Peter Reis hast just recently taken on the role of head of fund research at the independent fund platform ifsam – International Fund Services & Asset Management S.A. He is responsible for comprehensive research support of the international institutional client base through analysis, selection and regular monitoring of investment funds in all asset classes. In addition, he oversees the development of all research processes and tools as well as the web-based fund analysis platform ifsam Research. Before joining ifsam he held various positions for the German cooperative financial network, last recently as a senior fund analyst at Attrax Financial Services S.A. He has more than a decade of investment experience, is a CFA and CIPM Charterholder and holds a master in business administration.
1. When and how did you start your career in the financial industry? Did you have any other vocation?
After completing my degree in business administration with a focus on finance, I started my professional life in the fund reporting department of an asset manager during the global financial crisis in 2009. As part of my job, I gained substantial insights in the areas of fund accounting and regulatory reporting and was able to gain a wide range of experiences and knowledge of the fundamentals and legal frameworks of investment funds. Equipped with the extensive knowledge of investment analysis, that is needed for the Chartered Financial Analyst (CFA) exams, the path led me directly to the area of fund selection.
I was sure that I wanted to work in the financial services industry from a very early stage, but wasn’t that sure about the specific area. Eventually, it was a result of explicit decisions within given circumstances.
2. How does your work on a daily basis look like and what kind of problems do you normally face as a Head of Fund Research?
I currently have a self-imposed strict focus on the review of the existing fund research processes and their enhancements. I thereby start at the very beginning with the fundamental base of the quantitative fund valuation model and will develop all interconnected parts of the fund research process including ESG integration and an extensive self-created monitoring tool.
The daily work as head of fund research demands at the current stage a very detailed evaluation of an enormous number of academic studies which are related to fund research. I am looking for key ratios with proven predictive characteristics regarding future fund results. This will be a crucial input into the composition and calibration of the quantitative fund assessment tool.
While the focus of current phase is the development activities, the regular daily business always includes a constant watch on further development ideas combined with monitoring activities of the recommendation list, detailed analysis of specific funds, fund manager interviews and market research.
3. Which aspects do you consider more important when selecting a specific fund? Do you have any red lines? or is there anything that you usually take in consideration when choosing a fund?
The most critical issue of the fund selecting process overall, is to reconsider the congruity of the fund.
The congruity assessment starts with the analysis of the key characteristics of the fund strategy, the implementation of these in real transactions and the measurable results. These assessments are the basis for selecting the most suitable peergroup and benchmark for a specific fund.
Only after that initial critical step the more detailed quantitative analysis can follow, because the relative key ratios contained therein are partly profoundly benchmark sensitive and therefore only meaningful in this case.
Over the further assessment and verification of the congruity during the fund manager consultations within the qualitative part of the selection process, the observation of the congruity is also a key task of the final monitoring tool and processes.
Another overlying eminent aspect is the resilience of the fund. Some aspects which could be seen as positive signals for that are a clear and transparent investment strategy, high liquidity of investments and a low dependency of unusual and very specific market environments.
4. Within the fund selection process, which task is the most time-consuming?
First, the assessment of the characteristics of new funds, their suitable benchmark and/or the market segments contributing to the future returns of the fund is a central but also time-consuming task.
Another time-consuming activity can be the detailed performance assessment of recommended funds and if that matches with the previously determined fund- characteristics, statistical expectable value range and market circumstances.
Finally, the fund manager consultations which require an ex-ante detailed preparation to focus on the most relevant issues within the meeting, like red flags and outperformance related characteristics of the fund, manager and management company. As well as an extensive Ex-post analysis to separate important/high impact from unimportant/low impact issues to determine a compact and meaningful assessment of the fund.
5. What has been the most extraordinary thing you have seen in markets as a fund selector?
After an extensive analysis based on all available documents and data, we decided within the fund selecting team at my former employer to recommend a fund from H2O. Due to the fact that we were responsible for the recommendation list for bank advisors with a more conservative client base, we strongly overweighted risk related key ratios and characteristics in our selecting process.
Thanks to these facts, we decided to recommend the H2O Multi Aggregate Fund with a balanced risk-return target and no illiquid positions, which was therefore not directly affected by the later H2O/Windhorst problems which attracted enormous media attention and huge effects on the company Natixis and H2O.
On the one side, we learned with a bit of luck, that to stick to key targets developed in long -lasting processes is essential to avoid immense risks. On the other side, the case also shows that you can’t know everything and that humility is a good advisor to stay constantly aware of unexpected risks. You have to be careful not to invest in “black boxes” or overly complex investment cases. But at the same time, you should not lock the door in advance to promising and progressive new investment themes and styles.
6. Which asset classes, sectors, or funds do you think are particularly interesting right now?
Due to the current high uncertainty about inflation and the answers of the central banks in the short-/midterm, investors should adopt a more balanced style structure of their fund universe.
We see an advantage for strategies focusing on quality and resilience at the fundamental value assessment in their company selection process. A high level of leverage, both at the company level and as a crucial part of the fund structure should only be held with caution.
Last, recently very successful strategies that focus on the “quality growth” style should be reviewed if their concept will still be successful in an expected time period of higher inflation, interest rates and uncertainty. Those strategies which focus on a growth target of a fundamental value such as revenue or cash flow should be overweighted in relation to others aiming to find new growth stories without imaginable substance over a manageable period of time.
The near-term environment should also favour alpha focused investment funds instead of the ones predominantly dependent on Beta.
7. Would you give any advice to anyone wanting to start a career in the asset management industry?
I have always enjoyed working in the asset management industry because of the inspiring and friendly atmosphere, and I can therefore thoroughly recommend everyone to consider this career path.
The asset management industry needs to adapt very quickly to new enhancements and changes to stay competitive and relevant. A career within this working environment therefore calls for people who really enjoy constantly enhancing their knowledge and skills.
I would give everyone the advice to build a solid knowledge base from the ground up which will involve a considerable amount of steady self-studying, and furthermore to benefit from the various range of well-seasoned individuals within the industry. Getting in tune with a diverse way of thinking, and this will lead to the expansion of your overall experience and knowledge.