Meet the manager: “I’d be a baker…”

Hi, Andrew. So this interview is to get to know you, Andrew Ness, a little bit as an investor, but also as an individual. So, let's start. Tell us a little bit where you come from and what got you started in the asset management industry.

Sure. I'm from Scotland, I'm currently living in Edinburgh. I grew up in the oil industry. My father was an oil engineer. So, our very early years were spent internationally and I think that's certainly influenced my lifestyle and my career choices since then. We spent time living in Italy, we moved to Norway, lived in the Shetland Islands, spent some time in the Middle East and then finally settled down in Scotland when I was probably just at sort of teenage years, early teenage years. So, we had a very peripatetic background of travel, different cultures, different experiences, and I think certainly that either implicitly or explicitly influenced my subsequent career choices.

Why did you choose emerging market investing as opposed to developed market investing?

I think it chose me in many ways. My first firm was a small asset management firm in Scotland called Murray Johnson, no longer around, but I think back in the day they were one of the few pioneers in the asset class and I joined them on the graduate programme. And I think I had two options that I could have gone down, could have been the developed market junior analyst or in emerging markets, and I got allocated to the emerging market desk. So, in some ways, the asset class chose me. And Greece and Portugal were emerging markets back then. Obviously, Portugal has graduated to the, the ‘grown-up’ club. Greece has sadly come back towards us. But my coverage was Greece, Portugal, Russia, South Africa and the Central and Eastern European countries that were in that process of opening up for investment.

You know, we often refer to emerging markets as being a homogeneous area, but you, you know, what you've just alluded to, it's so diverse. Are there any countries or regions right now that are getting you excited?

It's far from being a homogeneous asset class, as you quite rightly say. And we often, I think, for simplicity, we tend to aggregate things in life to help us better understand and the reality doesn't, it brings confusion. We're fortunate in our team that we've got offices in 14 countries across the globe. I work with, I think, 22 different nationalities. So, working from them, learning from them, it's very clear that every country has its different thing going on.

I'm just back. I've done two trips so far from a research perspective this year in two very different countries. Just to give you a flavour, I spent part of January in Brazil, we've got a research presence in both Rio and São Paulo. Brazil's fabulous country. Very young, vibrant population, very well educated. It's got some challenges from a fiscal perspective, but overall, we think the country's got a really attractive long-term opportunity.

And then I was in India just three weeks ago. I was in Mumbai and Bangalore with my co-manager Chetan. We took some of our clients out there to do some due diligence visits and the investment resource that we have and some of the companies in the portfolio. And India's a tough place to visit if you've never visited. The infrastructure challenges are obvious, transport's chaotic. We went to Bangalore, which is statistically the world's slowest city for traffic. So, it's not easy to navigate. But you know, we've got a strong team of portfolio managers and analysts on the ground. They know the market intimately well and they recognise that India succeeds despite the obvious, you know, limitations in public infrastructure, for example. And much of the work that the government there are doing are to address some of the supply side issues. And I think it's having the benefit of being local, understanding the nuances, understanding the rate of change in these economies that we believe adds value to our analysis and ultimately to our clients.

You mentioned infrastructure and technologies, obviously, related to that. You know, we often think of America as being the leader in innovation and technology, but a lot of emerging markets are significantly closing that gap. Can you elaborate on that a little bit?

Yeah, it's a fabulous point. And I think America still remains a global leader in innovation. And one of the things we monitor and actually share with our clients in our literature is global patent applications. And if you track global patent applications, it's really interesting to see how they've evolved. USA and Japan historically have been the most innovative countries, but certainly over the last decade we've seen innovation come through from Asia, where North Asian economies of Korea and China are starting to dominate, often in patent applications in key technology areas. And I think it's to the cost of other parts of the world, actually where I'm European from, the UK. The UK and Europe don't necessarily feature in any of these charts that we share. And that's unfortunate. I think it's an indication of where value-add is moving to in a global perspective. And part of our investment thesis is that we're at the very early stage of the fourth industrial revolution and much of that is going to be built by emerging market companies. We're going to be building the semiconductors that we need. We're building the technology, hardware and our software engineers are helping global companies manage the digitization of their own footprint. So, whilst the US will have a lot to say in how the digital world prevails, I think emerging market companies and countries will have significant influence in the whole process as well.

