Episode 13: Schroders’ Andrew Williams and Ben Arnold, CFA | Inside an $800 Billion Asset Manager | Why Value Investing Is Not for Everyone |Repost from The Value Perspective Podcast
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The role of Andrew Williams and Ben Arnold of Schroders Value Equities team - a team responsible for £14B+ - extends beyond managing assets; it involves fostering relationships built on trust and steering clients away from performance-driven decision-making.
In this episode, they discuss:
• A period of underperformance and the heartbreaking trend of talented value investors giving up
• The damaging consequences of short-term focus and the chaotic rollercoaster of hot money inflows and outflows
• What it's really like to be a specialist within a large organization
The best part? They’re also providing practical examples of how their team infuses personality and human connection into each transaction – challenging the notion that quant is king.
Tune in now and prepare to be schooled on the power of human connection and radical honesty in the investment world.
More About Andrew Williams:
Andrew Williams is an Investment Director on the Schroder Global Value Team. As a founding member of the team, Andrew has played a key role in developing the team’s business and product strategy. Andrew’s responsibilities include client communications, commercial strategy, product marketing materials, competitor analysis, and Investment Product Team management. Andrew joined Schroders in 2010, initially working in the Investment Communications team with a focus on UK equities. Prior to joining Schroders, he served as an analyst at an independent capital markets research firm. Andrew holds a CFA certificate in Investment Management (IMC) and earned a degree in Economics and Politics from the University of the West of England. Andrew lives in London with his wife and 2 children, who keep him very busy when he isn’t in the office!
More About Ben Arnold:
Ben Arnold is an Investment Director on the Schroder Global Value Team. He joined the team in 2017, and Schroders in 2016 on the graduate training scheme. Prior to joining Schroders, Ben worked as an analyst in Institutional Banking for the Royal Bank of Scotland from 2012 to 2015. He holds the CFA Charter designation and has earned an MSc in Corporate Strategy and Governance from the University of Nottingham.
Want More Help With Storytelling?
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Resources mentioned in this episode:
Books
Ben’s recommendation: Let My People Go Surfing by Yvon Chouinard
Andrew’s recommendation: Meditations by Marcus Aurelius
Songs
Ben’s Rec: Kasbian – Fire
Andrew’s Rec: Blur – Song Two
Transcript
Below is an AI-generated transcript and therefore it may contain errors.
Ben Arnold: [00:00:00] We just have to be super honest with clients about the profile of returns, what's going on to deliver that and what that means, what and honest about what they're gonna have to stomach for it to work for them. Some of perhaps the proudest bits of work that we've worked on has led to, led to clients not investing because they've said, well, yes, actually this isn't right for us, which sounds so counterintuitive.
Ben Arnold: Part of our mandate as investment directors is to is to raise assets. Yeah. But as Andy said, if we raise those assets with clients that don't understand the strategy or we're just not suitable for, it'll only hurt us in the long term. And I think just like the investors take a long term approach to the companies that they look at, we've been very much backed to, to have the same approach with clients as well.
Stacy Havener: Hey, my name is Stacy Haner. I'm obsessed with startups, stories, and sales. Storytelling has fueled my success as a female founder in the Toughest Boys Club, wall Street. I've raised over 8 billion that has led to 30 billion in follow-on assets for [00:01:00] investment boutiques, you could say against the odds. Yeah, understatement.
Stacy Havener: I share stories of the people behind the portfolios while teaching you how to use story to shape outcomes. It's real talk here. Money, authenticity, growth, setbacks, sales and marketing are all topics we discuss. Think of this as the capital raising class you wish you had in college mixed with happy hour.
Stacy Havener: Pull up a seat, grab your notebook, and get ready to be inspired and challenged while you learn. This is the Billion Dollar Backstory podcast.
Stacy Havener: Storytelling and story listening. Both of these communication methods are important. What a tree it was for me to switch seats. My friends at Schroders invited me back to their podcast studio to interview two of the storytellers on the value team. What [00:02:00] happened next was pretty darn special. Let's just say, when was the last time you heard an asset manager talk about their strategies?
Stacy Havener: Origin story? As an urban myth, you won't wanna miss this. It'll inspire you to get clear on your stories, define your edge, and be brave enough to attract and repel. Let's dive into this episode of the Value Perspectives Podcast with Andrew Williams, Ben Arnold, and your girl as the guest host.
Andrew Williams: Hi, everyone. Welcome back to T V P. This year is our 10th birthday, believe it or not, not as a podcast, but as a value franchise here at Schroeder's. We wanted to celebrate this in the pod by having a sort of party with some of our longest standing clients and past podcast guests by inviting them in and flipping the table.[00:03:00]
Andrew Williams: Usually on the pod, we interview people from all walks of life on their expertise, but in this mini series called Meet the Manager, our guests and clients are going to interview us instead and finally ask those burning questions that have been brewing over the past 10 years. We'll be releasing this mini series on the off weeks from our regular content, which will publish as normal.
Andrew Williams: But we hope you enjoyed this limited series where we place the value franchise in the interviewee seat as a birthday
Stacy Havener: treat.
Andrew Williams: This podcast is for investment professionals only. The value of investments in the income from them may go down as well as up, and investors may not get back the amounts originally invested.
Andrew Williams: Past performance is not a guide to future performance. The information is not an offer, solicitation or recommendation to any of the funds, services, or products or to adopt any investment strategy. The views and opinions contained herein are those of the individuals to whom they're attributed to. It may not necessarily represent views expressed or reflected in other Schroder's communications strategies or funds, any reference to sectors, countries, stocks, or [00:04:00] securities, or for illustrative purposes only, and not a recommendation to buy or sell any financial instrument securities or adopt any investment strategy.
Andrew Williams: Hi everyone, and thanks for joining us for the second episode in the Meet the Manager series. We're welcoming back, Stacy Havner to the podcast where she will turn the table and interview Ben Arnold and Andrew Williams, the Value Teams investment directors. Stacy's the founder of Havner Capital and Agency dedicated to helping boutique asset managers build, launch, and grow funds, and the host of her own podcast, billion Dollar Backstory, where she interviews founders, portfolio managers and investors who have launched a seated and scaled billion dollar businesses.
Andrew Williams: Stacy will discuss with Ben and Andrew how they came to join the Value team, the story of the Value team's flagship product, a recent period of underperformance and a trend of value. Investors giving up the importance of defining what the team is not, and not to define what makes it different. And finally, what it's like to be a specialist inside of a large organization, a boutique inside of a large asset manager, so to say, enjoy.
Stacy Havener: [00:05:00] Well, this is a true honor for me to be back with my friends at Schroeder's on the Values Perspective podcast, but. This time as a host, not a guest. I am thrilled to be here with my friends Andrew Williams and Ben Arnold, and we are going to have a real authentic conversation today and tell some stories.
Stacy Havener: Are you guys ready for
Andrew Williams: that? Absolutely. Thank you for, uh, for hosting us, Stacy.
Stacy Havener: Oh, uh, it's the, the, the honor is mine. I am really excited about this and, you know, you gave me a, a blank slate on, on the questions, which I really appreciate and I hope you won't regret that decision at the end because of course, I like to ask questions about the people.
Stacy Havener: And my favorite thing, of course, is story. So can we start there? I, I typically, and you guys were great. I'm gonna be [00:06:00] totally authentic here. When we were prepping for this, I was like, okay, you know, we're gonna do the backstory of the portfolio managers and blah, blah, blah. And Ben was like, um, just one second.
Stacy Havener: Like, we're not portfolio managers, we're investment directors. And I thought, oh, what a good check for me, because now I actually up the stakes on the storytelling because that's the role that you guys are in. So, no pressure. I'd love to have, and, and one of you, whomever is the brave one, can go first to tell us a little bit about your backstory.
Stacy Havener: And for me, kind of the gem in the backstory are the things we don't expect, either a challenge you encountered on your way to becoming an investment director at Schroders. And how that's kind of informed your day-to-day role now, or as is my story, like something that's unexpected that you didn't actually envision yourself maybe in the seat you're in.
