Having spent almost 28 years working for a single firm that started as a small local stockbroking company, but over time morphed into large international investment bank, my first day at TEAM was almost a trip down memory lane. A friendly, rather genteel atmosphere appeared to prevail, with a relaxed, but still focussed approach to the tasks ahead.
Thoughts of how I would fit in had dominated my mind for some time, with my own fears that I had become institutionalised by big banking culture certainly evident. As much as I would hate to admit it to myself, in a large organisation there was a comfort in knowing what was expected of you, even if it meant an over emphasis on micro management and control. Certainly, I would not miss the joys of the annual computer-based periodic performance assessments that all had to participate in, which over the years seemed to become ever more complex, over-engineered and time consuming. Regular computer glitches only added to the frustrations for all concerned, but now that was over, what would it be like at TEAM?
The more laid back and less formal approach that is typically evident in smaller operations became quickly apparent when my first conversation with Ben Shenton (the Boss) centred on whether I wanted a chocolate biscuit to go with the coffee he was about to make. Although the conversation quickly moved on to broader strategic issues, Ben was keen to understand what I felt were the unique selling points of the company, rather than tell me himself. He felt that a fresh pair of eyes would provide interesting feedback, that would either re-affirm his own view, or at least test it.
Some obvious distinctions immediately sprang to mind. A privately-owned investment management boutique, private client led, relationship driven, bespoke portfolio solutions tailored to client needs, essentially a re-gurgitation of stuff that I had read. Fortunately, rather than state the obvious, for once in my life I decided to hold my tongue and suggested that we discuss further after a few days of settling in and research.
I must admit, I was a bit surprised at my initial findings, which dispelled a few misconceptions I had held. TEAM is an acronym for Theta Enhanced Asset Management, which is not only a bit of a mouthful, but to me at least implied a rather complex, option orientated approach. I googled ‘theta’, which is defined as ‘the rate of decline in the value of an option due to the passage of time’, which appeared to support my initial impression of an option-based approach.
To my relief, after reviewing a sample batch of portfolios, it was clear that the investment style has always been uncomplicated, based on sensible ideas and supported by consistent long-term demographic themes, which have helped generate impressive investment performance returns for some time. What did surprise me was how little of this was known to the outside world, it seems that TEAM has punched above its weight for some time but has been far too modest to actively promote the fact!
I discovered that a multi-asset TEAM portfolio strategy would typically be a blend of corporate bonds, equities, investment trusts and exchange tradeable funds. Corporate bonds are included to provide an attractive income yield in a low interest rate environment, which TEAM feels is likely to continue for some time, with long term secular deflationary forces still evident. The equity component is a blend of equities, investment trusts and exchange tradeable funds that reflect the long term, largely demographic trends that TEAM believes will be dominant for many years to come.
Unsurprisingly, hedge funds are not included in any of TEAM portfolio strategies due to their lack of transparency, illiquidity and high costs, whilst offshore funds have also been largely absent, again due to the layering of costs, but also since most international funds have underperformed comparable market indices. Moving forward, given the trend of lower fund management charges, combined with the launch of more thematic funds, it is likely their inclusion will be re-considered.
Another important differentiator is that TEAM has a benchmark aware mentality, which allows for its long-term investment themes to realise their full potential. Too often investment managers become slaves to their benchmarks and are often forced to exit specific long-term themes in reaction to short-term events, typically at the worst possible time.
So, after my first week in the job, I would summarise the general characteristics of TEAM Asset Management as follows:
- Privately-owned investment boutique
- Flexible bespoke solutions tailored for private clients
- Uncomplicated investment approach
- Collaborative Team based approach
- Strong Investment performance
- Focus on long term investment themes
- Benchmark aware, not slaves
- Competitively priced
A more specific observation would be as follows:
In the investment management industry, clients have never been treated equally. A tiered system has always applied, where clients are categorised according to their value and the type of service they expect.
Typically, those clients in excess of £5 million would expect an inclusive high touch, competitively priced (less than 1%) personal service, in sharp contrast to those worth less than £500,000 who would receive a remote low touch, high cost service (typically above 2% plus additional charges such as entry and exit fees)
So in answer to Ben’s question, I think TEAM’s key unique selling point, is its ability to provide a high touch, competitively priced bespoke personal service to its largely local (rather than international) client base, especially to those clients, who if managed by larger financial institutions, are likely to be bundled into packaged solutions with high annual charges and in many cases additional entry and early exit charges.
Written by Tony Wood.