Every morning when JPMorgan fund manager Talib Sheikh wakes up, one of his first thoughts is how the market has traded overnight.
He admits it sounds “horribly clichéd” for a fund manager but it demonstrates just how excited he remains about his job.
In spite of his enthusiasm, he recalls that he ended up in fund management “kind of by accident”, having graduated with an MSc in agriculture and economics. He started out as an analyst in the mid-1990s for Salomon Brothers with a vision of becoming a grain or commodities trader.
He explains: “I realised that a derivative on a bond or a derivative on anything is, by and large, the same. At the end of the day it’s about working out why there are more buyers than sellers and why somebody thinks something is cheap and somebody thinks something is expensive.
“I guess it really triggered a fascination in markets and from that I joined JPMorgan in 1998 doing various roles.”
He considers his job as two-pronged: “To think about how we can structure and deliver a solution for a client, whatever that might be”, and think about where markets are going and where the opportunities are.
Says Mr Sheikh: “Whenever I interview graduates I always ask, ‘Why do you want to be a fund manager?’ and they always say, ‘Because everyday is different’.
“I always say, well actually the complete opposite is true. Every single day is pretty much the same: I come to work at the same time, I sit in the same seat, I open up my screens and look at lots of flashing numbers.”
Although he adds: “But the thing that changes every single day is the market and the market pricing, and if you’re endlessly fascinated about markets, then that’s the thing that’s interesting.”
Mr Sheikh insists that his home truths do not put graduates off pursuing a career as a fund manager. “I’m very honest,” he acknowledges. “Unless you think the market is endlessly fascinating, this job would get really boring, really quickly. And you have to be unbelievably interested in why a price is moving today and not yesterday and what does that open up.
“At the end of the day, as a top-down asset allocator your job is to be interested in global economics, global politics and [the] psychology of markets. These things are interesting, because they’re constantly changing.”
When he first joined JPMorgan, Mr Sheikh was working in the derivative overlay team, before later running fixed income in balanced portfolios.
“I guess that’s really where multi-asset investing came from – balanced portfolios became more sophisticated and more diverse and I ended up in what was then the global multi-asset group when it was formed in 2004,” he remembers.
What has kept him at the company for 18 years has been the “continual innovation”.
“We’ve always got new products that we’re trying to deliver for clients,” he adds. “We have one of the broadest investment opportunity sets of any large global house.”
So what does he make of the proliferation of multi-asset products?
“I think a lot of it is to do with people realising that things that are perceived as safe assets are no longer available to them,” he replies.
He acknowledges that in most safe assets at the moment investors will lose money in real terms and suggests that central banks have played a role in this.
“They [central banks] have decreed that they will print money to push people up the risk spectrum and, in some sense, five years ago we would have run out and bought high yield and bought equities because that’s what central banks wanted us to do,” he reasons. “But the reality is we know that an awful lot of our clients are not able to take that volatility, [or] are not able to take that risk.
“So they need to think about, how do I get an above-inflation return or an above-inflation income without taking too much risk, because my traditional sources of safe return are no longer there? And I think that’s where you end up with multi-asset.”
He suggests JPMorgan is trying to fill this low- and medium-risk space by ensuring investors are not overly exposed to any particular asset class. But many other asset managers are attempting the fill the same gap in the market, particularly with the pensions freedoms looming.
While he is wary of the increased competition out there in the multi-asset space, Mr Sheikh is not excessively worried.
He asserts: “I’m just not convinced that you can run these funds in a very small boutique because I think you need the resources – you need the back-up. It sounds horribly simple but if you’re investing across multiple asset classes, you need more people than if you’re investing in one asset class.
“So you need to have the breadth, and you need to have the resources behind you to deliver those returns.”
Mr Sheikh says boldly: “In hindsight, the past five years – and I say this with a massive dose of humility – has been an easy time to make money. Whatever you bought went up.
“That happened because we started five years ago with cheap valuations pretty much across every single asset class. And we started with a very clear driver of markets, namely the extraordinary quantitative easing from the Federal Reserve in the US.
“You can debate about how rich or cheap assets are at the moment but it’s very clear that they’re not as cheap as they were five years ago. Things are more expensive and things are more uncertain.”
Mr Sheikh clearly still thrives in his job as a fund manager, although he realises that this type of career does not come with the adoration garnered by, say, football players.
“Being a fund manager is not like being a football star,” he says. “In some sense you never get to kick the winning goal at Wembley. What your job is to do is to just chip away with a small success [after] small success. If you try and smack the ball out of the park, that’s not your job. So there should never be a career highlight, it should just be a consistently good job.”
What does stand out, he concedes, are the “lowlights”, such as the demise of Lehman Brothers, which he’ll remember “until the day I die, it was unimaginable”.
“But you learn from it and you move on. The reality is that market crashes and market volatility have always been around,” he adds. “I never thought I’d see the dollar-Swiss [franc] move 25 per cent in 10 minutes, but, going back to what keeps you interested as a fund manager, it’s because things happen that you never thought would happen. You [then] have to analyse them, work out why it’s important, why it’s not important and ultimately how should your clients’ capital be positioned.”
Returning to his interviews with graduates, Mr Sheikh reveals he always asks them what they think a market is.
Then he answers his own question: “A market, at the end of the day, is just an amalgamation of everybody’s ideas, or the median of everybody’s ideas, and I think that’s fascinating to work out when might the crowd be right and when might the crowd be wrong. At the end of the day, that’s what my job is to do.”
CV
Talib Sheikh
2010 – present
Fund manager, Global Income and JPM Multi-Asset Income funds, JPMorgan Asset Management
2004 – present
Fund manager, Global Balanced and Global Capital Appreciation funds, JPMorgan Asset Management
2001 – 2004
Junior portfolio manager, JPMorgan Asset Management
1998 – 2001
Business analyst, JPMorgan Asset Management
1997 – 1998
Analyst, Salomon Brothers