Stacy Havener: And here you are. So that's my preamble to give you a little, some, uh, [00:07:00] some guidance on where to take the story. And, and I will turn it over to either Andrew or Ben to
Andrew Williams: start. Look, I think, um, it's a great question. One I've, I've thought about a lot and I think for most people you need to go quite far back.
Andrew Williams: And I certainly need to go back to university, but probably actually back to school, uh, as well actually kind of how I got here. And it's certainly not the, the linear route that most people ex would expect with hindsight. I think that's, that's kind of all to, all to the benefit of kind of who I am and where I am today.
Andrew Williams: So at university I actually read economics, uh, and politics. And I left university in 2007 at a time when, you know, the global financial crisis was happening. And I knew that. What interested me about economics wasn't necessarily the, all the math in the equations, but it was the human element of it and the human beings in markets.
Andrew Williams: So economics is often called the dismal science, but I loved about it was actually there's, the reason for that is it's all about human behavior and [00:08:00] human expectations and they're changing all the time. And also, and and narratives are, you know, incredibly important and e in economics as well. I'd actually discovered at university that I really loved writing.
Andrew Williams: I didn't know this throughout the entire school. I was actually kicked off, uh, a-level English at school for being terrible at writing, which is a true story. My salvation was, I'm quite dyslexic. I'm at school. I had to write by hand. So everything had to come in the right order. I got to university and realized while I was still terrible at exams, my coursework, grades were actually not too bad.
Andrew Williams: They were quite good because when I write with the work processor, I was able to, you know, Put everything down and it's all in a very bizarre order to begin with. Wow. But I can then reorder it. And I found a real, you know, I got a lot from that and got quite passionate about writing there. So I knew I wanted to communicate, I knew I wanted to write.
Andrew Williams: And so in 2007, I actually got a job with a, uh, a small kind of capital markets research firm, but essentially working in the [00:09:00] news wire side of that firm. So started as a, as a journalist, and it would've been the most boring job in the world because I was covering commercial paper and medium term notes, which are pretty dull until the global financial crisis happens.
Andrew Williams: And they're literally where it blows up. So it was a fantastic education where I was able to speak to, to, to bankers on the, uh, on the desks, uh, at these various banks when they, you know, would speak to me, but they wouldn't speak to each other, and they were asking what was going on and doing that job. I really felt like I really loved not only conveying.
Andrew Williams: Information, uh, to people in a kind of compelling way that kind of, you know, excite, educate and inform was kind of that kind of mantra in terms of my writing, but also working with lots of other people. After a few years I became editor of that publication, I realized I've been writing about markets for four years now, but I feel like a bit of a charlatan cause I've never worked in a financial institution, Soha.
Andrew Williams: So actually that's when I joined [00:10:00] Schroders in the investment, uh, communications team. Again, a fantastic education because I was exposed to lots of different styles of investment and investors and, you know, one of those was, was value. Uh, working for the co-heads of our team now, Nick Ridge, uh, and Kevin Murphy.
Andrew Williams: And that was really my introduction to value. Some people say they're kind of born, you know, looking at value. That certainly wasn't me. Mm-hmm. I found it, but then they said, you know, why don't you go and read. The, the Intelligent Investor by Ben Graham. So I did, and then, you know, I read, um, you know, margin of Safety by Seth Klarman, a bootleg copy, a coffee, internet, and I just went down the rabbit hole and thinking about other investment styles.
Andrew Williams: It was just the one that spoke to me. It chimed with the way I thought about the world. You know, it wasn't easy, it was contrarian, it was going against the crowd. Um, it was very hard work, but it was, it was worthwhile if you did that hard, hard work. And that very much just chimed with who I felt, [00:11:00] you know, where my sort of, my values were in kind of not getting, you know, caught up in, in, in, in fads and fashions and things like that.
Andrew Williams: So that's kind of how I got there. And then the Value Team was actually formed 10 years ago, and at that point, Nick and Kevin offered me a job on the team in what is my role now as a sort of junior investment director. We call 'em a product executive. At the time, I knew absolutely nothing about product, but I did know I.
Andrew Williams: The philosophy really chimed with me and I love communication and the opportunity was there to, to build a brand and a franchise around something around a style that did not exist at Schroder's before. And yeah, I just jumped in with both feet.
Stacy Havener: Gosh, thank you for sharing that. I love that story. I mean, I love backstory in general, but there were some really special moments in that story for me, Andrew.
Stacy Havener: One of them was talking about your dyslexia, which is a very vulnerable thing to share, and I appreciate you sharing that with us. You're certainly not alone in having some of those [00:12:00] challenges, and what I find is that, you know, something like dyslexia or any of those types of kind of neurological things, when you meet those people, they're so creative.
Stacy Havener: And you touched on that, how yes, maybe it was a challenge for you to overcome, but also probably an incredible source of creativity in an industry that's not really known for creativity. And you talked about your journalism for me, that that is such a thread to what you do now, both in communicating the stories and the narratives on behalf of the value team, but also in your role as a podcast host.
Stacy Havener: You know, interviewing is in and of itself a skill. So is storytelling, but story listening is a skill too. And I think you have both. So that was really special. Thank you for sharing that.
Andrew Williams: Oh no, thank you for asking.
Stacy Havener: Okay, Ben. Your turn my friend. What an actor
Ben Arnold: to follow.[00:13:00]
Ben Arnold: It's interesting listening to Andy talk through his journey because I think we have very. Two very different journeys to essentially the same team, the same role, but actually a lot of it rhymes. Mm-hmm. So I'll go back to, you know, Andy start point as a kid, you know, it'd be no surprise that at 10 years old, I, I didn't, I didn't dream of being an investment director in the value team of Schraders.
Ben Arnold: Uh, my big dream was to be a professional sportsman. And, you know, depending on the week, it would be a different sport that I'd, I'd want to be a, a sportsman app, like most sort of, you know, 10, 11 year old kids. But over time doing a ton of different sports. Uh, field hockey is what I, what I settled on and over time was a, you know, student athlete at school and at university.
Ben Arnold: And then was fortunate, fortunate enough to be a, a full-time professional hockey player up until the age of 26. So, training as a, um, an athlete as part of the Olympic program here in, in England for the, for the Rio Olympics in [00:14:00] 2016. Now, you know, most sportsmen don't like to think too far beyond their sporting career because, you know, they, they love what they do and, and, and, and they manage.
Ben Arnold: And it will never end, but of course it always does. Uh, and so, you know, when, when I was coming to the end of my sort of playing time, I looked beyond what a sporting career would look like, uh, and try to work out what I'd do, you know, for a proper job. And having studied finance at university and, and, you know, enjoyed reading a lot about finance and investing at school, there was some really natural appeals to asset management, you know, Both elite sport and fund management are highly competitive.
Ben Arnold: They're intense places to work. Yeah. And I really loved that there was the similarity, you know, this league table was in both, both were a meritocracy. Oh, love that. Um, so that was what really appealed to me. So that's what brought me to I shredder and the industry. And interestingly enough, the very first team that I worked for in Schroders was the same team that Andy first worked for.
Ben Arnold: Yeah. Andy had left that [00:15:00] team and, and was working on the Value team by the time I, I had joined. And how I stumbled across the value team was actually, I was writing a piece, uh, at the time, this would've been back in 2016, about what we call junior ices in the uk, which is a, uh, a, a, an investment tax vehicle that you can set up for your child at birth, you can invest in it.
Ben Arnold: And then at 18 years old, You know, they can access it. And there's a bunch of tax savings that, that, that you benefit from, that the UK government give you. And I was writing a piece how all the data from the Bank of England showed that about 60, 70% of junior ICER money was in cash rather than stocks, which seemed mad because it has to be locked up for 12 years, 15 years, 18 years until the child is of 18 years old.
