Contrarian discipline
Taking a contrarian approach in emerging markets is not for everyone, though Lazard’s relative value team would not invest in any other way, and the fund was up 38% year to date to mid-November this year.
The discipline includes target prices for every stock, with positions trimmed or bolstered according to current prices, while turnover is historically around 30%.
Says Donald: “Last year was challenging but we managed to explain to clients why we weren’t buying expensive stocks. We did underperform and people question you during that time, and the pressure can be quite intense, but investors were largely supportive.”
Donald is also passing on his experience to younger colleagues. He says: “I often get the question from our interns, ‘What’s the characteristic that is most needed in this business?’ My answer is always that it’s the ability to withstand pain.
“We are living in a world where people’s time horizons are very short and during periods of underperformance the scrutiny can be very tough.”
