Apr 24

Assistant Portfolio Manager - J O Hambro

Name: Alistair Wallace

Job: Assistant portfolio manager

Company: J O Hambro

Since: 2011

Alistair Wallace works on the fixed income team at boutique asset management company J O Hambro. With a degree in classics, a year in Taipei learning Chinese and an internship at a fund of funds under his belt, Alistair started work at a 'fund of funds', where he stayed for a year and a half before moving to J O Hambro last year.

The story so far:

Classics degree – Edinburgh University

Including 1 year ERASMUS studying Classics and Italian in Italy.

Internship – Fund of Funds

Taipei – Studied Chinese – 1 year.

Fund of funds – 1.5 years

J O Hambro – Assistant Portfolio Manager – since 2011

Hello, can you introduce your job?

I work on the fixed income team at an asset management company, J O Hambro. I conduct research on companies, analysing their credit and the markets on a daily basis, looking for interesting opportunities. I work particularly on two bond funds, worth over £100m, helping manage them.

Where did your career in finance begin?

Just after university I interned for a month at what’s called a ‘fund of funds’, which I got through a contact of mine.

What on earth is a fund of funds?

A fund of funds is basically a pool of investor capital which is invested solely in hedge funds. A hedge fund is a pool of money with which investors take long and short positions, ie buying and selling certain things, to financially ‘hedge your bets’. Hedge funds are seen as really risky. The good ones make lots of money and are very secretive, and a lot of them blow up. At a fund of funds you know what you’re getting into, because they do the due diligence on the hedge funds for you, and you’re safer as you’re diversifying risk. It does mean you get less return though.

What next after your internship?

After this internship I decided to move to Taipei for a year to learn Chinese at university there. I had already learnt Italian during my ERASMUS year at university, so I thought I’d try Chinese. I can speak Chinese now but I forget a lot! The experience helped with my later return to the fund of funds as they had lots of Asian funds, but I didn’t exactly need it.

So you did an ERASMUS year while you were at university?

Yes in my third year of university I went to Italy to study Classics and Italian there for a year. Studies were only part time so I got a job in a pasta school, after a course there which I had loved, making pasta and teaching others how to make it.

What happened when you got back from Taipei?

I got in touch with the fund of funds I had worked at and luckily someone there had left while I’d been away, so I got a job there, working on the Asian and equity funds.

I was responsible for monitoring the funds’ performance. Hedge funds are seen as risky and secretive, but we did due diligence, so that we could have faith in them and how they invested. It was my job to meet hedge fund managers and analyse them and the way they invested.

Working at a fund of funds is a good way to meet lots of people and get exposure to a lot of different areas.

In an investment bank you go straight in and sit at your desk in a company of thousands of people. There are definitely pros and cons of working in a smaller company, you learn a lot and get more exposure within the firm, and your role is always changing as you encounter new things. You have to be a self starter though, and very proactive.

I ended up staying there for a year and a half, before moving to J O Hambro, which is a boutique asset management company. I had wanted to leave because whilst a fund of funds is interesting, and gives you a broad understanding of different ways of investing, I was more interested in talking to people about how they invested, rather than giving someone else the money to manage.

How did you get the job at J O Hambro?

A friend of mine from university worked at JO Hambro, and we used to meet weekly for lunch. He knew I found it more interesting working on an investment team which invests directly, rather than indirectly at the fund of funds. He later forwarded me an internal email about a job vacancy in the company, and I applied.

I sent in my CV and covering letter, and then went through 3 different interviews, two with three people, and one with two people. The interviews were very personal, they really want to know about you, so you have to be honest and convey an interest in the industry. If you haven’t studied that topic, it can be difficult to convey an interest.

If you have a humanities degree and you want to go into finance, the only way to know what you’re getting into is through an internship or work experience.

At interview they will want to talk to you about various issues, like the Eurozone, and you need to be able to talk with them. It’s not about the right or wrong answer, just about showing your interest and making sure you have an opinion. It is difficult to make yourself stand out, because it’s a tough jobs market.

What do J O Hambro do?

They are a boutique asset manager which manages portfolios for private clients and charities. I work on the Fixed Income side of the business, investing in companies’ bonds. When a client approaches the firm they choose a level of risk they are comfortable with and it is then up to us to construct suitable portfolios which perform in line with the client’s needs. So for example most clients opt for balanced mandates which will see the firm invest around 60% of the portfolio in equities and 40% in bonds. My team will buy bonds (although I don’t make the buying decisions myself yet) to achieve a desired level of return, and constantly monitor these bonds and others in the market place to try and achieve the best risk adjusted returns. At J O Hambro preservation of capital is key.

And what do you do for them?

I monitor portfolios on a daily basis, keeping an eye on things like cash in and out, conducting fundamental analysis on specific companies.

We are invested in their debt so we have to be able to understand the company, which involves a lot of reading.