Ben Arnold: But it's all invested in cash. And so it's this education piece around, you know, how nuts that was from a, from a, you know, investment standpoint. And it turned out that Nick Ridge, who, uh, as, as Andy mentioned, heads [00:16:00] up the team, was also writing the same piece because the Bank of England released the data.
Ben Arnold: Oh, nice. You know, about April, may every year after the tax year end. So we sort of stumbled across each other. Both agreed that it was, you know, nuts, how all this money was stuck in, in cash in all these different accounts. And that's how I sort of got in touch with the value team. Now, I'd always read about different styles, investing at university, at school.
Ben Arnold: I'd read a watered down copy of security analysis by Ben Graham when I was at school, had a couple of, you know, essays and assignments at university where I, I, I wrote about value investing. So I'd already had this sort of warming, I guess to the value style. But when I met more of the value team, I guess what I fell in love with was the mindset and the culture within the team.
Ben Arnold: Having come from elite sport where you spend a huge amount of time thinking about performance culture, a lot of the things that the team talked about were, you know, exactly the same thing, just in a, just from an investment standpoint and very similar. To, to Andy. [00:17:00] When I got asked to join the team and, and help out on the product side, I had no idea what I was signing up for.
Ben Arnold: I knew I, I knew I loved value, I knew I loved, um, the, the, the team's culture and mindset, but had no idea what an investment director or product executive actually did. But I kind of thought I'll work that out as as I go, but if I'm in the right place and have the right beliefs, it'll all fall into place.
Ben Arnold: And luckily it did. And that was six, seven years ago. And, and here we are. So lots of things that rhyme with Andy's story, but from a very different journey, I guess.
Stacy Havener: Different person. Yes. Thank you for sharing that. I love that. Um, I, I even just love the idea how your team, how you connected with the value team around something that was its own narrative.
Stacy Havener: Like it's totally separate a project that you were both passionate about that aligned you as a team before you actually became one. And as somebody who played sports myself, I think, you know, The competitive nature is certainly inspiring and, [00:18:00] and every day is different and we love that as as sports people, but it is so much about who you're with on that field or at that table.
Stacy Havener: And I loved hearing how that came to be. I also loved you both kind of touched on this a little bit and certainly I think there's a quote, I'll probably butcher this, but from Seth Klarman. Seth Klarman said something like, value investors certainly aren't in it for the group hugs and that idea, right, of being rebels and thinking differently and being contrarian.
Stacy Havener: You know, I wanna talk more about that as we go because certainly to have an edge of any kind, you have to be brave. You have to be willing to attract and repel. You have to be willing to think differently than the herd. And I can see so much of that in both your stories. But certainly then as you talked about sports, that was something that really resonated with me.
Stacy Havener: So thank you for sharing that. Let's stay. I mean, this is fun for me [00:19:00] because I feel like I'm in, I'm with my people right now. These are like the storytellers. Normally I'm with the portfolio managers and I'm like really having to pull these things out of them. So this is fun. Can we stay with story for a little bit longer?
Stacy Havener: You both mentioned the value team, and I know there's a flagship strategy that goes back a number of years and I'm kind of, you know, I believe that that products have a story. Everything has a story, places have a story, products have a story, funds have a story. And I wonder if we can switch gears a little bit to talk about the story of your flagship strategy, just the backstory and maybe kind of bring it to how you communicate that narrative.
Ben Arnold: Sure. So it is such an interesting question because as you said, the, the, the longest dated product we run on the team actually started in 1970, you know, 53 years ago. Which is crazy when you think about it. Crazy. But actually it's an interesting question because the, the actual [00:20:00] origin story is a bit of a bone of contention on, on the team.
Ben Arnold: So there's two versions. Okay. There, you know, as they say, there's, there's not the truth, there is a truth and there's two versions of, of, of the story of how it actually came about. So perhaps I'll talk about one and then Andy, you can talk about the other. So the, the one version of, of history is that back at, at Schroders in the UK equities team, um, in the sort of mid and 1960s, uh, there was a big demand from UK investors, um, for deep value exposure from the UK equity market, that there was a set of investors that were happy to be long term, happy to own unpopular, unpopular stocks.
Ben Arnold: And, and you know, there was genuine understanding that, um, what went along with the value philosophy that had come over from, you know, from the us um, that have been popularized there. And so that's how. That fund got launched as the UK deep value sort of recovery type strategy. And, and that led to the, to Schraders building that [00:21:00] in, at the end of the sixties.
Ben Arnold: And in 1970 it launched. And, and that was the start. Now that's the kind of, I'd say the less romantic story. I think I probably prefer the other one, which, which Andy will, will talk about.
Andrew Williams: Okay. I, I'll, I'll do my best. So the, the other story, uh, and who knows, maybe the truth somewhere in the middle, but no, the other story is that the fund was a dustbin portfolio.
Andrew Williams: So if you think about fund management, back in the late sixties, very early seventies, this is before kind of unitized vehicles. It was a place. Where that stock that you've been holding for your clients that had done really badly, that had, you know, had the earnings, had disappointed everything had gone wrong, you just said, I don't wanna tell my clients about that.
Andrew Williams: Instead of telling my clients I'm gonna shove it in this dust bin and they're never gonna know about it. Now the irony of course of that was, was behaviorally people were getting rid of stocks. Absolutely. The worst time. The, you know, fear had, of course fear had taken hold, they capitulated and as is so often the case people massively [00:22:00] overweight, short term, negative events and don't look through that to see, you know, coming out the trough on the other side.
Andrew Williams: And so you had this portfolio of Dustin stocks that are done badly and then, As it happened, it turned out they, at that portfolio ended up doing pretty well, because more often than not, things weren't as bad as they seemed at the time. You know, insolvencies do happen, but they're pretty rare. And more often than not, companies, you know, do recover.
Andrew Williams: When they recover, they recover pretty well. So, as Ben said, I think that, that as a story, as this being kind of the, the sort of Dustin portfolio where you try and hide your mistakes from your clients, it's obviously a very romantic and nice story because it's, you know, and it really speaks to so many of the behavioral biases that actually create the value premium today.
Andrew Williams: Right. But as totally as ever with things, you know, 50 years ago, long before the advent of, uh, computers and, and, uh, and data being kept, the truth is probably somewhere in the middle of those two things. What we, yeah. What we do know is, you know, we can certainly trace the, [00:23:00] the value lineage of the fund.
Andrew Williams: Even by people you know, that, that, so that, uh, uh, Nick and Kevin have worked for back to their mentors and their mentors, you know, back to the, um, you know, the, the early nineties or, or or eighties. Uh, so it's certainly been a, we certainly know it's been a value product for a very long time. It may well have been from day one, like Ben's story, maybe from May about, you know, year five or six like mine.
Andrew Williams: But, uh, either way it is a compelling narrative and speaks very much to not getting caught up in the emotions of the day.
Ben Arnold: So we like to think it's a bit of an urban myth. Yeah. How, how that, how our sort of flagship strategy no one will ever be able to, and I, I, I dunno, I kind of never really want to find out.
Ben Arnold: I sort of both want both to be true.
Andrew Williams: Yes. It's like never, never meet your heroes. Yeah.
Stacy Havener: So great. And I love that idea of, you know, just the mystery around it and that kind of urban myth and the legend. Yeah. You know, the sort of legacy of it. And it, it does feel like those two things are maybe not as unrelated as they might appear.[00:24:00]
Stacy Havener: Uh, certainly for the behavioral bias, deep value is a very specific kind of investing. It takes a very specific, you know, again, going back to that brave, contrarian thinker to lead a portfolio, uh, team in that discipline with conviction. And it also takes a very certain type of investor, to your point, Ben, I think you said like, you know, some of this, you know, being kind of, you know, having more of a long-term perspective, um, this is not for the faint of heart.
Stacy Havener: And somehow those two stories touch on some of those really unique criteria and characteristics of value. So I love that. That was very cool. I'm torn where to go next because it's such a, it's such a segue into what's happened with value investing of late and, and I think maybe I wanna go there. We were gonna talk about that later, but I'm gonna kind of up it because it's such a natural touchpoint here because all [00:25:00] these brave value investors have really taken it on the chin, uh, for a long time.
