HILTON TARRANT: José Jiménez – CEO, March Gestión de Fondos the boutique asset management business of Banca Marsh, the family owned Spanish bank.
José you’re out here for the First Avenue Management Investment Forum, the inaugural investment forum and of course your link to First Avenue is that you do sit on their international advisory board. You run a fund, the business that you are head of… a fund called the March Vini Catena fund, the first global equity fund specialised in the value chain of wine. That is a very unique fund. Tell us a little bit about yourself and how you’ve come to work at this family owned bank and starting this wine fund.
JOSÉ JIMÉNEZ: Regarding myself, I’ve been working on asset management and research for the last I would say 24 years. But now I’m the chief executive officer of March Gestión which is the boutique asset manager for Banca March the only family owned institution that we have in Spain right now and what we do as the asset manager is global equities and asset allocation and the reasons to the … is that as a family business we want to have the wealth of our clients and the wealth of the family as much diversified as possible. So for this reason we started to invest abroad in the 1950s which was a long time ago. And we also ran asset allocation strategies because we wanted to keep the wealth of the clients and the family above inflation, because in the long run that’s the only way to make your savings and your wealth safe.
The only thing that is probably interesting to know is that I’m the chairman and the foreman of the Group of Boutique Asset Managers which is an international organisation where we are putting together boutiques in different parts of the world as we have with First Avenue in South Africa or ourselves in Spain or it could be Argos in Switzerland or … in UK. So we are a group of 16 boutiques on four continents where we have something in common which is our passion for investment. We really believe in asset management. These days there is a lot of information about passive investment but what is a pity is that most of this information, most of the numbers and figures that you can see in the press probably always has a bias because research has been carried out by big players such as Bangor or Luxor where they do passive investments and ETFs. We also believe in asset management. We really believe we have the right people doing the right thing and you can beat the market in the long run and our role is very positive for the financial sector because without active management, without boutiques you can say the passive management will dominate the world in a way that if prices don’t reflect the real value of companies, we can create a world where we can see boom and bust cycles maximised and amplified because nobody cares of what the real value is of companies which are listed. So I think we have a role and responsibility in terms of the financial market as well as in terms of clients.
What makes us different to the big players, you can probably see here people like Old Mutual, or JP Morgan’s Fidelity or people like that. Maybe we are small players, we have passion for what we do, we don’t do anything we just manage specific investment strategies where we think due to our track record that we can compete a bit in the market.
HILTON TARRANT: Global equity fund specialised in the value chain of wine… how did that come about?
JOSÉ JIMÉNEZ: As I was trying to explain during the conference, if you remember 2008 nothing worked. When it was a horrible year for equities and S&P went down probably close to 40% in a year. The same thing happened with… it was really difficult to make money that year so when I left Skandia, when I left Old Mutual in London then came back to Madrid I worked with some of my portfolio managers with my team and said what can we do to offer our clients equity exposure but in a very defensive way. So in case that 2008 happens again, we will like that our investors, we will also like that the March family which are our only shareholders makes money in the worst case, they lose less money than investing in indices or investing in those types of… So how can we create a fund and those investment pressures that we were managing… that in case the market goes up, you can capture 90% – 95% of the upside? But if you are facing a B market, your downside risk probably could be 60% or 70% of their equity wealth. So we were trying to get ideas to have equity exposure, but in a very defensive way because nobody knows what is going to happen in the future. With this in mind, we started to analyse wineries because you can see that the trend in favour of wine is growing all over the world. So fine wine is growing, the demand is growing and the supplier will say to some extent its constrained because you cannot be a strong brand for fine wine for a year, two years or 10 years. It’s probably going to take you a lot of time to build a strong brand… something that customers recognise and they’re happy to pay what that wine could cost.
So with this idea in mind, we started a lot of stress tests, we do a lot of analysis. As a family institution we are extremely prudent, extremely conservative. To give you an example, Banca March is the most solid bank in Europe officially. We were number one in the European stress test carried out for the European Banking Association. The two times they carried out the stress test in Europe we were ranked number one so with that philosophy which is more or less the same, but most families have… and it happens a lot on the wine set because most of the wineries belong to families… we wanted to have product that combined the best of both worlds. The best of the equity because in the long run you will make more money, but also the best in case something goes wrong, having such defensive … that come from wealth in a difficult market environment. So we’ve had the 4.5 years with our products, it’s been very successful, we have raised more than US$160m and the fund is distributed in different countries, in Europe and Latin America. What’s important is we have people who have promised in this period the fund is over 50% of accumulative returns. Compared with … which is around 47% – 48% so we have beaten the index but the most important thing is that we have achieved that with 60% volatility of the … So our set ratio, if you look at ours in terms of risk return probably is really important for any… to try to get some exposure to the wine sector. The important thing to know is this fund combines a little bit of luxury, a little bit of agriculture, a little bit of a difficult market with high entrance values. Nobody can sell wine for U$101,000 a bottle… you have to be recognised on the market place and it takes a lot of time to build such reputation and the good thing with this fund is that when you start to go with clients, with investors about wine, they quickly understand what’s behind. There’s a story that everybody understands and everybody loves so do you have to talk about quantitative… you don’t have to talk about ratios and complex things that we would like to influence the market, it’s quite simple. You can find out a very good investment proposition for any winery or it will be things related on the… factors like cork, glass, could be wine distribution… go for it and make a long-term investment. The other thing that I would like to emphasise is whatever the portfolio… that you are a pension fund or a … fund or you works manager and you running global equity portfolios, I can assure you that if you invest 5% – 10% in our fund you will see how you’re correlation is lower but your returns are enhanced. This is the magical one that we were thinking almost five years ago… is something that has been realised afterwards.