An actuary by training, Douglas first joined Platinum in 2003 as an investment analyst, having spent some time at the Commonwealth Bank as a product actuary and, prior to that.. More
Excerpt from a speech presented by Douglas Isles, Investment Specialist at Platinum to the Investment Data & Technology Summit, 21 August 2019. Douglas made the case for ‘man and machine’ in investing rather than ‘man or machine’. Human input is critical when making long-term investment decisions – machines are better suited to winning the ‘race to zero’ – but data is essential, and machines can help with prioritisation and saving time.
As a fundamental equity investor, our business relies on generating superior returns to the market. The elusive search for ‘alpha’ is our bread and butter.
Funds management businesses are straightforward: develop an investment strategy; raise capital to invest on clients’ behalf; and demonstrate competence to maintain clients and attract more. Things fall down when outcomes don’t match expectations.
There’s a big impediment to success. Investing is about solving a long-term problem, but short-term results are published continuously. Investor and manager time horizons don’t always align. Good performance attracts customers. However, they are inclined to leave when things get tougher.
Several studies and our own experience bears this out. It’s startling to chart the performance of the Platinum International Fund with flows (see Fig. 1). When performance is strong, net flows increase. When performance softens, net flows fall.
Fig. 1: Performance vs. Flows - Platinum International Fund
Source: Platinum Investment Management Limited, FactSet.
Performance Composite: Average of 1- and 3-year absolute & relative returns (to MSCI AC World Index)
Imputed flows: Sum of NAVt – NAVt-1 * Monthly return; for the 6 months following composite result
NAVt: Publically available month-end Net Asset Value as at time, t
Past performance is not a reliable indicator of future returns.
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