Stacy Havener: And I wonder if you can speak to that. I mean, it's been a heartbreak for me to see some very talented VA value investors just give up. Like, and it's not because they don't believe it's because the investors can't stay. And so in your role, both talking with the team, The investment team and also, you know, interacting with investors.
Stacy Havener: What has that been like for you and the team over the last, I mean, it's been over a
Andrew Williams: decade. I, I think one of the most important parts of Ben and I's roles is to make sure clients understand exactly what they're getting. Yeah. And, and you're getting the right clients at the right point in time. I mean, value as a style can deliver you some spectacular returns, but they tend to be very lumpy.
Andrew Williams: And you can have an amazing 12 months and then you [00:26:00] know, an awful 12 months and then it bounces back and then it doesn't, then it troughs for a few years. You have to be able to stay the course to actually realize the benefits of that compounding over time, which value has done, you know, looking at US equity market data, you can prove that back over 150 years.
Andrew Williams: And so I think one of the biggest challenges of our roles is actually it's not just getting clients to. Convince them on value in getting them to invest in strategies. It's getting the right clients into the strategy. Yes. So they understand what they're getting. And for me, you know what the best client that you can have is one that fully understands what the strategy is and what it's trying to do.
Andrew Williams: And they're, they're sophisticated enough that, that they use that as a building block for their portfolios. I think the worst thing for a value manager ever is to have, you know, a hundred percent of anyone's money because no one really can, can stomach that sort of volatility. But when you have a client that, that says, I have [00:27:00] allocated to you because I believe in active management, I believe in, in deep value, and believe that the way you were set up your process, the everything about your team will, will be able to deliver me the best outcome for that allocation.
Andrew Williams: Those are the meetings that you go to and, you know, value's been doing terribly. And they say to you, I don't even wanna talk about performance as exactly as I'd expect. In fact, if you perform well, I'd be putting you up on it because Gross's done really well a hundred percent. So, yeah, and obviously you can't all have clients like that, and we have to have hard conversations, but I think so much of our job is done in making sure you avoid the, the, the performance, chasing money as much as you can and get the right clients in there because you know when things are going well, the hot money makes you look great, but as soon as the going gets tough and that flows out the other way, we, we all kind of, uh, it does no, there's no in any favors at all.
Andrew Williams: So I think that's probably the one of the biggest challenges and, and, uh, and actually most rewarding things about what we do as well.
Ben Arnold: De [00:28:00] definitely, I would love that. Definitely rewarding. I mean, the, I think the. The key thread there is just on, you know, honesty. We know that we are not everyone's cup of tea, and we just have to be super honest with, with clients about the profile of returns.
Ben Arnold: What's, you know, what's going on to deliver that and what that means, what and honest about what they're gonna have to stomach for, for it to work for them. And actually, I think some of perhaps the, the proudest bits of work that we've worked on has led to, led to clients not investing because they've said, well, yes, actually this isn't right for us.
Ben Arnold: Which sounds so counterintuitive. Part of our mandate is investment directors is to, is to raise assets. Yeah. But as Andy said, if we raise those assets with clients that don't understand the strategy or we're just not suitable for, it'll only hurt us in the long term. And I think just like the investors take a long term approach to, to, to the companies that they look at, we've been very much backed to, to have the same approach with, with clients as well.
Ben Arnold: I mean, I think, you know, over the 10 years that the team has been around, [00:29:00] 2020 sticks out as an incredibly difficult period performance wise. Incredibly d you know, one of the toughest calendar years for, for value in, in history, you know, as a team we lost about 15%, you know, only about 15% of assets through Be flow, you know, and there were periods through that year where some of our funds were down more than 30% relative to the market, you know, when the market was down 20%.
Ben Arnold: And, you know, that was, you know, I think that's such a, a strong proof statement to the, the clients that we have, and therefore reinforces the quality of the comms that we have with them that, you know, only, you know, 15%, you know, left at the bottom when arguably a lot more could have justifiably left.
Ben Arnold: Yeah. And capitulated. So, so that was a really nice proof statement. And, and I think it all comes back to that thread of honesty and Sandy said, being consistent with your messaging and totally open about what, what's involved when you're, when you're, when you're investing in deep value
Andrew Williams: strategies. I think just to, to add to that, you just made me think, Ben.
Andrew Williams: So that [00:30:00] that period in 2020 when Covid hit was, was obviously very, very tough for value. Like, let's not, you know, it is just investing, let's not taking anything away from, from what was going on in the world, but actually as a, if you just focus on the micro on what we do in our job, I think that was, I, that was intense in terms of our client comms.
Andrew Williams: Then we think we were updating clients at least every week, you know, throughout that period. But I actually look back at it now, kind of with a fondness and like what we were, the way we kind of thought about what we were trying to articulate and what we were trying to communicate and, you know, uh, treading that line between, you know, we do not know what's gonna happen in the future.
Andrew Williams: We have no idea. Something is, something's happened today, that's never happened before. But, you know, these are the things that we're focusing on trying to reassure our clients because we know that selling out the troughs is the worst thing that they can do. Um, and so, yeah, actually it was, that was bizarrely one of a, a very rewarding.
Andrew Williams: A very rewarding period from a professionally, [00:31:00] despite the fact it was, it was very tough as well, you know?
Stacy Havener: Yeah. You know, you hit on something I talk about a lot, which is that attract and repel mindset, which is very difficult, by the way, for portfolio managers to be okay with, because to your point, you know, there's, people wanna grow.
Stacy Havener: You have a business, you have a fund, you wanna grow it. And so there's sort of a dangerous mentality around, well, all money is green and everybody is a potential investor for this strategy. I think you both hit on something so important that I want people to really hear, and seven times to hear it once, which is, every investor is not the right investor for you and.
Stacy Havener: Every fund is not right for every investor, and we all have to be okay with it. [00:32:00] There's plenty of money, there's certainly plenty of funds. And so this idea of of really finding your ideal client is so important. And I think you said something that if I put myself in the shoes of a portfolio manager would really hit home for me, which is, especially with deep value investor behavior is such that they, they will redeem at the exact time that you probably want more capital to deploy.
Stacy Havener: And that alone should give them pause on this concept of, oh, well every, everyone is a candidate for my fund. Uh, so I loved that. I love the bravery around it, and I think the stats really provide the data points on that narrative that you have some right fit clients in this strategy. And, and that's awesome.
Stacy Havener: Really great. Thank you for, for taking us through [00:33:00] that. Let's, let's go, uh, in a little different direction here, which is, you know, there, despite the capitulation and despite some of the value shops that have thrown in the towel, there's still a lot of value investors out there. Maybe not a lot of deep value investors, but we'll say there's a lot of value investors out there.
Stacy Havener: How do you differentiate yourself? This is a really tough question, by the way, because I think, but I know you're gonna nail it cuz you're the storytellers. But getting to your edge requires that same bravery. It goes back to that attract and repel. So talk to us about what makes you different.
Ben Arnold: I think first and foremost, the absolute devout dedication to deep value and the dedication to Yeah.
Ben Arnold: You know, a, a deep value approach. The, the hallmark of all of our strategies, uh, that you would just have an unwavering commitment to value exposure, whether value is loved. Where the value is loathed, we [00:34:00] make, you know, we make pretty clear promises that we're true to label regardless of where we're at in the market cycle.
Ben Arnold: I, I think that's a genuine differentiator compared to, to, to other value investors that, that, that may move
Andrew Williams: around. I was gonna say, to actually kind of build on that and to pick up on the word devout you used then, then, um, you know, value, you know, ask someone what value investing was 20 years ago and they could tell you what it was.
Andrew Williams: Whereas today, value genuinely means different things. A lot of different people. Yes. And devout value. Sorry, Phil, all the ponds, you know, value has become quite a broad church. You know, you've had yes values, decade in the wilderness meant a lot of people style drifted not towards growth, but towards quality, towards more garp approaches.
