How a diversified life drives portfolio success

Amber Sinha explains how a generalist attitude provides an active-management edge

How a diversified life drives portfolio success
Even in youth, Amber Sinha never wanted to get stuck in a rut. Growing up in India among a family of doctors, who knew a lot about medicine but talked about little else, he had an itch to be a generalist. He decided to pursue economics, which satisfied his desire for a wide worldview, made good use of his abilities in mathematics — and set him up for a career in the financial industry.

“As an undergraduate student, economics was a good way for me to get exposure to generally how the world’s economies work,” said Sinha, senior portfolio manager for global equities at Empire Life. “And the financial markets and financial services industries are really just a derivative of economics.”

His education, which took more than ten years, also took him to three continents: Asia, Europe, and North America. Over that time, he got to do intense work that required diligent study of markets and rigorous math-driven research. Because of that experience, he was prepared when the opportunity of a lifetime presented itself.

“I was doing my MBA at the Schulich School of Business in York University from 2003 to 2005, and I was approached as part of the on-campus recruitment done by Empire Life,” he said. At that point, the company was already offering global and international investment products, but they were being managed by external advisors. To build in-house global expertise, it was scouting for prospective international and global equity analysts.

“I basically had lived, studied, and worked in three different continents,” he said. “So I felt that was my calling, and that’s how I became part of Empire’s first global equity-management team.”

Today, Sinha does investment management for Empire Life’s segregated funds and mutual funds. With a mandate to study global equities, he watches stocks from the US, Europe, and Asia, and he monitors every economic sector. It’s a daunting challenge, but it’s one he enjoys.

“I have to keep myself informed and up-to-date on basically everything that’s going on,” he said. “I think intellectually, that is great; it helps me add value to our clients’ lives by beating the benchmark.”

Of course, beating the benchmark has been nearly impossible for many active managers. The years-long growth in the stock markets, punctuated only by minor corrections, has been a tide lifting all boats. These include ETFs, low-cost passive products that Sinha admitted can deliver outsized growth as years and decades pass — but that’s assuming nothing goes wrong.

“The problem with passive, in my opinion, is that it goes up with the market and goes down with the market,” he said. “Good active management has a human element, which includes some conservativism; it goes against you when a market goes up. But I know that when the market goes down, that’s when people will realize the value of active versus passive. It doesn’t come easy, but we have to do a good job. Climbing out of a hole is often more difficult, so our approach is to just try to go down less.”

That takes a solid portfolio strategy, which must be built upon a massive amount of information. In a typical week, Sinha could have meetings not just with an automobile company, for example, but also with the company it gets steel from, the company that supplies its tires, and an insurance company that provides home and auto insurance. “Talking to people from all those companies and industries lets you see the links, draw the lines, and validate what everybody’s saying,” he said. “I think you are better off having a more general, wider mandate as opposed to putting yourself in a specific hole like technology, healthcare, or another restricted niche.”

Sinha also stays on his toes by watching tickers from different markets, which are typically all closed for only three hours on any business day. For a portfolio manager bombarded with that much information, it can be tempting to make a trade or change a position. But in his view, it’s often better to resist the urge.

“In my experience, the portfolios where I let them just ride on cruise control tend to do the best,” he said. “Take it easy, don’t overanalyse or do things just for the sake of it, and that’ll help you in the long run.”