Stéphane is Chief Investment Officer at Allfunds. Before joining Allfunds, Stéphane was founder and Vice-Chairman of ABN AMRO Investment Solutions (AAIS), a pioneering European multi manager and sub-advisory platform. From 1998 to 2019, he was the CEO of AAIS and a Managing Director of ABN AMRO (from 2007 onwards). Stéphane was also the Chief Economist and Strategist of Neuflize OBC, a leading private bank in France. In his role at Allfunds, Stéphane is responsible for identifying and implementing possible opportunities that contribute to growing Allfunds investment solutions capabilities in particular, Allsolutions the sub-advisory business of Allfunds. Stéphane holds two Master´s degrees in Economics and Business Administration, as well as a post-graduate diploma in Banking and Finance.
1. When and how did you start your career in the financial industry? What brought you to the financial sector?
I started my career at the end of the 1980s as an economist in a public research centre attached to the University (Sciences-Po Paris); but, very quickly, the financial markets appeared very attractive to me because of their nature as a sounding board for political, economic, and social events on a global scale.
My entry into the financial sector was natural for someone with an economist’s background: I became a global market strategist; a few years later, my desire to take actions – to take positions on the financial markets – combined with my global approach led me, once again naturally, towards multi-asset portfolio management. It was at this time – the late 1990s, at the dawn of open architecture development – that I founded one of the first multi-management companies in Europe.
2. How does your work on a daily basis look like and what kind of challenges do you normally face as a Chief investment Officer at Allfunds?
I joined Allfunds at the beginning of last year as CIO, with the responsibility of developing the Group’s B2B investment platform.
In essence, we have built a digital platform that allows our clients to navigate more easily through the investment value chain, using the tools and solutions we provide to enhance their own offering.
In practice, our investment offering is organised around 4 pillars: Fund Research services, enabling our clients to manage their fund selection lists, from simple assistance to full outsourcing where appropriate; the Funds Solutions offering, with our newly created B2B sub-advisory platform and the private assets fund offering resulting from our partnership with iCapital Network; the Portfolio Solutions offering, which we will be rolling out by the end of the year, with customised model portfolios tools allowing our clients to use this service with total flexibility (whether it be risk profiles, asset allocation or the open architecture investment universe);
Finally, Sustainability services are particularly important to us in that they support our clients in their efforts to manage their assets in a more sustainable manner, by providing them with comprehensive ESG analysis and reporting services.
All in all, it’s a role I’m passionate about because of its client focus. Allfunds does not invest on its own account or on behalf of third parties but uses the full power of its WealthTech digital platform to help its clients improve their investment processes and the services they provide to their end customers.
3. After more than 30 years in the sector, what have been the most extraordinary things you have seen in the markets?
The first things that come to mind are the crises and the immense impact they had on society and people. Just to name 3: the dot-com bubble in 2000, the great financial crisis (GFC) and the meltdown of the financial system in 2008, and of course, the recent Covid crisis.
From a market psychology point of view, I always find it fascinating that the human’s brain is wired to look for patterns and to hope for those patterns to continue in the future. This behavioural bias had the power to create substantial bull markets like the Japanese asset price bubble of the late 80s or the US equity market post GFC or, closer to today, the equity market run post Covid crisis. This mindset will surely produce more strong bull markets in the future.
The creative mindset of market participants to constantly look out for new ways to deliver returns is also something that I find extraordinary. There’s no secret recipe for this thirst of creativity and it can come in any shape or form and from anyone. That’s why keeping your team aligned and motivated is always a good practice.
4. From your experience, and as a CIO of Allfunds – How do you believe technology has changed the sector?
Technology has been a key component in the industry over the last years. It has allowed us to use a more systematic approach to cover the most administrative parts of the work, allowing us to focus on the value-added areas of the fund selection process.
Another key aspect of the technology is, from a client experience perspective, the huge effort we have made to make the delivery of the products/services completely digital and online for clients, thus being able to communicate with them almost on a live basis.
The last critical aspect of technology is the creation of automated controls on various events for the managers/investments we oversee; these controls are paramount to incorporating a continuous monitoring and alerting system as part of the selection/investment process.
5. Taking into consideration the current market situation, what is your advice to investors? what do you believe will be the next industry trends?
It is always delicate to give advice as personal circumstances should always be considered. Nevertheless, I could share a contrarian one: If you are convinced about your strategy, don’t diversify, and maximize your exposure. To the opposite, if your conviction level is mitigated or low then diversify!
Regarding industry trends, it looks like ESG will continue to lead the trend, not only because of the demand generated by the growing awareness of climate change, but also because active managers may use it as a way to fight back the passive cashflow tsunami.
Exposure to Crypto currencies, if handled properly, could be another powerful trend: if it finds a way into investors’ portfolios it could bring substantial diversification benefits to the traditional equity and fixed income exposures.
6. Which aspects would you consider more important when selecting funds? and which are the less important?
Fund selection is not an exact science. Of course, the philosophy, the investment process and the team have to all be excellent. The track record must be strong as well, with good rationales for the drawdowns or underperforming periods. But some aspects that are more difficult to assess are truly crucial: we call them the intangibles. A typical one is the passion of the risk takers for their investment style: feeling the passion of the portfolio manager and his willingness to outperform because he is convinced that his process works is definitely an important consideration.
One aspect of fund selection that is usually given too much credit is the size of the team. Of course, of team of 2 or 3 people can’t pretend to cover a vast number of stocks or bonds, but a team of 30 people is not necessarily better than a team of 25. The quality of each individual, their interactions, and how they share and pass on this knowledge is a more important question.
7. Would you give any advice to anyone wanting to start a career in the asset management industry?
The industry has certainly lost some of its “flamboyance” over the last 30 years, but it has also gained in rigour and transparency, which is in line with its ultimate objective: to manage the assets of its clients, according to their objectives, while minimising risks of all kinds.
This industry still has great career potential for young and talented people wishing to join it: I would naturally mention the risk and compliance functions, those linked to digital transformation or ESG, not forgetting the continuing attraction of private assets management.
More generally my advice is to stay on the lookout for innovation, to anticipate and seize opportunities in a rapidly changing industry. It is also one of the few industries – not very capital intensive – where the entrepreneurial route remains possible!