Andrew Williams: And actually today you often see, in fact, uh, Kevin Murphy did a presentation on this back in 2016 where you kind of had value as a broad church, not one end. You had Ben Graham being this sort of, Old school, classic, classic value, and at the other end, sort of Warren [00:35:00] Buffet as he is today, not as he started, but as he's become in terms of, you know, the thinking about businesses with large moats and high barriers to entry and you know, high quality of earnings, all those sorts of things.
Andrew Williams: I think the differentiator today is if people've asked, what kind of value are you, and this is also really important for that client point, uh, the clients that we were just talking about earlier. Mm-hmm. When they buy you, they need to know what you're gonna do is we do sit in that classic deep value end.
Andrew Williams: We think about all those things that other people talk about, moats high quality as pretty much as excuses to put businesses on higher multiples. And I think today that is a genuine differentiator because the field of truly active deep value managers has been thinned out by 10 years of being kicked in the face.
Andrew Williams: To use your own, uh, your own phrase.
Stacy Havener: Oh my gosh, that's so good. And it's so true. There's so much here. I wanna stay with this one for a while cuz you hit on some things I love. So the [00:36:00] idea that value means different things is very interesting. It also allows you, and you did it wonderfully here to sort of define your own category, right?
Stacy Havener: Imagine if you were in a category of one. And I think when people that, you know, there's a, a mindset around that which says, oh, the category of one means I'm the best. No category of one doesn't mean you're the best at anything or better than anybody else. It means you're uniquely different. And the more we can get in touch with that and talk about that to our clients, the more we can tell ourselves that story, the more powerful it's gonna be.
Stacy Havener: Not to just gather assets, you know, across every, uh, uh, everyone and everywhere, but to really go back to finding those ideal clients. So I love how you're leaning into yes, value is this big broad church. It's this big camp and there's lots of different styles of value. And let [00:37:00] me tell you what we are.
Stacy Havener: The other thing I wanna talk about, cuz I think this is an interesting way to get to your edge, is to say what you're not. So when you say We're not this or we stand against this, or when we look at value investors, uh, who typically do A, B, or C, we are over here doing X, Y, and Z. When you talk about what you're not, it really helps you define.
Stacy Havener: Sort of what makes you different, and you did that as you kind of did point counterpoint with the other flavors of value investing that are out there. I wonder if there's anything else you wanna add to like, you know, here's what we don't do, or here's what we're not
Ben Arnold: sure. Um, we've probably got a long list.
Ben Arnold: I mean, you know, good the, the things that come to mind straight away. You know, we, we do not look at benchmarks at all. Our definition and our philosophy, our mindset to risk is, is that [00:38:00] risk and volatility aren't the same thing. You know, so things like tracking error, you know, looking at benchmark weights, et cetera, is something that the portfolio managers spend.
Ben Arnold: Zero time doing. Our attitude is that, that that risk isn't around the volatility of returns relative to the benchmark risk as a definition is the probability of a permanent loss in capital. Which again, to Andy's point, sits very much in the, the Ben Graham 1920s, 1930s, you know, origins of deep fundamental value.
Ben Arnold: And so that's something that we are very clear with clients that, you know, if you expect us to be monitoring, tracking, error, uh, or, or commit to a, you know, narrow tracking error ranges, that's not, that's not in our wheelhouse. Um, that's us. Yep. Equally, you know, looking at macro, not something we do. We're very clear about it.
Ben Arnold: There's plenty of people in the industry in this building that are happy to talk about it. It's not that we don't think macro impacts share prices, we think it [00:39:00] does over the short term, but history shows that it's very, very difficult to predict. The world is such a complicated place. We make absolutely no promises that, you know, that we're gonna spend time thinking about it.
Ben Arnold: We think that it's ultimately valuation that drives share prices. Um, so, so yeah, there are two things that came to mind straight away. The absolute mindset to risk. And, you know, we're purely bottom up. We def, you know, macro is not something in economics, is not
Andrew Williams: something we think about. Just one thing I'd add to that, which I think is particularly important, given everything we've said about deep value and what we stick to it, is some people hear that and go, okay, so you're pretty dogmatic about value then.
Andrew Williams: Like, you know, you, you, you're old fashioned. You don't learn with the times. The world's different. You're not, yeah. Update your views. Okay, look at this metric. That's what, how can you be so old fashioned using that? And you know, it's something which. You can see where people might jump to that conclusion that everyone, everyone is gra you know, gravitates to the, you know, the new kind of growthy tech [00:40:00] investor which completely gets AI and they, and they know exactly what, exactly what's gonna happen with it.
Andrew Williams: I think something because of that challenge that's leveled at us, and actually this comes back to our team culture, and we touched on this at the beginning, that kind of always having a growth mindset is, you know, while our, you know, while the, uh, you know, the investment style is, you know, unashamedly old school, like our approach to it is not, and one thing, you know, we don't wanna kind of go too far down investment process cuz uh, everyone had fallen asleep.
Andrew Williams: But, uh, one thing we, we've been running on the team since we formally came together as a style based team is what we call the value archive, which is where all of the work that the investors do is, um, is kind of saved. And what that enables us to do is, you can imagine as, as deep value investors we come across, even when we look in that cheapest quintile, we come across quite a lot of value traps and, you know, A huge amount of work is done on those companies, which would all be wasted cuz we, we don't end up buying them if it wasn't stored there in a [00:41:00] place for us to learn from our mistakes, uh, and, and learn, you know, learn for the future.
Andrew Williams: So the longer that archive has gone on, we've been able to look back. Let's say for example, we can now go back as 2023. We can go back to 2018, pull out the draw for 2018, look at every single company that, that, that the team analyzed and say, okay, we've now got a statistically significant sample size here.
Andrew Williams: Let's say there might be 300 companies, we only bought 20 in the year, but let's look at all 300 and actually see, did we normalize what happened to margins? You know, what happened to revenues? Where we are, we particularly good at companies in one sector, or particularly poor, as poor in others is, you know, Nick carriage, you know, great at utilities, but awful at, you know, consumer discretion or whatever it might be.
Andrew Williams: And to try and understand each other's blind spots and biases and never, you know, throw the baby out with the bath water and change the process. But just be conscious. Of mistakes or things that we've done in the past, and always try and learn from them and update our process. I think that's something which is kind [00:42:00] of nuanced, but I think it's particularly important for deep value because you are often just shoved in this pigeonhole of old-fashioned, you know, I'm willing to learn about the future, whereas I actually think it's, it's quite the opposite.
Andrew Williams: We're very, Um, you know, we're, we're, we're very, very inquisitive because the market is so often telling us we're wrong. We have to ask, we have to double check that a lot more than the growth investors rather, in my market, just tells them they're right the whole time.
Stacy Havener: I love that. And, you know, it's such a simple, it's such a simple thing what you just said of basically having a list of everything you've done and going back to it and saying, what did we miss?
Stacy Havener: What did we do Well? What did we do not so well? What can we do better? What can we learn? Uh, I had a client, also a value investor, also deep value a number of years ago. And, and he has this red flag checklist, which is basically every, you know, kind of major mistake he's made in the portfolio goes on this list such that he never makes that [00:43:00] mistake again.
Stacy Havener: He'll make different mistakes, but he won't make that mistake again. And I, and it kind of reminds me of that whole sportsman mentality that Ben talked about earlier, which is you have to be brave enough to sort of. Look at yourself in the mirror with some, with some authentic kind of realism. And, and I love that you're doing that.
Stacy Havener: It's a simple thing that very few investment teams do. It's not easy to do. It's simple, not easy. And also it's not something that a lot of investment teams talk about. So I encourage you to keep that's, that's a really interesting part of the story. But to your point, we won't be labor process because we've got other things to talk about.
Stacy Havener: Um, I have one as somebody who sort of stands solidly for investment boutiques. It's very interesting and I've become such good friends with all of you at Schroder's because it's a very big firm. It's been refreshing for me to meet specialists inside of much larger organizations. It's kind of like this idea of being a [00:44:00] boutique within a big is sort of how I think about it.