I'm on Bloomberg a lot. I also speak to brokers quite a bit, and I monitor the new issues market looking for new bonds. I look at the figures and report back, considering all other companies and the wider market. We are trading all the time so everything has to be monitored daily. If one company comes out with a profit warning, bonds could be devalued so we need to be aware all the time and on top of everything. I'm always writing reports, every week. I also write quarterly valuation reports for clients.

Is your job mathematical?

It’s analytical more than anything. I studied classics and I tried to make this into a positive at recruitment stages by pointing out that this is a very analytical subject which helps you look at things in different ways.

I stopped maths at GCSE. I hated it. I thought there was no way I could work in finance, but the financial exams have shown me you can learn anything if you want to, and if you put your mind to it. Those exams are great to get you up to scratch.

There is maths everywhere in this job but it’s not crucial to your role, unless you are doing direct quantitative analysis.

People think there’s much more maths than there is. Looking at a company for analysis, you have to look at other analysis, broker reports, balance sheets, income, cash flow, but the finance exams teach you how to do that. I’m still learning, I don’t analyse companies on my own yet.

Are you tied to your desk?

I would say I spend about 80% of my time at my desk. The rest of the time is spent at company presentations, conferences and meetings.

Favourite thing about your job?

It’s an interesting time to be in finance, given what’s happening in the Euro area and the global economy after 2008.

Governments used to be secure to invest in, but now they’re under scrutiny.

I like seeing developments in the markets and try to gauge a real understanding of what's going on, given that we are all, directly or indirectly, affected by what happens in global markets.

And least favourite?

Little tasks, which everyone has to do when they start a job I suppose, just things that are part of the nature of working in an office.

What are your hours?

I start before 8, and generally finish at 6, although that’s quite flexible.

Any particular challenges?

Trying to understand fixed income. I was on the equity side before, and you have to think about a company in a different way, and look for different things when you conduct analysis.

You really have to be proactive. You are left to your own devices a lot of the time, and you have to have a real interest in what you’re doing.

Are the stereotypes about the industry true?

Mayfair is quite incestuous. Once you’re in a job, it’s easy to progress. It’s all about people liking you and feeling they could work with you, rather than skills that you have from the off, they can be taught, so it’s important to make a good first impression.

The industry is not closed off at all once you’re in it, but it can seem difficult to break into. You need a lucky break.

The Mayfair stereotype is very old school. Hedge funds are much more chilled out and less corporate than finance in the City, but they still work incredibly hard. It all depends on the company you work for, but you definitely get those people who fit the stereotypes. Everyone at J O Hambro is incredibly nice, they couldn’t have been nicer to me since I started. Once you are working in a company like that who you know will look after you, you see a different side to the industry. Having said that, I do have one friend who was asked to leave an interview after ten minutes, so there are those ball-breakers out there!

The industry has changed quite a bit, there is now far more scrutiny and regulation, so I’ve been told, since 2008. After Madoff and his Ponzi scheme, lots of funds blew up. He was taking money in, so the fund would technically grow, but it was all fraudulent. It also made people look at fund of funds in a new way given that these are the guys who conduct detailed research and are supposed to know what they are investing in, whereas a lot of them had no idea.

Does anyone have to answer to you yet?

Some interns, yes.

What advice would you give me if I wanted to do what you do?

It sounds silly but just get used to reading the news all the time. If you’ve never picked up a financial newspaper before, start reading. Reading the FT daily is pretty intense, but read it on the weekend, watch the news, read The Economist.

Find something that sparks your interest, you will inevitably learn more and your interest will come across. You don’t need to be an expert, you just need to be interested and willing to learn. Be persistent and have confidence in yourself. The key is to have an opinion.

At interview you may be asked about what’s happening in the Eurozone, and it doesn’t matter if you’re right or not, but you need to have an answer and an opinion.

You have to be prepared to do a load of financial exams, which your company will pay for, but you have to study outside of work hours, so you should be willing to learn and put the time in! If possible, do the basic exams before you start looking for a job. I think they cost about £1000, but it will really make you stand out if you already have these qualifications.

If you’re not sure about what you want to do, don’t panic. People worry too much about it. Coming out of uni can be scary, and it’s really normal to chop and change jobs or careers at this stage. It’s all about finding your feet. If you’re not sure, try and fill a year with internships. Just call people up and ask if you can work for them for free. Definitely call rather than email. It’s easy to delete an email. If you call 100 people you will definitely get one or two who will be willing to meet you. Meet people in the industry you may know for coffee. The more you talk and ask about opportunities, the more will come your way.

Work experience is a really great way of working out if you like something, and on top of that, you may get a job offer at the end of it.

People also shouldn’t worry about doing something interesting which isn’t necessarily directly linked to their career. I didn’t have a gap year after school, so after university I paid for myself to go to Taipei, and I loved it. It was interesting and different, and it’s a talking point on my CV which people like.