Karol Ciuk from Pekao TFI is our Fund Selector of the Month

Karol Ciuk joined Pekao TFI (first investment funds manager on the Polish market) in 2017 as portfolio manager and since 2019 he is also Head of Global Strategies. He has 13 years of professional investment experience in various roles (senior analyst, investment advisor, portfolio manager) in several financial institutions in Poland. He holds a master’s in finance and accounting from the Warsaw School of Economics. He is licensed stockbroker and investment advisor by Polish Financial Supervision Authority and is a CFA and CAIA Charterholder.

Can you walk us through your experience in fund selection? When and how did you start your career in the financial sector?

I started my career in 2011 as a trainee on the sell side in a brokerage house in Warsaw. Then I worked in an asset management companies, where I was successively responsible for managing unit-link strategies for insurance companies, segregated accounts with long-only mixed strategies for individual clients and a market neutral close-end fund. In 2014 I focused on investment advisory services for wealthy banking clients where asset allocation and fund selection was an essential part of the investment process. Seven years ago, I started managing global multi-asset and fund of fund strategies at Pekao TFI (the oldest and one of the biggest investment fund company in Poland) and since 2019 I have been the Head of Global Strategies Team.

Taking a brief look at your working life, what would you highlight about your professional career?

I am experienced in managing multi-asset strategies with expertise both in bottom-up and top-down approach (from a single name and fund of fund perspective). It gives me good understanding how to handle manager selection depending on different asset classes.

What aspects do you consider most important when selecting a fund for a portfolio? Which ratios and metrics do you consider most important when including a fund in your portfolio?

There are many factors worth considering during the quantitative analysis of investment strategy including thorough performance attribution and alpha analysis with focus on sustainability and correlation with market and peer group. Besides, metrics like information ratio, duration times spread, drawdown, active share, turnover and, last but not least, all costs. Statistics are not enough, though. Investment philosophy and decision-making process are critical to understanding how the track record was generated and whether superior results are highly probable going forward. Moreover, looking at integrity of the business, operations and staff are essential for the final assessment of investment strategy.

What is the current asset allocation of your model portfolios? Which sectors or geographies would you highlight?

Our allocation is spread on many asset classes  -from fixed income, through equity to alternatives . Within fixed income, we currently prefer investment grade over high yield and do not exclude the latter, but tend to be very selective regarding potentially higher default rates in the current restrictive monetary environment and given the risk of economy slowdown. We favour short end of the yield curve in “core” bonds like US and Europe, but due to the interest rates peak and global inflation downtrend, duration is becoming more interesting for us. Equities could be more vulnerable in the second half of the year, so we have a bit more tactical approach on this side. 

What mistakes are most frequently made in fund selection?

One of the most common mistakes come from assumption that the manager is skillful but in fact was just lucky in the past. Based on it we can select or retain someone who subsequently underperforms expectations.

What assets do you think will perform better in 2024?

Macro environment is uncertain and thus the risk on equities could be higher the second half of the year. Momentum in some part of the commodity market like gold should allow for good return throughout the year.

If you could only ask the fund manager one question, what would it be?

'What do you believe is your biggest competitive advantage over other portfolio managers in your asset class?'

How has the work of the fund selector changed in recent years? How do you think it will evolve in the coming years?

I think the community has evolved and become more professional, specialized and focused on continuous improvement. After pandemic, work in a hybrid mode is the wide industry trend. In the future I expect more support from automation and AI in the fund selection process. This could be also a strong competition to our human skills though… 😉

When you have free time, what do you like to do?

When the weather is good, I like spending time with my kids and family outdoor e.g. taking part in bicycle trips and other sport activities like swimming. Otherwise I enjoy reading interesting books or articles from various fields as well as listening to music.