Morris joined Skagen in September and said, as a value investor it was a relief to join the Stavanger-based firm as it is truly and totally committed to value investing. But, she did identify a few easily available wins that would go some way to fulfilling the task she had set for herself.
“We have created a central trading desk. Before I joined every manager traded for themselves. And, while some managers are very good at it – they place an order with a broker and leave it at that – others have a tendency to follow it, to spend time on it.”
The desk is already working but, Morris said, will be fully operational in the first quarter of 2017. The second change Morris has made since joining is to assemble a team of product specialists led by former Kontiki-manager Hilde Jenssen.
“We have a huge retail client base and this team will take care of a lot of the work that was previously done by the portfolio managers,” she said.
Both of these changes, said Morris are designed to free up the managers to spend more time on finding great stock ideas.
Looking ahead, Morris said, her focus will be on ensuring that the performance of the firm’s fund range improves.
“For any CIO, having eight out of 11 funds outperforming as we did in 2016, is a good achievement. Unfortunately, two of the funds that are underperforming are our flagship funds: KonTiki and Global.”
Value relief
Over three and five years, both funds are fourth quartile, according to FE Analytics data, while over one year the Global fund is third quartile but KonTiki has moved back up to the first quartile of its peer group.
Part of this shift, Morris said, could be attributable to the return to form of Value as a style as markets have begun to rotate.
While Morris agrees that the market is currently witnessing a rotation away from bond proxies toward more interest rate-sensitive stocks, she is of the view that this less a simple style shift and more a return to something approximating normality.
“If I were to pick a theme, more than growth or value I would say what is going to characterise this next period is stock picking. There will be greater dispersion, everything won’t just go up with the tide because the tide is moving back. And, as a result there will be a reward for those managers that focus on their trade,” she said.
In the longer term, Morris said, the firm is also mulling a few other changes, including adding depth to its portfolio management team and the launch of some new funds.
“We will look to strengthen the team both in terms of how it is organised and in terms of attracting new talent,” Morris told Expert Investor’s sister publication Portfolio Adviser. “And we will see whether we can replicate the success of the Skagen Focus Fund.
While nothing is certain yet, Morris said any new fund would look to capitalise on Skagen’s key competencies: value investing, detailed analysis and emerging markets.
