The FSA Spy market buzz – 6 September 2024
Machine learning Chinese investment, BlackRock’s AI patience, Time Magazine’s AI cover, happier staff equal better returns, do wealth managers add value? sexy legs and much more.
As co-manager of the firm’s Asian Growth Fund, Gillan recalled a specific stock movement in 2015 that resulted in a lesson learned.
“On position sizing, I took one of the higher risk positions in the portfolio that became too big,” he recalled.
The position was a mid-cap Korean healthcare company. Market appreciation of the share price drove it to 4% of the portfolio from 1.5%.
The healthcare company was then involved in a scandal with some product ingredients being recalled and the share price dropped significantly, which contributed to a 1.5% drop in fund performance during the month.
“The key lesson I learnt was that I was taking too much risk at an individual stock level,” he said. “I wasn’t disciplined enough in trimming the position, which had run up through some strong performance.”
The firm now has more stringent risk control on the higher risk portion of the portfolio, which accounts for about 30% of the total.
“We would not take more than 2% active exposure on a single position in that portion of the portfolio,” he said.
Gillan said the “humbling” experience was good in the long run for the team and the portfolio. They had to apply a structure that he believes works well with his concentrated fund that holds only around 40 companies.
Machine learning Chinese investment, BlackRock’s AI patience, Time Magazine’s AI cover, happier staff equal better returns, do wealth managers add value? sexy legs and much more.
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