Sanlam’s Pinggera: The role of a fund manager in ‘unprecedented times’

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Sanlam’s Pinggera: The role of a fund manager in ‘unprecedented times’

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Head of multi-strategy at Sanlam Mike Pinggera speaks to Mike Sheen about how the firm’s multi-asset
portfolios and Real Assets fund have held up during the ongoing coronavirus pandemic, and how our
working lives might change when the crisis subsides

Mike Pinggera joined Sanlam in 2013 from Insight Investments to lead the firm’s absolute return multi-strategy proposition, which has comfortably outperformed sector peers in recent years. Prior to Insight, Pinggera, who also manages Sanlam’s Real Assets fund, spent 20 years with Credit Suisse where he held senior roles, including head of multi-asset solutions, managing a team of 14 with responsibility for £5bn of assets under management.

How does the burgeoning financial and economic crisis linked to the coronavirus pandemic compare to past crises you have seen in your career?
These are unprecedented times. The sheer speed of the sell-off is most notable – it was quite unlike anything we’ve seen and I have been in the market since 1989. So I have seen a few bad patches. In terms of magnitude, this wasn’t any worse than the worst ones we have seen. But the speed of the sell-off was really quite something else. And the fact that it was pretty much global straightaway. There will obviously be a period of reflection as there always is. It will be important for managers to challenge our processes and our thought patterns eventually, but it is quite hard to do that when you are in the middle of the battle

How have you managed from a multiasset fund management perspective, given the declines we have seen across asset classes?
There have not been many places to hide. Obviously, government bonds did well but it was hard to say there was value there in the first instance. We came into the year with a slightly higher cash position, we had put options, we had stop losses, and a short duration portfolio in the fixed income space. We also have a dynamic approach to equities – at the highest point in Q1 we had about 30% net equities and at the low point in the sell–off that was -10%. I am a fund manager – my task is to manage the portfolio given the challenge of the day so we had embedded protections and a defensive portfolio, but it still required action in order to further de-risk the portfolio and move into what I think is now a position of strength.

We have now been selectively redeploying. We have bought a couple of bonds, we have taken some profits on our hedges, we have put some structured exposure back into the portfolio, and we are buying some call options. I have finished the quarter down by around 5%, which was probably a percent-or-so worse than I would have liked to have been. But given the speed and the magnitude of the moves, I am not going to beat myself up over it. It was a pretty brutal period out there. The aim is to participate when we can and defend when we need to.

How are you expecting the longer-term consequences to impact your equity exposure?
We have been rotating out of some of the smaller companies and into some of the larger names. That is really just a liquidity move. If this is a protracted situation – if we are in lockdown for a much longer period – we feel the large-cap names will fare better, simply because they will have greater access to funding and are more likely to survive.

The Real Assets fund has outperformed global equities in every month so far this year. Why has the portfolio responded so well to the impact of the pandemic?
Our central theme is ‘the pillars of a functioning economy’ – we are looking for investments that are vital to a successful economy. It was interesting for us to see that the government’s response areas – healthcare, housing, transport, education, for example – are all providing support into these areas, which we consider to be perfectly aligned with these pillars.

The economy is in a period of stress but those pillars – schools, hospitals and roads, for example – are definitely not going anywhere. I would be happier if the fund was a couple of percent higher than it is, but as a long-only fund, I think it has done really well.

Like most, if not all, fund managers, you are managing money from the comfort of your home at the moment. How is that affecting the role and do you anticipate changes to your normal working life when the pandemic subsides?
We took the decision before the official lockdown that unless we had a reason to be in the office we would work from home. Perhaps I am a bit old now, but I do prefer being at the office. I miss some of the general chat you hear on a floor, and – as pleasant as my family are – they are not really interested what VIX futures are doing, which is a shame because that is really exciting.

But our chief executive [Jonathan Polin] made the point very early on that this is an opportunity for us as a business. Businesses are always reluctant to embrace big change, but I’ve done a lot of client conference calls, we’ve had numerous zoom meetings, and, actually, I think they have been really, really good.

It will change some of the way we communicate with clients and colleagues going forward. This has been something so unique in our lifetimes that I would be surprised if it doesn’t change the way we live.

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