Werner Richli is a senior portfolio manager for Global Real Estate Securities. He joined Credit Suisse in 1987. Werner used to be an equity analyst at Credit Suisse’s Investment Banking division (Credit Suisse First Boston), covering European real estate stocks. Prior to that, he analyzed building materials, construction, and utility stocks, and was involved in several initial public offerings. He is a Certified European Financial Analyst (CEFA) and earned a master’s degree in Business Administration from the University of Zurich, Switzerland.
When and how did you start your career in the financial industry? Was a role in the investment funds industry always attractive to you?
I have always been interested in a job in the financial sector. After my master’s degree in Business Administration, I started as a financial analyst in the research department of Credit Suisse, focusing on building materials, construction and utility stocks. Then I moved to our Investment Banking division to cover European real estate stocks. 12 years ago, I joined our Equities team within Asset Management to run a fund in the infrastructure area. I always loved browsing in financial reports and creating models to assess companies.
What key principles drive your investment process and why?
The CS (Lux) Infrastructure Equity Fund invests along the value chain of the global infrastructure opportunity set. The investment universe encompasses companies that provide the facilities and services necessary to maintain and develop modern infrastructure. The objective is to maximize total return from capital appreciation and dividends over extended periods. It follows an unconstrained, non-benchmark-oriented approach to identify attractively valued companies positioned to benefit from the infrastructure theme.
The broad aim of the fund is to identify the top 40 to 60 investments out of a potential universe of almost 500 stocks, and then to combine them in the optimal way. The investment process reflects the consistent and disciplined application of ranking the universe according to the expected macro-economic outlook, the perspectives of each individual subtheme and a bottom-up stock selection process, based on fundamental analysis. In the past 3 years, the fund has shown a strong performance, outperforming its reference index MSCI World.
Enormous infrastructure governmental programs and the global energy transition campaigns provided a supportive environment for infrastructure-related themes like halting climate change, decarbonisation, electrification, e-mobility, and new radio (5G).
What companies do you like to include in your portfolio? Do you have any red lines when it comes to selecting an asset for your portfolio?
The fund focuses predominantly on companies with predictable, stable cash flow generation and long-term growth operating in regulated or concession-based businesses or in those with relatively high barriers to entry. These companies belong to one of the following four themes: utilities, transport infrastructure, oil & gas storage & transportation infrastructure, or telecommunications infrastructure.
As of April 30, 2022, Cheniere Energy, RWE, Enbridge, Crown Castle and Vinci cover the top positions. In terms of geographical distribution, the fund is mainly invested in the US, Canada, Spain, France, and the UK. ESG-related risks and opportunities are an integral part of the investment process because they can affect growth, profitability, and the cost of capital in the long term. Therefore, a red line for selecting an asset for our portfolio are companies involved in controversial business activities.
How are you adapting your portfolio to the current market situation?
We are currently witnessing a global renaissance in infrastructure spending. After a decade of underinvestment, critical infrastructure in many countries in Europe and the US is now in a precarious state, with a negative impact on economic development. Countries with little financial leeway need to attract private investors. This creates new opportunities for infrastructure companies. With the energy turnaround, government infrastructure programs took on a new dimension.
The climate targets set and the recession feared as a result of the COVID-19 pandemic have prompted many governments to launch comprehensive fiscal programs. During these times of rising energy prices, oil & gas storage & transportation stocks perform well. Furthermore, we increased the weight of interest-sensitive utilities which cash flows are most protected against raising inflation and simultaneously, fears of slowing economic growth or of a recession negatively impact cyclical transportation infrastructure stocks.
How would you describe yourself in 3 words?
Analytical, committed, experienced.
Would you give any advice to anyone wanting to start a career in the asset management industry?
I encourage anyone who has a flair for numbers and enjoys advising clients to pursue this career. Our work is very diverse and encompasses a wide range of activities. This includes the creation of financial models, managing an equity portfolio, processing of information, regularly communicating with management and analysts, as well as reporting and presenting to clients. We usually work in the office, but also spend a lot of time traveling.