Does your strategy have a sound intellectual framework?

A portfolio manager talks about a call from a headhunter, secular themes and why the emerging markets may be your best bet

Does your strategy have a sound intellectual framework?
After working for nine years as a consultant, during which time he focused primarily on financial services and the insurance industry, Greg Placidi received a call from a headhunter. The recruiter was asking if Placidi would be interested in becoming a senior investment analyst specializing in global insurance for AIC Limited. He’d already operated in the investment side of the business in his consulting role and was managing his own portfolio, so Placidi’s interest was most definitely piqued.

“I met them and really liked the culture and the nature of the work they wanted me to focus on,” says Placidi, who is now Senior Portfolio Manager at Excel Investment Counsel Inc. “A year later I became a portfolio manger and took over a couple of global financial services funds and global dividend funds. Since then, I’ve mostly been running global money.”

Although the move into the investment field was somewhat unexpected, the progression to portfolio manager was something that Placidi targeted as soon as he accepted the role. Placidi thrives in the analytic side of the portfolio manager role and enjoys the dynamic nature of the industry. “There are constantly new things happening, whether it’s central bank policies or elections, or a comment by Clinton or Trump,” he says. “There are many minefields out there that you’re trying to navigate.”

Placidi puts his success down to his ability to pull back and consider investments from a wider perspective. “To paraphrase Warren Buffet: you have to have a sound intellectual framework and a rigorous investment process, so that you’re not being driven by emotion,” he says. “Emotions in this business will kill you; you have to be able to make tough decisions.”

Placidi points to the importance of identifying and attempting to understand secular themes. Portfolio managers who are able to identify potential themes for the next 15 – 20 years are in a great position to know which regions and sectors will be most heavily impacted; that enables portfolio managers to make the best possible investment decisions.

In 2016, Placidi has noticed an increased awareness in the investment community around the reality of continued low growth in Western Europe and North America. “It doesn’t really matter what the Fed does in the US; growth isn’t going to get much higher,” he says. “You have to look at those economies as being mature. Modern portfolio managers and advisors should really ensure their clients have a portion of their portfolio allocated to some of the higher growth areas.”