JUNO KiwiSaver Scheme’s fund manager Mark Devcich says one of the hardest parts of his job is having too much choice.
His role as research manager for Pie Funds, and as a portfolio manager for the JUNO KiwiSaver Scheme, is to choose just a few companies from all around the world to buy for the scheme’s funds.
So, he has to narrow down his options.
“I have to ask three things: is this a good market to invest in, is this a good industry to invest in, and is this a good company to invest in?
“That’s because we could invest in a good company, but it could turn out to be in the ‘wrong’ country. For example, if it’s in Turkey, and there’s political crisis, it could be a good company in a good sector of the market, but it’ll still fall, because the Turkish lira will fall, and the market will fall.”
He checks companies against an investing checklist that’s been built up over many years of trading in the markets.
The checklist looks for patterns that identify great companies – and warning signs that show there could be problems with management or performance.
For example, a company where managers all own shares will win it a point on the checklist. That shows its leaders have a vested interest in its success, something known as ‘skin in the game’.
But recent management changes can be a worrying sign of deeper issues, so that will lose the company a point.
“The Australasian checklist has about 35 points on it, but the checklist I run for global companies is shorter, a bit more big-picture and more high-level – they tend to be big items that can cause companies to stuff up.”
Devcich’s day starts early, at 6am.
“I wake up in the morning and first thing I do is check the markets. The US market trades till 10am our time, so I can check to see how the market’s performing when I wake up and then check any orders I’ve put on from the night before.
“Maybe I wanted to buy certain things, or sell certain things, that’s the first thing.”
Then he heads into the office for a day of reading business papers, broker notes and research analysis, and making decisions on currencies and which shares to buy or sell.
“We check to see if any research notes have come out from the brokers’ office, read those, talk to the analyst that wrote them, and talk to the sales trader.
“Then we’ll start researching companies that we have on our watchlist.”
There are several watchlists, some with 50 stocks on them, and shortlists with 10 stocks, which the team then prioritise to decide which companies they will research for the current week.
“We’ll decide how much we believe the company is worth. If we can buy cheaper at a price representing a good discount, we’ll buy it.”
Buying and selling is done by the team’s dealer, who contacts a broker to do the trades.
Throughout the day, Devcich watches the markets around the world.
The New Zealand market opens at 10am, the Australian market opens at midday, Asian markets open 2.30pm, and then the UK market opens at 8pm.
“With the global markets, you need to watch, because in the UK and Europe the announcements come out before the market opens, so you need to at least be watching that when the market opens.
“You won’t be able to monitor the US market opening at 1am, because you’re asleep, but the US companies tend to report after the market closes.”
Devcich says it’s a job that requires constant attention but the thrill of finding the next great investment makes it all worthwhile.
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Published 14 January 2019
Story by Brenda Ward, JUNO
Pie Funds Management Limited is the issuer of the JUNO KiwiSaver Scheme. You can read our Product Disclosure Statement here. This article is general in nature only and has not taken into account any particular person’s objectives or circumstances. We recommend you speak with a financial adviser. All content is correct at time of publication date.