Gunnar Knierim joined AllianceBernstein in July 2011. As a Managing Director, Financial Institutions he covers institutional and semi-institutional clients ranging from asset allocators over fund-of-funds to pension funds – focusing especially on big banks, family offices and private banks in Germany, Austria and Luxembourg. From 2005 to 2011 Gunnar Knierim was a Senior Sales Director at Pioneer Investments in Munich where he also took care of institutional/semi-institutional investors. Prior to that role from 2002 to 2005 he was Head of Fund-of-Funds/Multi Asset and Senior Portfolio Manager Equities at Warburg Invest Kapitalanlagegesellschaft mbH in Frankfurt am Main, the asset management arm of M.M.Warburg. He started his career at Commerzbank AG in 1996 and was a Portfolio Manager at ADIG/COMINVEST (nowadays Allianz Global Investors) from 1999 until 2002. Gunnar Knierim holds a degree in business administration from the Duale Hochschule Baden-Württemberg in Mannheim and is a Chartered DVFA/CEFA Investment Analyst.
Interview with Gunnar Knierim, AllianceBernstein
1. If you could give one career advice to young professionals in the industry what would that be?
Looking back at my 24 years in the financial industry, the best advice to young professionals would be to stay calm and focused whatever their career plan may be. In the banking industry and asset management business change is a constant companion, so flexibility will be a key requirement for your working life. I started as a financial advisor at Commerzbank while studying at university. My goal was always to become a portfolio manager at a fund management firm. I reached that target already at the age of 23, so after some years I wanted to expand my horizon and expertise to more than just managing money. So I started at a big international asset management firm on the institutional sales side.
If you want to be successful, it is always helpful to see the industry from various angles – from being a client to servicing clients.Gunnar Knierim, Managing Director at AllianceBernstein
2. Could you tell us some specifics that come with your role as Managing Director, what is your main focus in this position?
In my role in the EMEA Client Group at AllianceBernstein, I am looking after institutional and semi-institutional clients in Germany and Luxembourg. My focus area are the key fund selections units at the big banks like Deutsche Bank or Commerzbank. I also cover discretionary portfolio managers and fund-of-funds managers at clients like Deka, Union Investment or Allianz Global Investors. Last but not least, I advise private bankers and independent financial advisors on how to best allocate their clients´ money. Having been a portfolio manager and financial advisor myself is therefore a big advantage in my day to day work.
3. Could you tell us the most difficult aspects of your job and also the most positive one? Could you highlight an event in your professional career that stands out and that you are very proud of?
The most positive aspect of my job is pretty simple: it is the opportunity to work together with so many talented and experienced people on my clients´ side and at AllianceBernstein. Financial markets change every day, so your job is never boring and working together with such a diverse workforce with so many different backgrounds at AB gives me the opportunity to constantly expand my knowledge and personal horizon. On the other hand, the most difficult aspect of my job is to fulfil all expectations of our portfolio managers. What do I mean by that? By having a wide range of excellent products across all asset classes at AllianceBernstein, colleagues hope to be in the sales focus at all times. But unfortunately, not every asset class is of importance to our clients, and they can´t exclusively invest into AB funds. So it is crucial to concentrate on the best opportunities from an asset allocation angle at any given time, instead of coming to the client with a cornucopia of strategies where he or she completely loses orientation.
There were many highlights over the years in my career, but I would say that the launch of a unique client event like our annual Investment Colloquium in cooperation with UBS Asset Management was an outstanding achievement. This investment conference will be held for the 9th consecutive time in 2020, and we always host between 80 to 100 clients from Germany, Austria, Luxembourg and the CEE in Berlin. For many of our clients, this is the conference highlight of the year, which makes us very proud.
Another highlight of my career was during my time at M.M. Warburg, the Hamburg based private bank, where I invented the first ever Sustainability Fund-of-Fund in 2004 – long before the ESG/SRI boom started.
4. Taking into consideration the current market situation, which assets do you think will perform better in 2020? Any safe-haven assets?
With leading indicators bouncing off record lows and governments easing lockdowns, attention is turning to the shape of the recovery and post crisis landscape. Key factors for the pace and durability of recovery will be the effectiveness of policy support for households and firms as well as the extent to which the virus can be contained as restrictions are lifted. We’re generally optimistic on both. But even in a best-case scenario, recovery is likely to be slow and uneven.
