InvestmentsApr 16 2015

Firing Line: Wouter Volckaert

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Wouter Volckaert, lead manager of the Henderson Global Trust and a native Belgian, loves living in London.

He said: “It is the centre of the world at the moment and we have a garden for my son to run around in.

“From a work point of view, most companies that we invest in, they come to visit us. There are a lot of investment managers that I meet up with and we talk about the markets.”

The markets are somewhat occupying Mr Volckaert’s mind at present. Speaking before the FTSE hit the 7,000 barrier, Mr Volckaert said that markets were being quite perplexing. They are showing signs of strong corporate activity, even though indicators suggest we are only at the beginning of the postive economic cycle.

He said: “We are not in bubble territory, but we are starting to get there. If you focus on the economy, it feels we are just at the start of things. It feels like the economy is just picking up and wages are starting to rise again. That gives you the complete opposite view that the market has gone up a lot.

“The market will be more driven by the economy. If the economy is positive, then equities will continue to do well. If the economy goes into a recession, we’re up for a reasonable correction.

“It feels like we are closer to the end rather than the beginning – there are signs we are quite far down this market rally. The initial public offering market is very hot at the moment; we have got start-up companies that are worth US$1bn (£670m) in the first year on the markets.”

In addition, he said, the traditional correlation between asset indicators is breaking down. “Typically, the long end of the yield curve goes up and equities go up; now we’re getting the long end of the yield curve going down and equities going up,” he said.

Mr Volckaert is responsible for looking after the £172m investment trust which invests across different economies.

He took over the trust a year ago, and it is hovering in the middle quartiles, although it has returned 2.66 per cent relative to its sector over the past year, compared to -1.67 per cent over the past three years.

It has a discount of about 7.5 per cent, as of January, and it has no leverage.

He said: “When I took over, the trust was underweight North America. The first thing I did was increase the exposure. I inherited 9 per cent North America, I went 55 per cent North America.

“The economy has better momentum in the US; the dollar is strong and it is the first country considering interest rate hikes. I could just find attractive companies.”

However, the dynamics are changing: “I see signs that Europe is doing a lot better than people give it credit for – I see things like credit growth, leading indicators such as surveys of chief executive sentiment, investments of companies picking up. All of that says the economy is doing better. The weak euro is going to help.

“If sentiment is really low, it doesn’t have to pick up a lot; it has to pick up a little bit.”

Mr Volckaert is mindful, however, of the risks associated with Europe – especially the prospect of Greece leaving the euro.

He said: “The best way for investors to assess the risk of southern Europe is to look at bond spreads on southern Europe – Italian spreads, Spanish spreads. We saw at the start of the Greek crisis that spreads in other parts of Europe did not really expand.”

The lack of contagion from Greece allowed Mr Volckaert to take advantage of attractive valuations and he has started investing in Europe.

Mr Volckaert has a track record in managing funds investing in global equities, previously as portfolio manager global equities at Morgan Stanley and in a similar role at ABN Amro Asset Management.

But one of the challenges peculiar to managing an investment trust is the issue of discounts – the relationship of the share price to net asset value.

Mr Volckaert said: “Ultimately, it is up to the market. We have committed to shareholders that if the discount were to widen by more than 8 per cent, in normal market circumstances, we would be buying back our shares. We bought back 2 per cent of our shares to defend that. I hope that discount will come in over time.

So why should people invest in his trust? Firstly, many people are overweight their home country, but with uncertainty over the general elections, they may be looking for alternatives.

In addition, Mr Volckaert takes a long-term view.

He said: “I start every investment with a three-year time horizon, but my turnover is less than 30 per cent. I tend to hold over three years, partly because there is a competitive advantage in looking at the long term.

“What I find is that you get a lot of people looking for the short-term investment opportunities. I find I have got less competition for long-term ideas. Everybody is focusing on the short term, nobody is focusing on the long term. I have got a better chance of finding them.”

Melanie Tringham is features editor of Financial Adviser

Wouter Volckaert’s career ladder

2014-present

Lead manager,

Henderson Global Trust

2013-2014

Investment manager,

global equities,

Henderson Global Investors

2008-2013

Portfolio manager, global equities, Morgan Stanley

2001-2008

Portfolio manager, global equities, ABN AMRO Asset Management

Education

2007-2008

London Business School: Corporate finance evening programme

2002-2004

CFA Institute: CFA charter holder

1995-2000

University of Leuven (Belgium): Masters in economics,

Major in finance