Stacy Havener: And I wonder, you know, how that feels being in it. Um, you know, You're active managers, you obviously specialize in a niche. Uh, you have so many of the threads that boutiques really, you know, kind of cling to and shine around, and yet you're inside this very large organization. So can you speak to that a little bit from an advantage disadvantaged standpoint?
Stacy Havener: Without, by the way, saying something about all the locations you have and all the people, cuz that's like, we can't do that. Dan Mikulski, our friend Dan, will literally just fall out of his chair. So what's that like? And also how does that kind of position you maybe to gravitate towards a certain type of investor?
Stacy Havener: Those are the two things I'm thinking about, advantages, disadvantages, and how it affects your ideal client.
Andrew Williams: I'll, I'll jump in, I'll start and I'm sure, sure. Ben will jump in. I think the first thing to say is, To be honest, to answer that [00:45:00] que question is there are both, there are definitely both some huge advantages.
Andrew Williams: There are definitely some disadvantages. If you were in marketing you could certainly, you know, spin all the advantages really hard, but I don't think that would be authentic. So I think first thing to say is we certainly see some genuine real advantages, but they are very heavily caveated by the situation that we have at Schroders and that is about that history we spoke about going back to 1970.
Andrew Williams: That's about a business that understands exactly what we do. That's about having a team that have full autonomy and everything they do. We don't have that distinction between fund managers and analysts. Everyone on the team does their own work. We don't sort of tap into other, uh, other analysts for their, for their work on valuation anyway, you know, around the group.
Andrew Williams: And that's why I think, you know, everyone thinks they're a special snowflake, but I think we are a slightly special snowflake in that when I look at other. Big blockbuster asset managers, just the way they're set up [00:46:00] means this boutique in a larger business thing I don't think would work because they might be leveraging a global research platform.
Andrew Williams: And then you say, well, what's the kind of bias of every investor in your research platform? There's 200 analysts. Do you know what you know, right? John in the Sydney office, do you know what he thinks? Do you know if he's value or growth? And they'll be like, no, I have no idea. But so I think having that very decentralized research platform is absolutely crucial.
Andrew Williams: And we have to kind of say that upfront. But I mean, I think, and, and to kind of zoom out even further, we've spoken about this already, but the returns for value can be very, very lumpy. And I certainly think one of the advantages that we have is we have a parent that fully understands what we do, understands it's not in and outta favor at those bad times.
Andrew Williams: As been mentioned, there is never. A tap on the shoulder from management saying, are you sure you should be buying? You sure You sure you should be buying that stock now? Like, you know, it's just 450% and everyone hates it. That never ever happens. Cuz the group know that if that did [00:47:00] happen, it would just trash your, your credibility and your long-term track record.
Andrew Williams: So I think, but the advantage of doing that is we do sit in part of a much larger, larger organization. We are a small part of a very big group. Whether we do well or poorly year to year, we don't live or die by that. Quite frankly, the Yeah, you know, it's, there's a big parent keeping the lights on. And I think that actually in some ways the, the boutique point actually enables us to stay the course with, with what we're doing because there's not this temptation to, oh, performance was awful last year and our biggest client are gonna fire us if we underperform again.
Andrew Williams: So why don't we just hug the benchmark a bit this year we don't have that because the group back us all the way. And I think that's probably one of the, the key advantages that we have. Of being, you know, a boutique within a larger business.
Stacy Havener: I love that. Can I jump in? Yeah, I know, Ben, you probably have stuff to add.
Stacy Havener: Go for it. I love that so much. Also, very interesting. There were some [00:48:00] don'ts in there. Going back to like how you differentiate and how you can get in touch with your h your edge. Sometimes it's easier to do it when you say, we don't do this, or we, we're not like the, you know, our peers in this way. So I love that you did that, Andrew.
Stacy Havener: The business risk piece. I jotted that down as you were talking. That is real. That is one of the biggest risks that a boutique faces like a founder breaks out and sets up their own shop. Also, one of the biggest risks an investor has in investing with a boutique. So that is a really interesting point, that being a part of a larger organization that's keeping the lights on, that's not forcing you to do things, gives you a, the ability to be more true to who you are and to what makes you special.
Stacy Havener: That is great. I love that. Sorry, I'm like on the edge of my seat here. Cause I love, uh, so Ben, your turn.
Ben Arnold: I'll stop talking. No problem. I mean, I, yeah, I agree with everything Andy's just said. I mean, yeah. To, to the point. [00:49:00] You could, you could a a, a big, a big, as you call them, a, a big asset management firm.
Ben Arnold: Yeah. Could, could try and, you know, create a similar setup tomorrow, but they can't recreate the history. They can't recreate the path that's, that's led us here. They can't repeat, you know, the heritage. And I think that's a huge advantage. And, and all that backing and, and traders understanding what, what comes with, with deep value investing is, is, is huge.
Ben Arnold: I think there are a couple of things in the, you know, that, that we see changes in the industry that do point to, you know, and it's not either, it's not one or one or the other, but do help us sure with the, the, the support I guess that we have around the rest of the building. So, you know, we know that, you know, there is the demand for more bespoke portfolios, greater customization over time.
Ben Arnold: And you, yesterday I was reading, you know, um, BCGs, big report, annual report on, on, on the asset management industry and you know, they're flagging this as one of their, their, their big changes over the next 10 years. If. If that [00:50:00] is going to be the case, and we're gonna see increased levels of mass customization.
Ben Arnold: There's a certain level of, of, of heavy lifting that's needed to be done operationally for that. And, and I think that, you know, having that within the building that doesn't have to come from the PMs is a real advantage. Mm-hmm. The, the whole benefit that we would point to, a big benefit that we would point to of having all this resource around us, I guess, is that we let fund managers just focus on fund management.
Ben Arnold: Yeah. And there are certain things going on in the industry for the better, whether it's democratization of, of, of, you know, of, of assets. Um, that will put more stress we think on, on investors and, um, you know, part of that, such as bespoke portfolios. There are a lot of work to be, to be done around that.
Ben Arnold: That, that, that can be done with the, the, the input of the fund managers, but not wholly relying on them. The other one is sustainability. You know, we all know over [00:51:00] the last five years, the sustainability landscape has changed, uh, a huge amount. And asking investors to do all of that work themselves, you know, is, is extremely draining.
Ben Arnold: Traders have, you know, a, a big team of, of, of, of people that can help us with that. So a lot of the advantages around, you know, boutique in a big is around just letting fund managers focus on the, on the fund management.
Stacy Havener: Yes, I love that as well. And maybe the next time we talk, I'd love to even dive a little deeper on this because I, I'm curious.
Stacy Havener: I, I have this, you know, This thought you're a little different cuz you're literally inside of an organization. But you know, this idea that a healthy ecosystem is one in which the, the bigs, the people and firms that have been successful sort of feed and nurture the next generation. And I don't see that a lot in our industry.
Stacy Havener: And I think you're in a unique position in that you've got that. And I wonder [00:52:00] how that kind of empowers you to launch new products and think about new creative things. So we're gonna save that for the next time we talk, um, because this didn't come up in, in the boutique within a big piece. But I think it's important.
Stacy Havener: None of what you said would work without the right people. There are people within Schroders who believe in the value team and in this concept of a specialist within a much larger organization. And, and to me, you know, people, first, people behind the portfolios, that's such a big part of, of what I believe is important in the industry, in the world.
Stacy Havener: And so I wanna talk about the human element a little bit. And, and for me, I think that often goes to authenticity. And, and we've talked about this, fund managers being brave enough to be themselves, be able to show up authentically to investors, to the world. How has that journey been for you and for your team, given there's so much more focus on, on that now?[00:53:00]
Andrew Williams: I think I'd say, you know, when I, when I joined the Value team, it had, you know, been around for like a month basically, you know, it was, it was brand new and at that point mm-hmm you had some value investors that have been investing in the uk, some in Europe. We were, we, we were, we were launching some global strategies and you could have looked at, you know, two sets of presentations or read two RFPs or, you know, request for a proposal, whatever it is.
