After graduating in pure Math i decided to jump in the finance world, first from the quantitative persperctive; i studied quant math in Milan then i moved to Paris and then came back to milan to start working as a risk manager in 2004. After 5 years i decided to move to the front office side of the business, starting as fund analyst and then as a portfolio manager. Since 5 years ago i coordinate the fund management, selection and advisory business in BCC Risparmio & Previdenza.
- Could you please tell us about the Fund Selection process at Bcc Risparmio e Previdenza?
In bcc R&P we developed our internal system few years ago, and is based on 2 pillars: a quantatitative scoring and a qualitative due diligence. The first pillar is enterely built in house, and it has a forward looking approach. From the external providers we use just row data. This quant part works well enough for traditional and directional asset classes, but for the alternative and multiasset part it is essential the qualitative due diligence analysis, in other words to meet the manager.
2. How many people are in your team, and how is it organised?
The fund selection activity is followed by 8 people that have few core asset class each, associated as principal owner of the analysis. We have also an esg analyst that cover all the strategies from the ESG perspective, and the final judgement is weighted with this last one. Every month we share the analysis and check the performance of what we selected. If a fund fall to the last rate, the fund analyst should explain why maintain the position, buti f the following months is still in the last position we cut the position.
3. What parts of your role do you find more challenging? And what parts would you say are the most interesting to you?
I think the more challenging part is to try to stay skeptical, without being involved from the human perspective. Because at the end of the day it’s a human business where the connections have a role, where you have to trust unknown people and you cannot do this just with trust, faith and friendship.
The most interisting is that in my opinion you cannot achieve the perfection in this job. There is always something new, something that changes from the past, it’s a very fluid process and you have to evolve with it, or you will loose the connection with the front of the market.
4. What aspects do you consider more important when selecting a fund for the platform? And what metrics do you take into account?
It really depends on what we are analysing: if it is a traditional, directional fund we trust on the statistical metrics used in our quant screen like sharpe ratio, volatility, alpha, and others. We never challenge a traditional fund manager on a single name presence, like why did you buy BMW instead of FCA. I think it’s not our job to do the analyst of the single name. I really believe that our goal should be to ask why do you have a really growth name (spotify for example) if you are a value manager, that means assuring that there is a coherence between what the fund manager declares and what he is doing. I think in our job the most important thing is coherence. If the fund manager explains correctly the process, the investment cases , the portfolio costruction, is then oru duty to know when to use what.
5. From your experience, how do you believe technology has changed the sector?
Technology has a crucial role. It has semplfied the job and let the fund analyst concentrate on the real value added. I don’t believe that it can substitute entirely the human aspect but can help to semplify it. 15 years ago you should analise the data, poor quality data, by hand. Now you can expect that your provider produces an in deep analysis to help you ask the right questions. There is still a lack of accuracy in the data so the job hasnt finished yet, but we are going in the right direction, and now with some aspect of AI we can do the next step. But always with the analyst in the center of the process.
6. What processes do you have in place to identify a good manager?
We are lucky enough that almost every fund manager or fund house coming in milan i salso coming in our offices, so we are engaging everytime with new ideas. The difficult part is always maintain an objective point of view. Another good way is to partecipate in all the events that the industry organizes in italy and abroad. In this kind of meeting we have the possiblity to see how our peers work and it is always interesting to have this brain storming. Clearly it is not enough to decide to buy some fund but as a first step of the process, meeting new manager can help.
7. How important is it to have a market opinion when choosing the product?
I think the fund analyst should know what happens in the market, not to choose the fund manager that agreed with the view but to test if the fund manager is coherent. How can you undestand the process, the risk management phase ecc if you dont know In our case every fund analyst partecipates to the market calls and has its own bloomberg terminal to follow the markets.
8. What sectors or geographical areas do your team find more interesting at the moment?
From the fund selection perspective we are looking for thematic funds and for alternative funds. Is some way we try to build a long term horizon investment but with a short term focus on protecition and decorrelation. And of course every new fund we will introduce in our products will be with a focus on ESG.
9. Which sectors and trends do you think will perform better in the last quarter of the year?
I think we are in a phase of normalization of the markets, due to the aknoledgement from the market perspective that the central banks will conitnue to fight inflation. So i expect some reduciotn in general volatility but not for the IT sector. In the short term financials can do better than the market.
The unstoppable trend is on ESG funds. I think in 2023, due to regulation, we will see a change on the perception of the esg theme with some volatility caused by the reshape of portfolio to achieve the promised goals.