What’s different 10 years on?

1234

Ralph Bassett, Aberdeen Standard Investments

Risk, then opportunity

Ralph Bassett, head of US small and mid-cap equities for Aberdeen Standard Investments, has been at Aberdeen since 2006. The financial crisis erupted early in his career and he said it taught him “how to juxtapose opportunity and risk”.

During the crisis, every bank was expecting to do a capital raising. His main job at the time was looking at banks and modelling how capital raises will impact his firm’s holdings.

He had to think about portfolio positioning – which banks either to allocate to or pull capital from. It involved figuring out where losses and provisions for the banks will peak and what that meant for solvency.

“What that taught me is to think hard about these things before they happen on every holding we put into the portfolio,” Bassett said. “Young people now come on our team and they think about the opportunity and I think about the risk.

“The opportunity is more apparent, but the risk you have to think about more. It’s important those [risk] questions are being asked.”

Low interest rates and low volatility during the years following the Lehman collapse, however, have not impacted the way he approaches a potential investment, he said.

“We would like more volatility because generally it is a friend to active managers. We don’t want companies that are exceedingly volatile, but we like it in the broader market because it gives us an opportunity to buy.”

1234