Andrew Williams: And you'd have absolutely no idea that these people invested in the same way. So I think the first thing was, you know, to try to create a brand and create something and create a brand halo around that very long term flagship product. So that's, I guess, that's kinda step one, I think, to answer your question.
Andrew Williams: Step two is let's, how do we actually bring out the individuals in, as you say, yeah, a mark, uh, uh, I say an industry where that is often. Actively discouraged and in lots of respects, you know, yes. People find funds by looking at [00:54:00] the, that are squared and you know, their volatility and their performance and Yeah.
Andrew Williams: And then like, oh, they, who manages this? It's like the, yeah, the, the last question often. Um, but you know, when you are, when you're doing those really, really, when you are a part of those really good due diligence pitches, you often Yeah. Get the feeling that the allocators are really trying to understand you and how you think and why you do what you do and why you are doing this and why this is all you could do.
Andrew Williams: You haven't just been, you know, given this vehicle because you're in the right place at the right time. And so, as in our jobs, what we've tried to do, what Ben and I've tried to do is, is just encourage the portfolio managers to be authentic about, you know, to, to coin your phrase, kinda about their backstories.
Andrew Williams: About how they came to this and why they came to the team. I'll give you a quick example. One of our portfolio managers, Simon Adler, often tells a story about the fact from the age of eight, he, he kept a set of accounts on, on himself, which is his father got him to [00:55:00] do, uh, who, and his father was a forensic accountant.
Andrew Williams: And this is very, very true. And he is a very talented, you know, he won't mind me saying slightly eccentric, uh, fund manager. But he really focused on that and it's, and, and it's authentic and, and clients get it. Um, another, uh, head of our team, uh, Nick is very much into kind of endurance events and ultra marathons, and it's done this event called the Marathon ler.
Andrew Williams: And these are really, you know, tough things to do, require a huge amount of training, but are incredibly rewarding at the end of it. And there are some, you know, there's some sort of metaphors there in terms of being a value investor, I, I think as well. Yes. Um, you know, I'm actually off to. South Africa very shortly to do a presentation on value.
Andrew Williams: And one of the things I'm gonna talk about is the cycle of invest of investor emotions, but I've, to make it personal to me, and I'm very much into motorbikes. I've called it the motorcycle of investment emotions, and hopefully I get shot them for that terrible pun. That's hopefully the worst bit of the presentation.
Andrew Williams: Um, but just to try and, you know, bring [00:56:00] life to what we're doing. Yeah. To make, to make things memorable. And some of those examples I gave you there, yes. They're a bit, that they're reti, they're, they're more kind of retaily, they're more for like the platform rather than the, the detailed. Sure. Due, due due diligence.
Andrew Williams: But I think, yeah, encouraging that personality to come across is, is something that, that we actively, actively try and do. Because, you know, once people know what we're doing as a team, then they then kind of know, want to know kind of why the culture is, as we say it is.
Stacy Havener: So good. And I love the motorcycle thing.
Stacy Havener: Um, it's not easy to get portfolio managers to be comfortable talking about themselves or sort of like who they are as people or why they do what they do. Because to your point, the industry has sort of said that's not what anyone cares about. And all the studies, you know, I always talk about that one Kaya study where, where the difference between what investment [00:57:00] managers think allocators value or find important in due diligence versus what the allocator actually finds important in due diligence.
Stacy Havener: That gap is so wide. The investment managers think all the allocators care about, to your point, Andrew is the quantitative and here are the allocators sitting there saying, actually qualitative is as important as quantitative. And until we bridge that gap, there's a big problem, right? I mean, this is a failure to communicate.
Stacy Havener: And at the end of the day, with all the funds out there, the allocator has to make a decision to invest with someone or a team, right, to invest with the people. It's not just, am I buying a fund? It's am I hiring a human? And so I think what you're doing is great, and as an industry, we all need to kinda lift each other up to say it is okay to be a person.
Stacy Havener: It doesn't make you less professional. It makes you a human and, and people do business with people. So I love [00:58:00] that. Ben, anything you wanna add around authenticity? I think,
Ben Arnold: I think the, the only thing I'd add is that, You know, when the team came together just over a decade ago, it was five. Today it's 12.
Ben Arnold: Mm-hmm. And we've a, you know, we've added seven, seven people and there's a huge amount of, you know, that people side of things and culture side of things. There's a huge amount of, um, thought and energy has gone into who we recruit as well because, you know, we want that authenticity and, and, and we want to really understand, just like people allocating to us, we want to understand who we are hiring as well.
Ben Arnold: And, and you know, some of the things we do around recruitment are, are super interesting and probably for another time. Um, but it's been amazing to see people come in the team and really embrace some of that as well. And also, you know, help us grow as well. So the team sort of over doubled in size and, you know, the people side of it has improved as well.
Ben Arnold: So that's been really interesting. And actually that's great.
Stacy Havener: And you wanna, [00:59:00] oh, go ahead Andrew, please.
Andrew Williams: Sorry. Say I was just gonna to say, It's gonna come back to a question about the people. I think Ben raises a really, really good point in that yes, you're a, you're a value team and you have this style.
Andrew Williams: You need people that have philosophically aligned with what you do. But once you're over that sort of philosophical bar, and obviously, you know, competent at their jobs as well, you actually want as much diversity of thought and experience as you can get. Yeah. Because, you know, as I said, we're often looking at stocks that have fallen upon hard times for one reason or another.
Andrew Williams: And, you know, their screening is cheap, but we're essentially saying, you know, why is the screen wrong? Why might this stock actually be, be cheap for a reason, or be a bad track for one reason or another? And it, it follows on from the hiring, but very deliberately in the process. We want to have that, that challenge and that debate and have people that have been, you know, uh, you know, grown up in different areas.
Andrew Williams: You know, people that have grown up in emerging markets, different backgrounds, different career backgrounds as well, because they all think about [01:00:00] risks slightly differently. And. Trying to, to, to bring that out. And I think to really answer your question directly, I think often, you know, sitting in front of clients when, and all our portfolios are co-managed, I think it's actually really powerful when you have two portfolio managers saying, well actually, you know, we had a different opinion about this and this yes.
Andrew Williams: And this, and this is how, this is why, and this is how we work through it and, and, and all the rest of it. And this is how we challenged each other. And I think that's a, comes back to one of our, our USPS about, you know, all fund managers being analysts, having that debate as equals is absolutely, you know, integral to our process and setting that bar as high as possible for inclusion in portfolios.
Andrew Williams: But it was also a very good human story because it's not often you hear from managers say, yeah, I completely, you know, I disagree with my co-manager on that. But we try to encourage that because that authenticity goes down very well and it's, and well, and it's not just that, it's, it's the truth. We want us, we want tell
Stacy Havener: the truth.
Stacy Havener: That's what I [01:01:00] was gonna say. That's real life. Yeah. It's real life that people don't always agree. Yes. Or have differing opinions. And you have to create an environment to Ben's point, to both of your points. And that was exactly what I was gonna say, um, Andrew, she took the words outta my mouth, is that you have to create an environment where people are comfortable to be themselves and to say an opinion that maybe is different.
Stacy Havener: And the way you do that is by, you know, it's not talking about it, it's being about it. So the leaders have to be authentic and be vulnerable and, and be willing to challenge each other in order to create an environment where other people will follow. Their lead. That was great. I wanna end with something a little, uh, well, I'm not even gonna go into it.
Stacy Havener: I, I go into it on my podcast, but it's basically a version of proof's questionnaire, which goes back to the authenticity and kind of the people behind the portfolios. And we're gonna do this with you [01:02:00] today. Um, I'm gonna pick a couple of these questions and I'm gonna add some caveats cuz I wanna make it a little bit more challenging cuz you're storyteller so this isn't hard for you.