You mentioned a lot of your travels. I'm sure in your job you still get to travel a lot. How would you say some of those travels have influenced your attitude or your outlook in terms of an investor?

I would say before, as an investor, as an individual, as a sort of member of the human race, that it's eye opening to travel because we often get far too influenced by the media that we absorb in our own countries. And I think the benefit to me, one of the greatest benefits of my job has been travelling and meeting ordinary people from across the globe. I'm fortunate I get to meet captains of industry and policymakers and industry fellow fund managers and whatever, but real people doing real jobs across the economies I travel to. And the beauty of spending time with real people is you realise there's much more that connects us as humans than separates us.

And I think, particularly in the world today of increasing distress and potential separatism, I think it's quite healthy to recognise that there's a lot more that connects individuals than separates us. And that's probably the greatest thing that's happened to me that also influences how I work as an investor because at the end of the day, individuals get motivated by the need to provide for their families, to provide safety, comfort, education, clothing … have some leisure time. So, the wants and needs of people across the globe are very similar.

And so, when we're analysing business models, it really helps for us to understand how a business model in one country has evolved and how that potentially can be imported into another country. And again, by having our people across the globe, it really helps us make those connections and collaborate on research.

Somewhat related question then … on shaping you as an investor, what's the best piece of advice that you've been given over the course of your career?

Slow down is one of them! That's definitely one. I always live on the front foot, so at times just to slow down and appreciate the benefit of doing nothing. There was a great quote that was given to me that's: think busy, act idle. And I think particularly relevant in our industry where often investors can get in their own way of a good investment idea by overthinking it and interfering with their portfolios too often and I think having the benefit to pause, slow down, recognise that the portfolio is in a good place. And there's a very active decision in doing nothing, which I don't think you get in school or university; high school experience doesn't condition you to the benefit of doing nothing. And it's a strange transition to our world. That was one of the greatest pieces of individual advice I was given as a young analyst.

Well, that is good advice. Rumour has it you were, or maybe still are, a rugby player?

Yeah, I was. I wish I was, but I'm no longer. I had a really enjoyable junior rugby career. I think back in the days when you didn't think about careers and settling down, it's all I ever wanted to do. I wanted to get capped for my country. I was fortunate that I played age group rugby and represented Scotland as a young man and I had the opportunity to become a professional rugby player. And by that stage, I'd been working as a junior fund manager for, I think, three or four years. And I absolutely loved my job and it was a really tough decision. I think if I hadn't had a couple of injuries to navigate, I may have gone down the professional sports path. But as it is, I didn't. I've got zero regret. I would love to run out one day again if a couple of bionic knees at some point in the future allow me to do so. But no, I'm more than happy with the decision I took.

Well, if it's not rugby, what do you do outside of the office?

Too much golf. According to my wife, I spend a lot of time with her and her family, a young family that still want to spend time with me. So, I've got to make sure I do that before they move on in life. I do a lot of outdoor activities. We're fortunate in Scotland. We've got great walks, we've got great beaches. I try to learn to surf. I'm far too big for that. So, my centre of gravity is just not conditioned to being on a surfboard, so I took up paddleboarding instead! So that was my latest hobby, paddleboarding and exploring the coastline of St Andrews. We revisit it quite frequently.

All right, sounds like a decent compromise.

Yeah, it's good.

Last question. What is something people don't know about you that they'd be surprised to learn?

If I wasn't a professional rugby player and if I wasn't a fund manager, I would be a baker.

A baker?

I grew up. My grandfather was a baker, my grandmother was a chef. I love cooking. My mother was the most sensational cook. And I love entertaining and feeding friends and family alike. So, yeah, I'd be a baker.

Well, this has been very interesting. Thanks, Andrew, for taking the time to talk to us.

Thanks, Ian. It's a pleasure.