented assets to much more cyclically sensitive ones.”
Fixed income, Yousefian says, is “very much out of favour” despite the team’s fund having performed quite well because it is defensively positioned. “Our fixed income position is the most defensive it has been for at least 20 years.”
When it comes to the future of the industry, Yousefian is “really positive about it in the long run, because the new generation of investment managers and advisers are coming on board from a much better starting point”.
“The fact there is a requirement to be better educated, better armed and informed from the start, is a major plus. It gives me heart and confidence about the long-term prospects.”
This article first appeared in the February edition of Portfolio Adviser magazine