Stacy Havener: Um, okay. So I wanna start with what book inspires you? But the caveat I gave you is it can't be a business book. Okay. Okay. Ben. Ben,
Ben Arnold: Ben, you wanna go first? Yeah, sure. So it was written by a business person. I'm gonna say, I'm gonna say it's not a business book. Well I think half of it actually is. Half it is
Andrew Williams: autobiography.
Andrew Williams: You tell the storyteller it's, it is
Ben Arnold: Let my people Go Surfing by Avanti. So, uh, the founder of Patagonia. Ah. Uh, I'm cheating, I guess, cuz the, you know, the, the second half is his business manual and his philosophy on, on, on, on business. The, the first half is autobiographical. Um, other than the fact that I love surfing.
Ben Arnold: Anyway, I think it's a great book. Uh, you know, he's such a sort of, I accidental capitalist. Um, I think I share a lot of, you know, values, principles, not just on doing business, but life as well with him. So, yeah, I [01:03:00] really loved, uh, reading that six or seven years ago. And I, it's probably the book that I've handed out the most to friends.
Ben Arnold: Um, so yeah, I, I, and it's short as well. So many books. Fabulous. About, fabulous, about five times longer than they need to be. Fabulous. But let my people go. Surfing is short and sweet.
Stacy Havener: Love that. I have not read that. I'm adding that to my list. Okay. Andrew, your turn can't be a business book.
Andrew Williams: Okay. It's definitely not a business book.
Andrew Williams: I'm gonna say, uh, good. Uh, meditations by Marcus Aurelius, which is become this, you know, so Mark Aras was a Roman emperor. It's become something like stoicism has become something which is. Yes. I dunno if it's like fashionable now or it just comes up on my, it is Instagram feed a lot. But anyway, it totally is.
Andrew Williams: It becomes fashionable to say this thing when I, I like to think I, you know, got in there early. I'm contrary, I'm not following, following the crowd, but in all seriousness, like people say, oh, you say that, you sound like a bit of a, you know, uh, a bit like you're up yourself. But I think what I love about it is it was, it was a private memoir.
Andrew Williams: It was never supposed to be made [01:04:00] public, written by the most powerful man in the world. Like he was, you know, a, a semi deity. He could have whatever he wanted, and yet there he is chastising himself about his impressions about being a good person, about, you know, not, not trusting your emotions, about having that reverse course.
Andrew Williams: All those things, the kind of things that are really, really good values to live by. Um, and I think it just gives a wonderful sort of perspective on the world. And I just think it's just fascinating that something which an emperor a few millennia ago was writing in his private chambers. Eddie, pick one of those quotes and it can be so relevant for us today.
Stacy Havener: So good. And it is clear that you were a trendsetter, so now we know that. Okay, so we we're gonna go from books to music now. So let's pretend that you're gonna take the stage and a stadium and there's, you know, thousands of your adoring fans. And you're gonna [01:05:00] talk about Schroders, we're gonna make it work related.
Stacy Havener: You're gonna, you're gonna tell some, some stories about Schroders, but before you take the stage, they're gonna play a song. What's your walkout? Anthem? And Andrew, you can go first on this one.
Andrew Williams: It's a song by a band called Blur, and the song is called Song two. Um, and mm-hmm. So Blur are a Britpop band. Uh, kind of been around since the early nineties and the mid nineties there was.
Andrew Williams: This Bri Pop battle between Blur and Oasis, and I actually love both bands equally, but it's, it's almost the, the trite song to say it's probably the most famous blur song. It's really short, but it's just got a lot of energy. You know, it's often the song they put on and like, everyone sort of starts jumping up and down and, and m it's just, uh, it just, it, it's a song I loved at the time.
Andrew Williams: Still love now, and ultimately, if I hadn't been sitting in this seat, I would've loved to have been a rockstar. So it just kind of, yeah, I love it.
Stacy Havener: Oh, that's so good. That is so good. I love it. You're gonna have to [01:06:00] quiet the crowd after that plays. It sounds like they're gonna be moshing. Yeah. I dunno how you're gonna take it to Schroeder after that.
Stacy Havener: Okay. Ben, what do you got? They should play
Ben Arnold: for you in, uh, South Africa actually. So mine's rock as well. So Casabian, uh, song called Fire. They're a British rock band. Um, The song has got a ton of energy and it's great for a walkout, but for me it has a bit of a special meaning because before I got my very first international cap for, for England, when I made my first appearance for England men's team in Australia, the Champions trophy back in 20 0, 20 12.
Ben Arnold: It was, that was the song that was played for our walkout onto the pitch before we sing the national anthem. So it's always, it's a good song anyway. I think it, it is, it, it justifies itself anyway, but for me it has personal meaning.
Andrew Williams: I, I second that. It's a, it's a, I was wondering, it's a close seconds of blur.
Andrew Williams: Definitely. Yeah. Pretty close.
Stacy Havener: Um, I love it. So obviously if you, if you, if you both take the stage, you're gonna do, was it called fire? Is that what it's called? Ben? Yeah. [01:07:00] Yeah. And then I wondered if it was gonna tie back to your sportsman days. And I love that It did. So that's great. Okay. I'm gonna pick, uh, okay.
Stacy Havener: I'm gonna pick one to end with. Andrew kind of already answered it, but let's see if he had, if he stays with it or goes with something else, what profession, other than your own, would you like to attempt? I'm gonna stick with it and let's see. You're sticking with it. Okay. Keep go with it. What
Andrew Williams: was it? It was, say it again.
Andrew Williams: I actually wrote down, I mean, just not a profession is it, but I wrote down, you know, rockstar. I mean, I think I've been, I loved live music, loved going to gigs, I've loved going to, well before I had, uh, a young family, loved going to festivals and things like that, which are huge ever here in the uk and I just, Don't think anything can compare to sort of having a few hundred thousand people, you know, singing back at you when you're doing something you love and you are, you know, making so many people so happy.
Andrew Williams: So yeah, it's rockstar, but, uh, [01:08:00] close Second is investment director, of course.
Stacy Havener: Well, I mean, I was gonna say, there's so many ties to your day job. Think about all the investors who are just like, you know, freezing the roof when you're talking.
Andrew Williams: Yeah. I wish.
Stacy Havener: Okay. Ben, how about you? Um, you can't say sports.
Ben Arnold: No, you're not allowed to say sports.
Ben Arnold: No, I thought you might say that. So I think, you know, I've always been probably like a slightly frustrated, um, you know, there's been, there's an inner frustrated entrepreneur in me, so running my own business, I think I'd love to do, ah, one day. I think it would either be related to something similar to, to, you know, to, to fund management or, or it would be sport and fitness based given, you know, quite passionate about that.
Ben Arnold: I think one of the great things about our job is that actually, you know, I like that, you know, it is something, it feels a bit like we're sort of running our own business on the team and that's the whole, you know, but with the, all of the sort of safety yeah, safety lines of, of the wider business, we're given it quite a lot of autonomy.
Ben Arnold: So I get to scratch that itch for now at least. So, [01:09:00] um, so yeah.
Stacy Havener: So good. You, this has been so much fun. I literally just looked at the clock and I'm like, we could have been talking for two hours. I have no idea. So we should pause. I am here for any next conversations. You've both been a joy. It's been awesome to hear more of the narrative of Schroders and specifically the value team, but also to get to know both of you a little bit more.
Stacy Havener: So thank you for your authenticity and for your vulnerability and for letting me join you in the studio. Again. It's uh, it's a, it's an honor.
Andrew Williams: It's been our pleasure, Stacy, thank you so much. Yeah,
Ben Arnold: thank you, Stacy. It's been great fun. Thank you.
Stacy Havener: This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. The information is not an offer, solicitation, or recommendation of any of the funds, services, or products, or to adopt any investment strategy. [01:10:00] Investment values may fluctuate and past performance is not a guide to future performance.
Stacy Havener: All opinions expressed by guests on the show are solely their own opinion and do not necessarily reflect those at their firm. Manager's appearance on the show does not constitute an endorsement by Stacey Haner or Haner Capital Partners.
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