The recent rapid equity market recovery was unprecedented as the sell-off in March, so for the rest of the year I expect volatility to remain high. Clients tend to find good value on the Equity side. AB strategies like Concentrated US, Concentrated Global, American Growth and Sustainable Global Thematic are attracting clients´ assets. On the fixed income side yields are far more attractive as they were at the beginning of March. Products like our Income flagships AB American Income Portfolio and AB European Income Portfolio are offering very interesting yield-to-worst.
When it comes to safe-haven assets, the healthcare sector has been a reliable safe haven during even the most challenging markets. But the novel coronavirus panic is raising questions about its resilience. By looking beyond the pandemic at changes sweeping the industry, investors can find defensive healthcare stocks that offer long-term growth prospects, too. Tech stocks weren’t considered defensive investments in the past. But as the coronavirus crisis reinforces technology’s fundamental role in our lives, investors can find sources of risk reduction and growth potential in companies that have become digital utilities enabling global networks. Global technology stocks have enjoyed a solid run in a tough year so far.
5. Which AllianceBernstein funds can best fit in the current market environment?
I highlighted already a few strategies in the question before that offer interesting investment opportunities for our clients and prospects.
- On the equity side we are seeing generally great interest in all our high conviction strategies. On top of the above-mentioned AB funds our Low Volatility Equity services are an ideal fit for investors in these uncertain times: AB Low Volatility Equity Portfolio, AB Emerging Markets Low Volatility Equity Portfolio and AB Low Volatility Total Return Equity Portfolio. These strategies offer very attractive upside/downside captures over a full market cycle.
- On the fixed income side fallen angels are an area where our analysts and portfolio managers see potential. Even in good times, it’s not unusual for companies clinging to the bottom rung of the investment-grade ladder to become fallen angels. Yet concerns surrounding fallen angels are especially pronounced today, and not just because of the coronavirus pandemic and concurrent oil crash. Given the sudden onset of liquidity challenges and reduced access to capital in today’s environment, we estimate that 8.5% of the US investment-grade corporate market will be downgraded below investment grade. For investors who can hold them, owning some angels after they’ve fallen may make sense. This is because fallen angels tend to enter the high-yield universe undervalued relative to their credit fundamentals and often end up performing very well. This has held true even following a sizable surge in volume. The Great Recession, for example, saw a big increase in the volume of fallen angels; in 2009, total returns on fallen angels surpassed 60%. For high-yield specialist like AllianceBernstein, that’s an opportunity worth exploring. So strategies like our AB Global High Yield Portfolio could offer very attractive return potential going forward. But investors should remain prudent and expect further volatility.
6. Everybody in the industry is talking about ESG investments. Why integrate ESG factors in the portfolios, and, do you see this trend continuing or is this a fad?
The trend of investing under an ESG framework is definitely more than just a fad. It is the new normal, and for asset managers to be successful in the long run, ESG integration into the investment process is a basic requirement. We already see that many of our clients are starting to integrate an ESG analysis into their fund selection process.
Fortunately, AllianceBernstein was at the forefront to integrate ESG in most of our investment products, and when you look at external ratings on ESG inclusion (like MSCI or Morningstar), AB is garnering positive results. We were early in signing the UN PRI as a firm and adopted the UN SDGs as a guideline for dedicated investment funds shortly after their introduction in 2015. We’ve developed a disciplined research and investment process over several years that is designed to find stocks that can make a difference and deliver long-term returns in a focused sustainable portfolio. Our thematic asset allocation framework draws on the UN Sustainable Development Goals. The 17 goals and 169 specific targets address areas of critical importance to humanity, including eliminating poverty and hunger, improving access to education and healthcare, and addressing the negative impact of climate change. Equity investors can make a big difference by adopting a coherent sustainable agenda, in our view. Thematic asset allocation aligns a portfolio’s target securities with the most important development issues flagged by the UN.
ESG integration in research allows for more comprehensive financial forecasting and risk analysis at the security level. And active engagement helps promote positive change at companies, which can also be a driver of stronger investment returns. On the equity side our AB Sustainable Thematic Equity Portfolio and AB Sustainable US Equity Portfolio are showing excellent results of all periods. And this UN SDG framework is not only working on the equity side, since a while AllianceBernstein is also offering a very interesting strategy on the fixed income side: the AB Sustainable Thematic Credit Portfolio.